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Our project aims to derive learnings from supply chain management in human body and apply them into modern factories and industrial setting. Our project tries to benchmark industry practices with that of human body and see if it can be improved further.
We worked on this project with the premise that human body must be having best mechanisms and processes. We can assume so because humans have developed various mechanisms and processes after 4 billion years of evolution and since these processes have stood test of time, hence they must be more efficient than processes & mechanisms that we develop with our evolutionary 600 million year old brain which worked on processes & mechanisms for only 100-200 years. Human body has been chosen because human body represents the most advanced and by far most successful living being present on earth.
Learning designs from human body is an extension of concept of "design by nature". Design by nature is a very popular concept in management and very relevant in today's world. In design by nature we try to learn designs, processes & mechanisms from nature. For example, concepts like "swarm intelligence", "bee-hive" design etc. are inspired from design by nature.
Our motivation for this project was the fact the most of the current researches focused on learnings from other animals. We realized it would be best to 'benchmark against the best' and the best is arguably the human body. Therefore we chose "Supply Chain Management in Human Body" as our project title.
Supply Chain Management (SCM) is defined as the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.
So, supply chain management in human body encompasses all the processes that happen in human body for conversion of raw materials (food) to work-in-progress (in between amino acids, fatty acids etc,) and finished goods (energy).
This project aims to find out some learnings from supply chain management in human body which could be applied into modern factories and present some examples, on how these learnings could be applied in factories.
Secondly, this project aims to show how modern day operations which are considered best are already becoming analogous to human body in its functioning to achieve maximum efficiency & profitability.
Initially we will be covering the most basic supply chain of human body - the supply chain of food and what learnings we can derive from it for present day factories. Later we will present a case study on how HP benefitted in improving its operations & profitability by following advice of Fed-Ex and how these advices were strikingly inspired by human body.
For supply xhain of food, you can say that from mouth to anus, your intestinal tract is a 25-foot long disassembly line. Whole food is taken in at one end and waste expelled from the other. Enroute nutrients are taken out of the food and absorbed into the bloodstream according to the body's needs. This is one part of supply chain. Second part is how absorbed nutrients and glucose is used by cell factory to get converted into ATP, the energy currency of living systems.
Digestion is basically a process of breaking down big food particles into individual molecules, tiny enough to squeeze through the intestinal lining into the bloodstream. Your body uses mechanical and chemical means to do this.
Digestion begins in the brain. Before your meal you imagine how good the food is going to taste. Your eyes and your nose get your body and mind in the mood for food, and just the thought of food gets the digestive juices flowing. Your mouth waters, which is actually saliva - an important component which actually breaks down food, and your stomach churns at the very thought of what is soon to grace your pallet. Even before the first bite you think, sniff, and drool your digestion machine into action. Just anticipating eating gets the intestinal tract ready for the job coming its way. That is, in a way almost half supply chain from mouth till intestine gets ready even before raw material (food) has arrived. Current factories may probably learn from this. If our current factories and that too everyone in half supply chain can get the information about the raw material that is going to come then they may prepare themselves for the production. This will help in reducing the production time and improving efficiency. For example, in a software industry, unless requirement engineer gives full SRS (Software Requirement Specification) to design engineer no work start on his end. Similarly, unless design engineer submit complete specifications, developer teams doesn't start working on it and so on. So, for example, as soon as client calls for requirement engineer to capture software requirement, company can collect preliminary information on what kind of software company want and using its past experience start preparing design and development and testing team for it. For example, by scheduling developers, with experience on similar project, so that there availability time coincides with time when design specifications are expected to be available.
Digestion in mouth- The chewing process in mouth first breaks down food into constituents viz fats, carbohydrates, proteins etc. The digestion of fats & carbohydrates starts in mouth itself by saliva produced earlier. The body starts digestion of carbohydrates earlier as it can be easily digested and hence is almost instant source of energy. The modern factories can learn from this by actually fast tracking the raw material of product that is most profitable. By starting its processing early, company may be able to generate finish good faster and it can help company maintain healthy liquidity for day to day operations.
Digestion in stomach - Stomach digests food by churning the food and by releasing hydrochloric acid. Hydrochloric acid performs two functions - one of digesting food particles and second to kill germs. So the stomach not only digests, it disinfects. One key learning which we can derive from this is how to combine two different functions into one stage and if possible, carry out different operations using same machine.
Digestion in small intestine- As the food moves down the intestinal disassembly line, it passes by stations where it gets squirts of digestive juices that further break down the proteins, carbohydrates, and fats into molecules small enough to seep into the bloodstream. Now, small intestine has "doors" specially marked whether they can absorb carbohydrates, or amino acids or fats etc. Behind each door runs a blood vessel that quickly ferries the nutrients throughout the body where they can be burned for energy or reassembled into tissues. It is perfect example of how multi product processing can be done efficiently. As soon as the final products (sugars, amino acid etc here) get generated they get transported in the body without wasting any space or time.
Small Intestine is probably the best example of space utilization. Small intestine follows an 'S layout' to pack in more length in the given area. Additionally it has small protruding on the surface called villi and additionally folds in them which further increase surface area for more absorption. The length of small intestine is about 7 meters (23 feet) and surface area about ten times greater than the skin surface. So, we can see such high level of space utilization can be achieved by learning from layout of human body.
Digestion of fat: After break down of fat into fatty acids, fats go into microscopic holding rooms within special cells in the intestinal lining. Here they are stuffed into microscopic bags, which are then taken out the back door and loaded onto ferry boats in the bloodstream called lipoproteins. These molecular ferries then circulate throughout the bloodstream loading and unloading fat molecules at cell loading docks. Picture each cell of the body as having millions of loading docks on the membrane. If the cell doesn't need any more fat, it shuts down the docks, so that the lipoprotein ferry boats can't dock and are forced to circulate around the bloodstream until they find some other place to deposit the fat. The two places always receiving more fats are the liver and the fat cells.
Modern factories can probably learn from this. This method turns current method of manipulating raw material suppliers (by techniques like JIT) etc. on its head. Our body's approach is that "no matter what may happen, we will make our system strong enough to withstand any contingency." The body's method of managing fats can teach us how raw materials can be managed semi-automatically by designing an efficient procedure. Just like each cell has 'docks' to indicate whether it can accept fat or not, modern factories can also have docks in a cellular structure, so that as soon as raw material comes, it gets deposited there. Similarly, if cellular structure doesn't need more raw material it could shut down the dock so that raw material goes to next cellular structure. However it should be noted that this method, like in human body, shouldn't be applied to all kind of raw materials. Human body applies this to fats because they are bulky components and cannot be allowed to circulate in blood. So, any raw material which cannot be delivered through normal supply chain can be delivered through this alternative method. Notice how this method allows cellular structure to function independently of actual time of arrival of raw material. Raw material arrives and is processed independently of utilization of raw material. This kind of approach can be very useful in countries like India where there are lot of uncertainties in delivery of raw material.
A supply-and-demand process. The enzymes involved in digestion work on a supply and demand basis. If the glands in the intestinal lining and the pancreas secrete enough enzymes to break down and absorb all the food that comes by, the intestines feel fine. But if there is more food than there are enzyme workers to process it, the doors close, and the excess travels down into the lower intestines.
Digestion in Large intestine/ Colon- In small intestine most of nutrients gets absorbed. The leftovers enter the final five feet of the large intestine, or colon. As the waste from the food passes through the lower part of the intestines (called the jejunum) and enters the colon, the colon absorbs excess water from the food and furnishes it to the water-thirsty body. If, however, the waste matter lacks water, the colon fills the stool with water to prevent constipation. The learning which we can derive from this is how the final node of supply chain scavenges the waste to recover whatever useful it can for the factory. If implemented in all the factories, this will reduce wastage and consequently, will increase efficiency.
Another important function large intestine performs is to harbor beneficial bacteria which digest the food which we are unable to digest. In return these bacteria keep harmful bacteria in check. They also ferment the soluble fiber in food, forming short-chain fatty acids (SCFA's), which nourish the cells of the large intestine, stimulating healing and reducing the development of intestinal cancer. This has a direct learning for factories on how they can have symbiotic relationship with other small organizations which may find the waste of factories useful for their products. For example, molasses - waste of sugar factory- can actually be used by ethanol producing factory. So, if a factory can have such type of contracts, both factory & small organization can benefit from such an arrangement. This will further add to the bottom line of the factory.
To complete digestion process, lastly waste is ejected from colon after sufficient mass has accumulated. This is similar to how factories throw out final waste.
Overall all the food components are stored in semi-ready form and hence body follows Assemble To Order (ATO). So, body can assemble any protein by using amino acids, carbohydrates by sugars it have and so on. Dell is already following this model of mass customization.
HP Case Study
We will also compare the supply chain management in the company Hewlett-Packard with our human body system and would then derive the learning from it.
Case description::Hewlett Packard, founded in 1939 was a technology pioneer which always exceeded customer expectations. Though it had many retail outlets yet it wanted to reach directly to the consumers through e-commerce. It wanted to leverage the power of internet so as to give its customers an easy and convenient access to its products. The objectives of the plan were very clear which was to strengthen its customer relationship, reduce costs, manage demand and most importantly increase its revenue. The outcome was hpshopping.com, the new online sales channel for its consumers. The management of hpshopping.com turned to FedEx to develop a comprehensive solution which would manage entire process from order management to order fulfillment. The idea was to quickly implement the new internet sales channel with minimal risk and resource utilization.
We now discuss the supply Chain solution offered by FedEx:
Assessment of growing consumer demand and supply chain analysis of HP
FedEx assessed HP's supply chain architecture and identified critical integration points. It also had to develop key strategies to tackle the growing consumer demand.
Here the system was analogue to Nervous System. The nervous system is divided into two parts-the central nervous system (CNS) and the peripheral nervous system. The CNS (comprising brain and spinal cord) main job is to get the information from the body and send out instructions. Here the brain is FedEx which tried getting the information of consumers and then strategizing on it , instructed many entities ( as we will see later on) to take an action to meet those demands. FedEx similar to brain helped in controlling all the systems like order management, order fulfillment etc, a very necessary requirement for the proper functioning of the company.
The brain get the information about the rest of the body aka market through spinal cords and the nerves very similar to the company employees required analysing the requirements of the consumers so as to take appropriate action to meet them. It is then the brain (FedEx in this case) which then gave instructions as to what needs to be done.
HP chose FedEx for similar function only as stated below:
â€¢ Proven expertise in information technology (The brain controls all functions).
â€¢ Access to U.S. households through an extensive distribution network (with the help of nerves and spinal cord).
â€¢ Experience in electronic commerce and supply chain management (Gets and delivers the information).
â€¢ Analyze business processes, assess opportunities, and recommend a solution (send messages to whole body as to what action to be taken).
Integrate multiple solutions from various alliance partners with HP business processes to meet customer needs (The brain interacts with whole body).
â€¢ Quickly deliver the solution to market (Quick reaction to external stimuli).
One very important factor in any organization is effective communication system. Like neurons wired together throughout the body to effectively carry messages across the body, in any organization the collaboration and coordination of various departments is important for successful working out of any strategy. It is only then that the action taken by FedEx to create a new channel for HP that allowed the company to sell its refurbished printers and computing products to customers thorough internet got great success.
Order Management and Inventory Management
FedEx recognized that one of the factors for the success of the solution was the integration of online credit card authorization and settlement within the order management system. Once the order was authorized, it was accepted by HP, confirmed and routed to the fulfillment centre by FedEx. Also it was important to have necessary integration of order and inventor management system.
Here we would like to compare the situation with endocrine system which works with the brain and nerves to keep the body in order. Glands are the organs that run the endocrine system, a system which controls the rate we grow, our feelings if hunger, our body temperature and more. In this case the credit system functions like pituitary gland, which is the most important endocrine gland in our body, it secretes the hormone which controls the growth. Hence until and unless the credit system passes the order by customer successfully (by debiting his/her account) to successfully have inventory management (the rise and fall of inventory like the growth of our body) nothing would be done to fulfill the order by consumer.
Below is the schematic diagram which shows the Order Management process:
The above diagram clearly shows us that hpshopping.com is the heart of the body. The flow of the information of order symbolizes blood which enters/exits heart.
Through the integration of order management and inventory management systems, the inventory levels could be monitored and controlled (just like over or under secretion of hormones isn't good for the body and hence is controlled by glands, similarly more than required inventory causes the company to incur unnecessary holding costs while low inventory levels which cannot meet fluctuations in demand causes the loss of goodwill by the company). One good thing about HP was that customers could track their shipment either through online or by calling toll free numbers.
The fulfillment center's close proximity to the FedEx SuperHub enabled to cut down on transportation cost and delay.
When the food is being chewed it's the saliva squirted into the mouth which makes the process speedier and easy. The saliva is secreted right in the mouth, this is how even the warehouses should be located, close to the order fulfillment area.
HP left no stone unturned to provide flexibility to its customers when it came to time. Order times as late as 10 pm had their orders shipped the very same day. Also multiple orders by customers arrived in one coordinated delivery rather than multiple shipments.
Here we see that one of the order winners for the company has been its speed. The brain reacts very quickly to external stimulus and not governed by any time of the day, so is the case was with FedEx strategy to deliver customers as and when they want. hpshopping.com quickly debited its customer accounts and help them select products that fulfill their needs. The external stimuli had to be answered instantly!
The final results achieved by HP were spectacular:
HP saw revenue growth of over 500% annually.
Hpshopping.com was ranked #1 in retail revenue and #3 in PC product sites. It also ranked in the top ten for overall revenue and brand recognition.
HP decreased its returns cycle times by 80% and per unit return product costs by 70%.
Conclusion & Recommendations
From this project we can conclude that our initial assertion that human body is the best benchmark is correct to an extent. Although, it suffers from its own limitations but nevertheless, it can provide us valuable learnings for supply chain management.
Few limitations in applying all concepts of supply chain management in human body to modern-day factories are:-
Major raw materials of body viz - carbohydrates, proteins and fats are all carbon based. So, some limited interconversion is possible among them in human body. However, it is not possible in factories to convert one raw material into other.
Extreme flexibility that human body provides is sometimes not needed and can be sacrificed for further more efficiency.
Sometimes other functions of human body take precedence