July 2017

Drone delivery is buzzing — but where does it go from here?

With the drone industry netting $8 billion last year and consumer spending for on-demand services topping $57 billion, the implementation and deployment of drone delivery fleets is becoming more of a reality each day. From Amazon’s futuristic drone delivery tower proposal to parachuting packages on the horizon, we are nearing a complete delivery transformation. While these innovations will need to be fine-tuned as the commercial drone industry flourishes, several factors, such as operational inefficiencies, continue to work against the Amazons and Ubers of the world, hindering supply chain innovation.

The mainstream drone delivery timeline

We have already seen the start of drone deliveries, but it likely won’t become truly widespread and accepted until 2025. Over the next seven years, we’ll begin to see an overall increase in this new vehicle for deliveries, but a large portion of these test runs, followed by operational deployments, will be heavily focused in rural areas where the safety risks are smaller and logistics are much simpler to manage. Contrary to popular belief, dense metro areas present numerous challenges and risks — think traffic, privacy issues, power lines, high-rise buildings, sudden wind gusts and crowded streets below.

Instead of thinking about smart urban cities, we should shift our focus, at least for drones initially, to smart rural areas. It’s much more likely we’ll see drones used to deliver common goods like food and medication to remote homes and offices versus a busy suburb. Instead of a consumer driving over an hour one-way into town to pick up a prescription, he could choose to have it delivered by drone. Autonomous vehicles and drones could, and should, even partner for optimal efficiency while delivering packages — companies like UPS and Mercedes are already testing a self-driving van and drone combination for the ultimate rural delivery challenge solution. Meanwhile, cities will shift their attention to small and less risky sidewalk bots to help enable the “life on-demand” luxury in metro areas.

Implementation challenges

Before these services can become a reality, we need to start addressing the inherent challenges to implementation. While there are several concerns that need to be addressed, the ones we should be thinking about sooner rather than later relate to the safe deployment of these technologies. The obvious safety element everyone is looking at, which I am sure will indeed be addressed, is that of the single drone: How will it fly safely, avoid obstacles, carry its packages and so forth? However, it is the deployment of a fleet of drones I am more concerned about. Before they can become commonplace, live operational testing is mandatory to ensure we can deploy several drone fleets without overcrowding the airways — a scenario that could completely erode the potential benefits these technologies present, and moreover create a potentially unforeseen safety risk.

To adopt this technology and do it right, we need to start thinking about a higher-level network of connected drones — no matter the parent company. This means taking a look at how they should be deployed, managed and used so not only individual consumers can experience the benefits of these technologies, but society can as well. Whenever a new method is introduced into everyday use, there is a great deal of strategy that needs to go into thinking about which services are implanted where.

Who will be the first adopters?

One benefit drones exhibit is the lack of overhead required as opposed to traditional delivery methods like trucks and airplanes. A large-scale delivery model requires an enormous amount of capital investment including drivers, trucks, space to store equipment, regional depots and much more in order to be successful. This presents a substantial barrier to small competitors trying to enter the market, even if their model is more efficient than the delivery giants. On the other hand, drones are less expensive to buy, store, maintain and operate and because of this, we’ll likely see many small companies launch drone delivery services. Because of the technologies’ flexibility, there is an opportunity for both corporate giants and mom-and-pop shops to operate in this industry successfully. This in itself also poses an added risk of very large numbers of drones all flying around the same airspace in an uncoordinated fashion. Inefficiency and risk galore.

Additionally, companies like FedEx and UPS will also look to break into the drone business in order to stay competitive. As drone technology improves and new businesses emerge, it’s likely drones will slowly begin to replace some of the last-mile routes traditionally fulfilled using trucks and vans, thus resulting in increased efficiency across the board. Just think: if one delivery in a driver’s route is three miles out of the way of every other stop, that’s six miles roundtrip for a single package. The time spent driving to the delivery destination and back is not only an inefficient use of the employee’s time, but a costly waste of company resources (assuming, of course, the package is small enough to be delivered by a drone instead). In the future, delivery vans will likely be equipped with drones to deploy one-off package deliveries, optimizing the driver’s daily route while simultaneously reducing operating costs. In combination with the great distribution networks and infrastructure in place, FedEx and UPS will have a huge leg up on potential competitors looking to enter the drone arena.

Looking ahead: The future is buzzing

Look for Amazon to continue to push the envelope very publicly, but don’t be shocked to see Wal-Mart come out with a surprise from left field. It has the money, it just has to find the right focus and partner — I think it will. I also anticipate seeing brand-new delivery companies emerge and try to conquer the space, only eventually to get bought out by the delivery giants such as UPS and FedEx to try and maintain pace with Amazon.

At the end of the day, there are two technologies that are going to be required to make this all happen, and happen successfully to the benefit of the consumer and service provider: a safe and effective drone at a price point that is affordable, and dynamic network-level, multimodal scheduling software that will enable the service provider to efficiently deploy a fleet of drones and integrate them with other resources.

Finally, don’t limit your thinking to delivery being of only physical goods. Drones will also be used to deliver data. Insurance companies could rapidly deploy a drone to a car accident scene (especially that of a driverless car) or a home disaster to take photos from multiple directions and collect data in near-real-time to increase the accuracy of the data. That same drone could deliver information rapidly to emergency services, such as the police and fire department, to increase treatment quality and survival rates.

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Life on-demand: What we can expect from the new normal – a TechTarget byline

At the touch of a button, you can request a ride, get groceries or dinner delivered to your door, or have your Amazon order delivered in two hours or less. It’s safe to say a new era is here — we are living in an increasingly on-demand world.

With every three out of 10 American workers employed by the gig economy and new on-demand services appearing daily, there’s no denying the world is trending toward increased convenience, autonomy and flexibility. More than 22.4 million consumers use on-demand services, netting $57.6 billion in spending annually. Online shopping currently leads the on-demand revolution with $36 billion spent, with transportation coming in a not-so-close second at $5.6 billion, followed by food and grocery delivery at $4.6 billion. And the result of this impressive growth in spending? Researchers believe by 2020, almost one in five U.S. workers — the equivalent of 31 million people — will rely on the gig economy for employment. Is the ecosystem ready to support life on-demand?

The future is here. Now what?

The gig economy, and every company born out of it, has propelled consumers to become accustomed to a vast array of services like ride-sharing and food service on-demand — but it doesn’t end there. In addition to what is already available, we can expect an explosion of additional services being offered on-demand.

Imagine a world where healthcare is available on-demand. Doctors and nurses will come to your doorstep (at home or your office), a veterinarian will come to your home to care for your beloved pet instead of having to take your dog to a scary office. In terms of beauty services, stylists will come to you for hair appointments and manicures instead of requiring you to go to the salon. By the way, on-demand doesn’t mean the services have to come to you. It could also mean that you could go to a service location but not have to wait in line because the schedule will be created automatically based on your movements. A nearly unimaginable on-demand world of convenience will be available at the touch of an app — until we hit an inevitable tipping point.

Hitting the on-demand tipping point

Entrepreneurs looking to enter the market and established companies will continue to take advantage of consumers’ infatuation with real-time on-demand services. However, the economy will eventually reach a point where it can no longer support the growing inefficiencies caused by an outdated and weak back-end infrastructure. The inefficiencies are created by companies and industries implementing services with the fastest and most convenient outcome to capture market share, as opposed to the most efficient and effective method to operate the service.

The cost of on-demand: Nearly $58 billion and inefficiency

As growth accelerates, we need to look at the cost. Society, including the consumers using these on-demand services and the companies providing them, need to ensure this trend does not create little-discussed but very impactful side effects — massive waste and inefficiency. The average consumer does not always think about what is happening behind the scenes to provide their products and services on-demand. To get a ride within minutes from a company that only uses contract drivers, there are often more vehicles idling around the area than necessary causing congestion, pollution and overall inefficiencies within the ecosystem.

If we are going to continue ordering rides on-demand, we need to cut the number of cars on the road and ensure they are working intelligently together. If we are buying in real time with a delivery to our front door, let’s make sure companies plan efficiently to decrease the number of delivery trucks on the road. The advantages and conveniences of the on-demand economy require companies to ensure back-end operations are just as efficient and convenient as the services they provide. Data does not show that happening.

When convenience outpaces infrastructure

In order to fully realize life on-demand, gig companies must optimize the systems currently in place instead of simply adding even more unnecessary capacity. Although it will be difficult at first, companies will need to shift their focus and put as much emphasis on back-end and operations execution as they currently do on the front-end, consumer-facing aspects of the business.

When planning or contemplating a new on-demand service, companies and governments must take into consideration the resources needed to fulfill that demand and ensure it is not exceeded solely to increase convenience at the cost of efficiency. The answer: restructure current “gig-based” models (i.e., using contractors who choose their own job) into resource-directed models (i.e., controlled and actively scheduled resources that work based on a schedule provided by the company). Companies using contractors such as Uber, Lyft and Postmates are prime examples of achieving growth through over-capacity versus operational efficiency.

So what’s the difference with these models? Resource-directed models ensure on-demand services are operated efficiently through dynamic optimized scheduling. This means that when you click your ride app, the one most applicable driver will be notified to pick you up instead of a bunch of drivers getting your request (and only knowing your pick-up location and not your destination). The system will take into account your preferences, the drivers’ preferences and the company’s goals, creating an efficient schedule for all in real time and with less waste.

If you take that to the next step, you could actually optimize between networks, creating a coordinated efficient fabric of resources. While there may be more than a few companies that offer deliveries to your home or workplace, these services will be coordinated through a few efficient scheduling networks that make sure resources are used efficiently for the good of society and the consumer — not just the company operating them. This is not to make for a feel-good, “kumbaya” world, but one where we simply allow sophisticated technology to help us be intelligent in our decisions to the betterment of us all.

The future of on-demand is in your hands

In order to reach this on-demand utopia, companies, governments and cities will need to recognize and address the looming inherent risks in IoT, smart cities and on-demand services. However, it will be the will of the consumers that has the final say. The on-demand economy was created by consumers’ desire for convenience and control, and until they demand improvements, things will continue as is.

Take airlines for example. Consumers continue to complain about cancelled flights, poor service and other issues, but planes are still full. United will not be persuaded to provide better customer service unless people actually start boycotting its flights. Uber won’t improve its internal issues until consumers stop using it and the company feels it financially. We won’t see improvements to the on-demand model until consumers demand increased efficiency and accountability from their beloved Lyfts and Amazons. Actions speak louder than words, and $57.6 billion spent by consumers for on-demand services is saying a lot.

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Driverless vans, drones, and the next phase of automated deliveries

Driverless vans, drones, and the next phase of automated deliveries

 


Do you remember the futuristic movies that showed us what daily life might look like 50 to 100 years from now: the autonomous cars in Minority Report or the drone deliveries and parachuting packages in The Hunger Games? Well, you might be surprised to learn these formerly futuristic movie effects are slowly but surely becoming our reality.

Drones, driverless vans, delivery bots, and other futuristic technologies have the potential to make a great impact on us day-to-day, making life easier, more immediate, and perhaps even healthier. From less congestion on the roads to real-time deliveries, this would be the new normal for our society.

This stunning transformation has been propelled by overwhelming consumer demand. Recent studies find that consumer spending on on-demand services currently tops $57 billion. And it continues to grow, with new products and services popping up every day as entrepreneurs scramble to capitalize on society’s desire for convenience.

With that said, these new technologies — which have not yet been fully tested — have more than a few inherent risks. Some of these risks are related to the technological breakthrough itself: for example, the safety of a delivery drone or the decision-making capabilities of the single autonomous car. The recent traffic fatality involving a self-driving Tesla prompted additional testing and scrutiny almost immediately. But some of these concerns, the ones we should be thinking about sooner rather than later, relate to the deployment of these technologies once they are proven safe. Before they can become commonplace, live operational testing is mandatory to ensure we can deploy these technologies without ending up with a sky overfilled with drones or roads congested with driverless cars — a scenario that could completely erode the potential benefits from these technologies.

To do this and do it right, we need to start thinking about a higher-level network of drones and driverless vehicles. This means taking a look at how they should be deployed, managed, and used so that not only individual consumers benefit from these technologies, but society does as well. We need to think strategically about which services are implanted where.

Delivering to a remote location near you

While our cities suffer the most from road congestion, automation can produce significant value in suburbs and remote areas where population is sparser. In these areas, delivery drones and driverless vans can create greater efficiencies and bring a level of service traditionally missing due to location and economics.

For example, it does not make economic or practical sense to send a driver with a car on a two-hour drive to deliver a single package in a rural community, burning through the driver’s time and gas and wearing down the delivery vehicle. The four-hour time frame in itself would take half a workday for a single package, making it a losing proposition. Alternatively, deliveries could be scheduled on a weekly basis, but that solution would greatly diminish the whole concept of “on demand” that consumers have come to expect. To solve this problem, companies like UPS and Mercedes are testing a self-driving van and drone combination for the ultimate solution to the rural delivery challenge. Tying in drone deliveries will bring increased on-demand services to rural areas, along with providing the best R&D environment for drone deployment.

Outside of on-demand deliveries, rural areas will also see an increase in autonomous trucks and vans hauling goods long distance — similar to Uber’s successful cross-Colorado beer delivery. Once they reach a metro hub, these long-haul autonomous vehicles will transport their cargo to depots on the outskirts of cities, like Amazon’s new cargo hub in Kentucky, where workers will then transfer the shipments to smaller delivery bots or drones and complete the “last mile.”

Rural versus urban solutions

Meanwhile, and contrary to popular belief, metro hubs likely won’t be the first to see autonomous trucks or vans delivering goods. Since congestion and parking are still two big issues in the city, using a driverless vehicle isn’t a solution. In fact, it could create even more problems.

Instead, delivery of Amazon purchases or restaurant orders in dense cities will be done through small bots and sidewalk-based drones, alleviating traffic by minimizing the number of delivery vehicles. A small bot makes a lot of sense in an urban area, as long as it can maneuver the sidewalks of Manhattan or San Francisco with ease and without much risk to its surroundings. Just imagine, your pizza could be delivered by a sidewalk bot soon. Want proof? Five states — Wisconsin, Idaho, Virginia, Florida, and Ohio — recently passed legislation making delivery bots legal on city sidewalks.

Taking both the rural and metro next-gen tech implementations into account, rural areas seem ripe for massive innovation, trials, and change. I myself live in a more rural area, and there are significantly fewer cars on the roads, fewer houses in any given area, no high rises, and a lot more open space. This means lower risk for companies trying new delivery methods and technologies. Think about it: Would we rather have a drone flying over a dense neighborhood with playgrounds and schools underneath or in a more secluded area covered in farmland? Take, for example, the recent news about Amazon’s patent applications for a drone delivery tower and packages parachuting down to the receiver. With the cool factor (and resemblance to parachute deliveries to Katniss in The Hunger Games) aside, it would probably be more appropriate to test dropping packages or launching drones from a massive hive in an area with 5-acre homesteads than in a dense townhome community.

While the debate for exactly how smart cities will unfold in the not-so-distant future continues, one thing is certain: Next-gen technologies are not only cool and efficient, they will connect rural and urban areas, providing a higher quality of life for residents of both — ensuring communities are truly “smart.” Businesses will be able to provide efficient, low-cost on-demand rapid services at all times (even in rural areas) and with fewer restrictions. In turn, consumers will be able to get an increased level of service. People may find themselves significantly changing their buying patterns and buying more, simply because they can, which increases business.

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How Infrastructure Will Tip the Scale to Reach the Era of Life On-Demand – The Fast Mode

Q: IoT services like on-demand deliveries and mobile workforce seem to be on the tip of everyone’s tongue. What’s the current state of the movement; and, in a perfect world, where do you see it progressing? 

A: There’s no doubt we’re trending toward a world where increased convenience, autonomy and flexibility reign supreme. Every 3out of 10 American workers are employed by the gig economy, more than 22.4 million consumers use on-demand services, annual spending is nearly $58 billion, and new ways to live the convenient ‘on-demand life’ pop up every day. Soon, on-demand services will expand into new industries and become the norm. Healthcare will be brought to your doorstep both for you and your pets; a mechanic will come to your house to provide any maintenance on your as opposed to taking it to a garage and waiting for hours.

Sounds like the perfect system, right? Unfortunately, companies are currently operating in individual, inefficient silos versus an overarching network of resources. While a number of companies that offer on-demand services, most do so through an over capacity of resources which in turn create more waste than necessary. Eventually, these companies will optimize their own resources through the use of a dynamic optimized scheduling technology connecting their service to a network that ensures resources are used efficiently for the good of our society and consumers. And no – the goal is not to create a  feel good, “kumbaya” world, but simply one where we allow sophisticated technology to help us make more efficient and intelligent decisions.

Q: How long will it take for companies involved to implement and adopt a connected, IoT system?

A: If companies decided they wanted to do this, we could be there in the next five years. When you remove the autonomous aspects – for example, assume delivery cars still have drivers and drones are not en-mass yet – all the necessary technology is in place already. It is the will of companies and entrepreneurs to do what is right that is lacking.

Q: What roadblocks — obvious or unexpected — exist when it comes to merging IoT services? 

A: Since life on-demand emerged out of the need for convenience, efficiency never topped the list of company priorities. As a result, the backend infrastructure of smart IoT technologies are grossly underdeveloped, creating systematic inefficiencies which hold us back as a society from truly realizing an intelligent, “smart” future.

Currently, gig-companies are focused on capturing short term market share without any regard to backend waste. While this may seem like a winning proposition, this will come back to haunt them at some point as it is not sustainable. As IoT becomes increasingly intertwined with these services, updated infrastructure will become critical to tip the scales into the era of life on-demand.

Companies like Uber, PostMates, and GrubHub must rethink their backend infrastructure to be able to continue executing on this convenience. The ‘sharing economy’ model was interesting and nice to use to get ahead, but it’s time to think long term and manage resources efficiently and fairly. This includes the resources (i.e. people) that enable these companies to be successful. And no, using the so called ‘sharing economy’ is not answering that. Data shows us the introduction of Uber and Lyft has not reduced the number of cars on the road – and in fact, might have had the opposite effect.

Q: How critical is infrastructure when it comes to services like on-demand, last mile delivery and transportation?  

A: Services are currently growing unchecked, and a much faster rate than legacy infrastructure can support. This is causing inefficiencies the general public does not yet understand such as congestion, pollution, and underpaid workers. When planning or contemplating a new on-demand service, companies need consider how many vehicles, personnel and other resources are truly necessary to fulfill that demand – and then use only that number.

Q: Infrastructure and overall inefficiencies are difficult to connect with on the individual level. Why should consumers care? How will this affect them in the future?

A: Our society claims to be a more aware than we were a generation ago. Discussions of global warming, healthcare, and other “big ticket” concerns are in the news every day. And yet, as consumers, we seem to give little thought to the fact there are too many cars driving around, burning gas, creating emissions and congestion all for the sake of picking up a passenger or delivering your food so you don’t have to grab it yourself.

It is nice to be on the receiving side of an on-demand delivery, but we need to start thinking about the other side of this – the fulfillment side. If the company you receive a delivery from does not employ the driver or control their schedule, rather rely on a driver willing to accept the ‘gig’ with an app, more drivers than necessary will be roaming the streets with empty cars waiting to fulfill an order. If we want to achieve a truly on-demand economy that is actually beneficial to all, we need to come to the decision to become more efficient as a society.

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BoldIQ CEO to speak at Elevate 2017 by Air Cargo World

Roei Ganzarski, CEO of BoldIQ will be speaking at Elevate 2017 in Miami on October 2nd.

This second annual Elevate 2017 presented by Air Cargo World, dives into innovation in the air freight industry with groundbreaking seminars and networking with elite industry executives. Their diverse panels facilitate unique discussion on the industry and provide key insights that will inspire the transformation of the air freight industry.

Ganzarski will sit on the first panel: Using Next-Gen Technology to Solve Logistics Problems. Thee he will discuss digital logistics; real-world problem solving; and e-commerce, all from the perspective of real-time dynamic optimization software and how it will help drive the next generation of logistics solutions.

Click here for more information on the conference.

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