Impact of Autonomous Vehicles in Your Supply Chain

September 14, 2018
10:33 am

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?

Final Mile Delivery
and Distribution Center Implications


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.

Long Distance
Travel and No Drivers

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.

Does your
organization need guidance in developing strategies to plan for this
revolution?

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September 14, 2018
10:33 am
Insight
Change Management
Strategic Planning and Facilitation
Continuous Improvement
Financial Impact
Customer Impact
Organizational Impact
Impact
Global
High-Tech / Digital
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