Drones & The Demand Chain in 2018
Since 1980, the supply chain has rapidly evolved with the introduction of logistics systems via computers to the emergence of enterprise resource planning (ERP) systems. And 2017 only fueled this progress bringing about a new era of logistics with the introduction and emergence of next-generation technologies like drones and sidewalk bots, driverless delivery vehicles, and next-generation intermediaries such as technology driven brokers.
These technologies are being rapidly developed and introduced due to the changing nature of the economy and resulting shift from supply-driven to demand-driven operations. It’s no longer the manufacturer or distributor deciding what to sell and when, but rather the consumer dictating what to buy and when to have it delivered.
As companies begin testing and implementing these futuristic technologies, the promise of new delivery services continues to gain popularity. In fact, drones are projected to have a $14 billion economic impact within the first three years with the potential to grow to $82 billion by 2025. Although this seems like only a fraction of the $676.2 billion made by the American trucking industry in 2016, ‘smart’ technologies like drones and bots will start to carve out their niche and create a significant impact on the supply chain over the next year.
Here’s a look at how drones and bots are sure to impact the supply chain in 2018 and beyond:
Drone Delivery Will Take to the Sky
It’s a bird, it’s a plane…. wait, it’s your online order heading to your front door by a drone. Over the next year, we’ll begin to see an increase in this new mode of delivery in non-urban areas where the safety risks are smaller and logistics are much simpler to manage. Coupled with new consumer expectations for same-day delivery or at least date-defined delivery, the use of drones will allow companies to meet this quick turnaround.
Drones also require less overhead costs as opposed to traditional delivery methods like trucks and airplanes. Just think: a large-scale delivery model requires a wide array of resources including drivers, trucks or planes, space to store equipment, regional depots, and much more in order to succeed. With these facts in mind, it’s likely we will see drones slowly replace some of these routes that have been traditionally fulfilled with trucks and airplanes to increase efficiency, delivery time and curb costs.
Showcasing the potential of delivery drones, other countries are already starting to capitalize on the futuristic tech. For instance, Rwanda is using drones to deliver blood to nearly half of all of the country’s blood transfusion centers while Switzerland is incorporating networks of drones into various aspects of its healthcare industry. And the US isn’t far behind.
In early November 2017, the Department of Transportation (DOT) launched a pilot program allowing states to test new types of drone operations, including package deliveries. The program allows companies interested in deploying drone fleets for deliveries access to necessary testing which may have previously been out of reach. Backed by the successful trial runs from industry giants like Amazon and UPS, we can expect to see drone delivery as another option when clicking the ‘checkout’ button with our next online order.
Step Aside for Sidewalk Delivery Bots
In addition to delivery drones, sidewalk bots will start to appear in dense urban areas where challenges and risks like traffic, power lines, and high-rise buildings may prevent the usage of other ‘smart’ technologies like drones. These bots provide companies with a perfect solution for short distances, delivering a takeout meal or the morning coffee and donut from storefront to your doorstep within a matter of minutes. While this method may be a few steps behind the growing popularity of drones, several startups are working to make sidewalk bots a societal norm.
In reality, this doesn’t mean there were no hiccups during the initial ideation phase of this new system of ‘smart’ deliveries. In May 2017, San Francisco proposed legislation looking to outlaw the usage of autonomous delivery bots stunting the potential to optimize processes. Because of this, the implementation of sidewalk bots for daily usage may face a few hurdles before we experience widespread adoption. In the meantime, we can expect to see cities shift their attention to smaller and less risky technology to help enable the concept of life on-demand in metro areas and revolutionize the supply chain as we know it in 2018.
Welcome to 2018 and Beyond
Over the next year, we’ll reach a turning point as a society and start to see the evolution of the supply chain industry with the introduction of ‘smart’ logistics and delivery technologies. Now, with all of this added convenience in mind, do you think we should incorporate drones and bots into our daily lives?