A Natural Application Of Logistics Business Essay

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We human have many questions to answer, all can be answered by the nature but as we go in deep inside in the web of the nature. Again a question arises "how to see and understand its nuances?" Only we have to search a right magnifying glass to see through it.

Here I like to put a magnifying glass on ant colony. I know all of you thinking back in your mind how ants could teach lessons in logistics? That is absurd how that invisible, intangible and minute asset could leave such indelible marks on a company's bottom line? But in an economy that relies more on ideas, individuals and change rather than on traditional bureaucracy, companies achieve and maintain competitive advantage over others.

Swarm intelligence

Many Scientist are working on ants, butterfly, bee, cooken to nuances of amazing efficiency of social insects. Companies like Hewlett-packard , southwest Airline , Unilever are working on this new way of thinking about business.

Eric Bonabeau is the founder and Chief Scientist of Boston-based Icosystem Corporation, one of the world's leading experts in complex systems and distributed adaptive problem solving , co-writer of the book Swarm Intelligence, readily admits that he was not the first to see how his work studying social insect colonies could be applied to the management of complex corporations. "When I was first approached to draw parallels between business and insect behavior, I was very skeptical," Bonabeau recalls. "Then I realized that human behavior is highly constrained in a human organization [just like in an ant colony] and because of that, it might be possible to model human behavior with the same tools that I use to model social insect colonies."

Such behavior, swarm intelligence is a successful illustration of self-organization on a large scale. The traits that enable a colony of ants to find food manage colony and set up supply chains, can help companies to find efficient solutions to complex problems. The colony can quickly adapt to a changing environment; it can perform its necessary tasks even when one or more individual ant fails; and it needs relatively little supervision or top-down control. Bonabeau employs rigorous mathematical models that enhance these traits of flexibility, robustness and self -organization to help a company hone its competitive edge.

Traits of social insect has helped several companies including Unilever , McGrawHill and Capital one to develop more efficient ways to schedule factory equipment, divide task among workers , organize people and even plot strategy

Foraging For solution -These Ant-forging Algorithms is a natural application of Logistics. Researchers from Hewlett-packard's laboratories in Bristol , England have developed a computer program based on ant-foraging principles that routes calls efficiently. In the program, hordes of Software agents roam through the telecom network and leave bits of information (digital information) to reinforce path through uncongested area. Phone calls then follow the trails left by the ant like agents. Southwest Airlines used the principles of swarm intelligence to streamline its cargo operations, save more than $10 million a year. Some of the airline's discoveries about itself at first seemed counter-intuitive. For example, Southwest discovered that it can be beneficial to leave cargo on a plane, even if it was initially headed in the wrong direction. If the airline wanted to send a package from Boston to Chicago, it might be more efficient to leave it on a plane heading for Atlanta and then Chicago rather than wait for a direct flight or transfer it mid-route. This finding slashed freight transfer rates by as much as 80 percent at the busiest cargo hubs and reduced the workload for people who move cargo, allowing Southwest to cut back on its storage facilities and minimize wage costs. Furthermore, the resulting flexibility meant that the airline could still make money even if the planes weren't fully loaded, which opened up significant opportunities to generate new business. Variations on the ant-foraging algorithm also helped Unilever, the multinational consumer goods company; develop decision-making software for its production facilities that was faster and more automatic than traditional efficiency methods. At one complex-liquid manufacturing plant, the chemical mixers, storage tanks and packaging lines each have different rates of operation, different abilities to be connected to other equipment, different capacities, different changeover times for switching from one product to another and different maintenance schedules, all occurring in a dynamic environment in which machinery can break down without warning and customer demand is increasingly volatile. Bonabeau examined how ants surmount unexpected obstacles in their relentless quest to find food and bring it back to the nest, and produced software that copes easily with changing conditions.

Insights gleaned from swarm intelligence also helped Capital One, the giant financial-services company; replace its rigid command-and-control management style with a more flexible approach better suited to a fast-growing business. Like a medium-size ant colony whose territory is invaded by a larger competitor, Capital One constantly searches out and targets new market opportunities. To encourage employees to look for opportunities outside their immediate departments, Capital One revamped its employee-evaluation system to reward people who actively search for such "food sources." The extent to which this behavior supports the business strategy was implicit in a comment in the company's annual report soon after it adopted the precepts of swarm intelligence: "Many of our business opportunities are short-lived. We have to move fast to exploit them and move on when they fade."

Scanning the Periphery

One of the important things we can learn from the Ant is scanning the Periphery. Ant builds their empire but never leave their eyes on the Periphery, they can deduce the incoming thread and opportunity in advance, it makes them easy to warn there counterpart in the colony. In most of the survey 9 out 10 corporate accept 3 out of 5 big threads which it faces, they don't have any information (warning) about it in advance. When thread came to smack them they are empty hands.

With the ant behavior our modern Business house can learn how to have eye not only on target but also on periphery so they have proper and valid information that what other player are doing and use it for their benefits

Networking knowledge

'When you look at how organizations really work," says Bonabeau, who has written about swarm intelligence in the Harvard Business Review, the Journal of Business Innovation and in a book he co-authored, Swarm Intelligence: From Natural to Artificial Systems (Oxford University Press, 1999), "the hierarchical chart is very rarely the structure that people use to get their jobs done."

Karen Stephenson couldn't agree more. A professor at Harvard's School of Design and Imperial College's School of Management at the University of London as well as a software entrepreneur for NetForm International, Stephenson studies the informal pathways by which knowledge is communicated throughout an organization.

Why is that important? Think of it this way: If the official organizational chart shows the rules of a company, the human network shows the ropes--what really makes things work and gets things done. Each person in that web represents a node, but not all nodes have the same nature. Some are what Stephenson calls "hubs," people who become a gathering and sharing point for critical information. Some are "pulsetakers," who carefully cultivate relationships that allow them to monitor the ongoing health and direction of the organization. And some are "gatekeepers," information bottlenecks who control the flow of contact to a particular part of the organization. These nodes and networks house and transmit tacit knowledge, the vitally important information that gives a company its competitive edge.

Furthermore, Stephenson has identified at least six different types of networks, each of which represents a core layer of knowledge, ranging from how the company works to how innovation is sparked and nurtured to how it is disseminated throughout the company and becomes part of its modus operandi. Like the body's circulation system, nervous system and skele-to-muscular system, all of these networks combine to sustain the health of an organization. Conversely, if there's a problem with one, then the health of the entire organization is affected.

By performing the equivalent of an MRI on an organization, Stephenson helped Amgen, the world's largest biotechnology company, reduce the rate of attrition among its research scientists, IBM re-engineer itself, Steelcase design a new furniture consultation service and J.P. Morgan smooth its merger with Chase Manhattan.

The most relevant aspect of her work has to do with the lifeblood of companies today: innovation. At the root of all bureaucracies, she says, is an innovation that didn't get harvested in time. At the other end of the spectrum, is an innovation that went too far, which sometimes results in fraud. And in the middle is a network that nurtures innovation appropriately so that it benefits the organization.

"There is an optimal balance between social networks and organizational hierarchy," Stephenson says, "and there are correlations between these networks that show when an organization is ready for a change. If you're knowledgeable about this, you can leverage your human capital appropriately."

Grasping intangible assets

One of the confounding aspects of tacit knowledge networks is that they can be mapped and their results measured on a company's bottom line, yet they can't be physically grasped. Federal Reserve Chairman Alan Greenspan spoke to this issue last year when he talked about how the weight of the economy had declined. What he meant was that the economy is no longer being measured in locomotives and factories; instead, it is measured in ideas and people. Evaluating the ramifications of such intangible assets is what Jonathan Low and Pamela Cohen Kalafut of Cap Gemini Ernst & Young's Center for Business Innovation have been puzzling over for the past five years and wrote about in their recent book, Invisible Advantage: How Intangibles Are Driving Business Performance.

Submitted by

Abhishek Gupta

Abhijat Singh Dhawal