L’Erbolario Design Eco Warehouse With Predictive Simulation

L’Erbolario is an Italian brand leader in natural, herbal and plant based cosmetics, with their unique products available worldwide.

Founded in Lodi, Italy, in 1978, as ‘Premiata Erboristeria Artigiana’, when Franco Bergamaschi and his wife Daniela Villa began to develop their first cosmetics in the back of a small shop, following the recipes of their own families.

As its popularity continued to grow, L’Erbolario strived to continue delivering the high-quality products their customers expected, while it developed new product lines and expanded its business. With the rapid growth that was in place, L’Erbolario began to realise that further changes would be necessary to their production lines and shipping logistics, which the current site could not handle.

In keeping with the company’s ethos for natural and sustainable products, L’Erbolario wanted to pursue product innovation and powerful logistic solutions from a new Eco-Sustainable Logistics Warehouse, moving their existing offices and production facilities to a new site. Realising the scope of the project, L’Erbolario turned to NeT-LOG Consulting, who specialise in logistics and operational consulting.

Given the importance of the project and its cost implications, the management team of L’Erbolario required that all the proposed logistical changes should be validated using predictive simulation. For this reason, NeT-LOG Consulting turned to Lanner Partner Studio Zeta and WITNESS simulation, which enabled a comparative assessment of all the proposed scenarios.

Designing a New Logistics Warehouse

"The company’s rapid growth meant we had to start looking for new productive options, which lead us to turn to an external consultancy, to which we could entrust with the management of the new logistics project. This decision was not taken lightly, as we wanted to be sure we selected a company that takes the same extreme care we have for our services, customers and staff, and therefore we selected NeT-LOG Consulting and Studio Zeta.

Planning a new Eco-Logistics Warehouse enabled us to take advantage of the rare opportunity to design a whole new facility from a completely blank page."

Andrea Cattaneo - Logistics Director of L’Erbolario

Setting the Objectives

With the freedom to design a whole new logistics and production facility, with no existing limitations, NeT-LOG could start the design process based on the requirements and objectives set by the Directors of L’Erbolario, outlining the most suitable solutions to meet those constraints.

These objectives included the creation of a new Eco-Sustainable Logistics Warehouse, the improvement of Customer Service levels and the reduction of costs.

The Strategic Goal

To continue meeting the company’s high customer service levels, and to exceed them, the new supply chain design had to ensure fast delivery times to maintain product visibility and availability.

The pursuit of this objective was one of the key requirements of the project; to provide excellent customer service, at the lowest cost for the Company while improving the level of service to both retailers and individual customers.

The following KPIs were set out:

• Improve delivery times from the Logistics Warehouse to retailers
• Reduce the percentage of damaged stock, before it leaves the Logistics Warehouse
• Reduce the number of "out of stock" products at retailers

A feasibility study was developed by NeT-LOG Consulting which analysed various facility layouts and scenarios to meet the target KPIs. From the various proposed scenarios, one was selected which was the most likely to succeed and met all L’Erbolario’s requirements. The selected scenario would:

• Double daily productivity
• Increase storage capacity, with added space for expansion opportunities
• Reduce operational costs
• Achieve a class B energy rating at the new Eco Logistics Warehouse, further reducing costs

The Simulation Model

Following the feasibility study, L’Erbolario required NeT-LOG Consulting to provide “what-if” analysis through a predictive simulation model of the proposed solution. The simulation model would validate the sizing of equipment, resources and foresee the overall functionality of the system under various stress conditions.

The simulation model was used to identify:

• The sizing of the production facility, the material handling capacity and shelving space required
• Personnel requirements
• Potential bottlenecks on the production line
• Any potential delays in production, ensuring optimum delivery times

Once the facility was modelled in WITNESS, a further 6 sub-models were built to explore processes in greater detail. These sub-models included 5 main production streams which involved trolleys and other activities and 1 model of the order packaging area.

"Simulating the process of orders from production to delivery involves many variables, so we have studied the impact of staff variability on production in each of the facility sectors.

The results generated by WITNESS have shown that the increase in productivity and in order flow is not linear with an increase in employee numbers.

Therefore, the facility, and its processes, were designed to offer flexibility, to ensure they can be adapted to meet variable seasonal demands throughout the year.

We then analysed the impact on productivity when there is the distribution of variable products across different branches of the production line. We identified the optimal layout and the product and staff allocations which would be consistent with the workload," explains Patrizia Trionfetti – Partner of NeT-LOG Consulting.

In addition, the simulation identified potentially disruptive events which could have negative impacts on the production. These included initial production being slower than the rate of end-of-line activities, such as labelling and packaging, as well as product waste being determined by weight discrepancies.

By identifying these potential disruptions, NeT-LOG Consulting concluded that:

• A small deviation from the target weight of batches would not cause significant production losses
• A deviation of over 12.5% from the target weight would result in a total bottleneck
• Packaging the parcels, during the filling phase, would make the line lose 5% productivity, so a dedicated packing line would be required

Finally, the trucks’ performance was analysed, noting that:

• The number of trucks planned for the project was optimum
• The maximum sustainable flow for production line orders required on average a 50% utilisation of the trolleys, with the "peak times" covered by flexible trucks
• There was a high utilisation of reach trucks compared with a low utilisation of order pickers, it was assumed that all the activities would be handled by the reach trucks, however 30% of the activities could be carried out by the order pickers which provides greater flexibility

Achieved Results

Thanks to the use of predictive simulation, it was possible to assess the overall facility design, the resource requirements and the operating methods to use in order to achieve the operational objectives.

Andrea Cattaneo, Logistics Director of L’Erbolario, explains, "The results from the simulation, following the project validation, have been extremely useful to identify the critical KPIs.

We have been able to achieve our goal of keeping one production line, precisely detecting where our attention is necessary during daily operations to avoid reduced service levels.

Simulations using WITNESS software has allowed us to validate the technical and organisational choices before implementing changes, as well as to observe in a risk-free environment the impact of every change on the new production line."