Of all the technologies explored in MDM’s Disruptive Technologies Special Report, drones and driverless cars are the least close to fruition. The technology is advancing quickly, but many obstacles stand in the way of a practical application for businesses.
This article is part of MDM’s Disruptive Technologies Special Report.
As Winston Churchill once said, “It is always wise to look ahead, but difficult to look farther than you can see.”
In the case of drones, driverless cars and other technologies that used to be better suited for Star Trek than the real world, it’s tough to know how much of a threat or disruption they are to how distributors traditionally approach delivery and other operations.
Most experts say that the technologies are still “farther than you can see.” There’s no fear that drones are going to take over our skies in the near-term. And driverless cars still have a long way to go. But the technology itself is developing quickly.
“The big barrier is not the technology; it is far more the regulation and the legislation that has to be put into place to get people comfortable with the idea of drones making deliveries and taking pictures and unmanned vehicles driving up and down the roads,” says Guy Blissett, specialist leader for wholesale distribution for Deloitte Consulting.
Here’s a closer look at the current and potential uses for these technologies:
Ever since the 60 Minutes television segment featuring Jeff Bezos on Amazon Prime Air, which would deliver goods by drone, the industry has been abuzz with talk of drones. But is the hype warranted?
Logistics giants UPS and FedEx have also expressed interest in testing drones for the final miles of a delivery, although they have been much quieter than Amazon. UPS told The Vergeonline: “The commercial use of drones is an interesting technology, and we’ll continue to evaluate it.”
Research firm Frost & Sullivan estimates the global market for small, unmanned aerial vehicles at $250 million to $300 million, according to BusinessWeek. Much of the focus seems to be on the military and consumer markets; drone manufacturers such as DJI are targeting hobbyist consumer markets with drones that include HD cameras. Movie studios are investing in drones to round out their filming capabilities.
“I’m not sure that it is ever going to be part of distribution,” says Jim Thompson, former CEO of Vallen Corp., which is now part of Sonepar, and principal with NewMGroup, a consulting group.
Thompson, who owns a drone and has tested the technology himself, says that he has safety concerns when looking at drones as a method for delivery. He says drones tend to kick up a lot of dust when they drop down low; they also have exposed fan blades that could hurt someone if they get too close. In his experience, drones also can get caught in updrafts.
Privacy concerns are top of mind for most though. “You now have a high-definition camera that literally looks into people’s homes during deliveries. You can’t help it, it’s going right to the front door,” Thompson says.
According to Thompson, drones could be feasible if used on a line-of-sight basis within a closed, controlled environment, such as within a distribution center or on a job site.
“I think there is an application for that. Everyone’s wearing hardhats and safety glasses. I think that’s what this is all about,” Thompson says.
Blissett agrees. “I could see this being used is from a sort of reconnaissance, survey, photography perspective,” he says.
For example, Blissett says drones could be used at a construction site. A distributor could launch a low-cost drone to fly around the site, through the building and into other less accessible areas to assess how far along the project is and gauge inventory levels. The distributor may also be able to use them to assess what the likely needs will be going forward. “To me, that creates a tremendous amount of opportunity.”
Another application for drones could be in the distribution center. Qimarox, a manufacturer of material handling systems, has been toying with the idea of using drones to build pallet loads.
“Because of the limitations in terms of capacity and ergonomics, using people to stack goods on pallets is no longer an option for most manufacturers of fast-moving consumer goods,” Jaco Hooijer, operational manager of Qimarox, says on the company’s website. “Using drones, they can fully automate the palletizing process, while retaining the much greater level of flexibility and scalability entailed by using real people.”
Qimarox however noted drones’ weight limitations; currently, it says, they can lift products up to 2.3 kilograms, or a little more than 5 pounds. The company says that technology is developing quickly so that weights up to 10 kilograms, or 22 pounds, would be “possible within the foreseeable future.”
While the technology driving driverless and self-driving cars may still be a ways off from widespread adoption, it’s coming faster than you may expect, says Raj Rajkumar, a professor at Carnegie Mellon and co-director of the General Motors-Carnegie Mellon Vehicular Information Technology Collaborative Research Lab.
“The technology is progressing pretty rapidly, maybe faster than what people were anticipating even a couple of years back,” Rajkumar says. “In terms of adoption, it will still take time. The driving process is a very complicated process, one of the most complex activities we undertake as human beings. To reach completely driverless vehicles without any human being in the car, we are probably at least, in terms of adoption, 10 years away.”
Rajkumar cites four challenges that driverless and self-driving cars face: affordability, social acceptance, safety and liability. Affordability will become less of an issue as the technology matures, but remains a significant hurdle for adoption. Social acceptance, or people being “comfortable with the concept of vehicles running around without anybody in them,” is the second hurdle, he says.
From a safety perspective, while the technology is sophisticated, it still isn’t able to handle unknown obstacles as effectively as would be needed for full adoption. Things such as a caved-in road, an accident or severe weather conditions could all throw a loop in the ability of the car to continue its navigation.
“The road conditions need to be right, the lighting conditions need to be right, and the weather conditions need to be right,” Rajkumar says.
Finally, there is liability. “If anything goes wrong, who’s liable? Is it the person who owns the car? The person who deploys the car in a driverless fashion? Or is it the insurance company, or the manufacturer? Agencies like the National Highway Transportation Safety Administration have to create a framework that will in turn basically dictate what can happen; should not happen in driverless cars. Progress needs to happen on all fronts.”
What role can driverless and self-driving cars play in the more immediate future in distribution? According to a Deloitte “Signals for Strategists” report, some companies are using them for less traffic-intensive situations, such as transporting materials around a mining site.
“International mining company Rio Tinto is using a fleet of autonomous hauling trucks developed with Komatsu to improve efficiency and worker safety in its Australian iron mines,” the Deloitte report says. “Earlier this year, its fleet, which can move and navigate with limited human intervention, reached the milestone of moving 100 million tons of material. BHP Billiton, another major mining company, has also announced investments in mine automation.”
Despite this technology being heavily pursued at the moment, distributors should expect its development to be slow.
“The automotive industry seems to be looking at it on an incremental basis,” Rajkumar says. “It’s not the overnight ‘no person in the car,’ but incrementally adding automation capabilities. Cruise control becomes adaptive cruise control, for example.”
When the technology is matured to the point of being feasible for delivery operations, the benefits could include things such as decreased accidents and decreased fuel costs, through the use of convoying or platooning.
“Vehicles driving on the highway could, for example, drive very close to each other – and therefore occupy less space on the highway – and because they travel close to each other, you get the benefits of aerodynamics, and you have to spend less fuel,” Rajkumar says.
Fleet Tracking Technology
Technologies already in place today can help a distributor improve their delivery operations. As technology improves, more advanced fleet tracking and management is available. By better monitoring their fleets, distributors can more effectively manage costs and get a better view of their driver’s habits. Companies like GPS Insight, Teletrac and Fleetmatics offer services that provide a real-time view of vehicles out for delivery.
“All of this can boil down into identifying inefficiencies in a fleet’s performance and being able to create actionable intelligence so management can take corrective action,” says Harold Leitner, vice president of business development for GPS Insight, a software company for vehicle tracking.
GPS Insight provides tracking software that uses real-time data, collected from a distributor’s fleet, to help manage and monitor the efficiency of the distributor’s logistics.
“We found that the distribution clients who truly incorporate location-based data into their day-to-day operations are seeing huge increases in driver productivity – in the time it takes to create routes and dispatch vehicles – all of which affects the bottom line,” he says.
Leitner talks about one company that, through the monitoring of its fleet’s down time, was able to make an extra stop each day, ultimately resulting in an extra $300,000 in revenues each month.
By using fleet management software, distributors can also monitor things such as cycle times, gas consumption, accidents and even “high-G” events, such as a hard braking or high-speed turn.