Companies of all shapes and sizes are entering the autonomous vehicle market, from small startup companies to large tech companies such as Alphabet (Google’s parent company) to major automobile manufacturers such as General Motors. It has been well documented that self-driving vehicles will have an immense impact on individual consumer travel, but it will also greatly impact logistics and supply chain management as well. Why will supply chains be impacted?
Bâton Global has proven experience in guiding clients through decision making surrounding innovative initiatives that will profoundly impact the organization. Autonomous vehicle technology has the ability to greatly impact supply chains through cost savings, reductions in transport time, safety, etc. What are specific ways that this novel technology will impact supply chains?
A challenge to suppliers and distributors alike, the final mile of delivery is typically a bottleneck in the delivery process, as delays frequently occur even with the close proximity of the product to the end consumer. Companies are currently experimenting with autonomous vehicles that could deliver goods to the end consumer without the presence of a driver within the vehicle. One example of how this may work comes from Starsky Robotics, where they are experimenting in having a remote driver control the vehicle until it reaches the highway from a distribution center, and then during its final leg of the trip another remote driver would take control of the autonomous vehicle once it leaves the highway.
Autonomous vehicles not only could impact logistics by reducing costs and delays, it may also greatly impact distribution and production centers. A common practice has been to build distribution centers on cheaper land where highways and human resources were easily accessible. With a shift in consumer requirements that now call for speedier delivery times, these large centers will need to be closer to the end consumer. Distribution centers will also become smaller, as companies will want to be located close to multiple cities instead of distributing from one central location. It has been estimated that rent costs will increase, which will most likely be offset by reducing costs in implementing autonomous transportation during the final mile of delivery.
In implementing autonomous vehicle technology, it is most likely that long distance travel will see this type of technology soonest. Travel on highways is more predictable than in urban settings, requiring less need for human skill to navigate between destinations. Currently, a large stem of transportation costs arises from the need to employee drivers to navigate goods in semi trucks and other vehicles.
Implementing autonomous vehicle technology during long distance travel will greatly reduce costs. Companies experimenting with this technology still see the need for a driver to be present, but vehicles would be self guided and would require far less skill to navigate. Companies have also looked into “platooning,” which would allow a group of trucks to travel together over long distances. The first or “lead” truck would set a speed and direction, and trucks following the lead truck would follow autonomously. These trucks would then go in separate directions when they are on the last leg of the delivery. Platooning not only reduces labor costs, but it would also reduce fuel costs, as the trucks would be in a more singular slipstream.
Implications of autonomous vehicles are far-reaching. Freight volume will increase over time, as drives won’t need to take as many breaks and products will be delivered more efficiently. As more autonomous vehicles are on the road, congestion will also be reduced due to reduction in driver errors and increases in efficiencies. It is clear that autonomous vehicles will impact supply chain management as a whole.