Drones, driverless trucks and robots are commonly discussed in the logistics sector as game-changing factors, but are these concepts largely hype? LMH finds out.
When Amazon made its first-ever public Prime Air drone delivery in the US last year, people in the logistics sector started to consider and ask questions around whether this would be something that the industry would adopt in the near future.
Many of the tech giants, including Google, Apple, Microsoft and Uber, are investing in and testing drones, but is there really a place for drones in large-scale distribution?
The Amazon test that took place in 2017, saw a drone drop off some bottles of sunscreen for attendees at the company’s conference in California. While this grabbed the headlines globally, is this practical in terms of commercial and large-scale delivery?
According to Andrew Clark, Managing Director at Logistics Help, a lot of the technology that is gripping the media is a long way of from actual practical implementation. “Some of this technology is looking further and further into the future, this all may be coming, it’s definitely not in the near future.”
Andrew points out that, according to current Australian legislation, drones deliveries are prohibited in cities due to the 30 metre no fly radius from people. He then asks, whether we even want a world where there are thousands of drones flying around and delivering packages all the time?
While some do argue that these disruptive technologies will shape the future of logistics, Andrew refers to the Gartner Hype Cycle, to try to understand the implications of these advancements in technology.
The Gartner Hype Cycle was established to provide a graphic representation of the maturity and adoption of technologies and applications, and how they are potentially relevant to solving real business problems and exploring opportunities.
The methodology aims to give a view of how a new technology or application will evolve over time, providing a sound source of insight to manage its deployment within the context of specific business goals.
The hype cycle is broken down into five phases of a technology’s life cycle. According to Gartner, first there is the innovation trigger, this is the technology which kicks things off. There will be early proof-of-concept stories and media interest that trigger publicity, but often no usable products exist and commercial viability is unproven.
Next in the cycle is the peak of inflated expectations. At this stage, there are a number of success stories, much like Amazon’s sunscreen delivery. Here some companies start to take action and invest in the technology.
After this, Gartner describes what happens as a trough of disillusionment. The interest has faded as experiments and practical implementations fail to deliver. Producers of the technology fail and investments continue only if the surviving providers improve their products to the satisfaction of early adopters.
Andrew offers the example of Rethink Robotics, a robotics company that launched in 2008 and closed in October this year. Rethink Robotics was a US-based company that pioneered the development of cobots – collaborative robots designed to work alongside humans.
“This concept was all over the news, it was impressive technology but we are at least five and probably ten of more years away from a robot that replaces a storeman or a worker. The Rethink Robotics just weren’t a product that people needed to buy,” Andrew says.
The final stage in the Gartner Hype Cycle is the plateau of productivity. This is when mainstream adoption starts to take off. Criteria for assessing viability is more clearly defined and the technology’s application and relevance starts to pay off.
For Andrew, some of the technologies that are currently in the early stages of the hype cycle are a long way from reality, especially for the small to medium enterprise market. “If a lot of these technologies get used at all, they will be largely for the big companies to live with the costs. At the moment, there is marginal or zero return on investment.”
Using drones as an example, Andrew says that if they do have a place in logistics it is most likely for remote deliveries. “With drones, there are issues around risk, loss of asset, damaged asset etc. If you were going to lose say 10 per cent of your drone fleet a year, you might just decide to put the parcel in a truck and drive it.”
Back to basics
Andrew argues that many businesses are yet to take advantage of technology that is already widely available. Warehouse Management Systems, for instance, have been on the market and transforming logistics operations for nearly 30 years. But according to Andrew, most are smaller and medium sized businesses are yet to take advantage of the technology.
“It’s all well and good talking about drones, robotics, Industry 4.0, but in many warehouses the most advanced technology used to assist order picking ia a piece of paper.”
Part of the slow deployment of technology is down to the perception of cost, but Andrew says the cost of logistics software and technology has fallen significantly over the last few years and it’s not more affordable than ever.
“The small businesses have the same problems as the big businesses. A small e-commerce business needs a very sophisticated warehouse system to run it. They can have 1000’s of orders a day, that are being processed entirely on a paper-based system. This could take 20-30 people to process, but with the right systems they could do it with half that number,” Andrew says.
As businesses start to scale up and grow, if they cannot fulfil orders accurately and on time, they won’t survive, he says. “There are two main problems that SMEs face with regards to logistics. They struggle to manage their inventory well and their warehouses are run with old and inefficient practices and little or no technology support.”
Sophisticated inventory planning is key in the e-commerce world. “You can easily have several million dollars of inventory and not be a big business. But if you are not buying and selling correctly you will over buy things that don’t sell and under buy things that do. Businesses end up losing sales because they can’t keep up with demand and have to discount, or discard underperforming stock,” Andrew says.
Many of the big corporations are doing all of the right things with regard to warehouse management, but Andrew believes that it’s the SMEs that are getting left behind. “When they start looking to improve their logistics operations they are often struggling to find the skills and knowledge needed to implement these systems.”
Andrew believes that SMEs should have access to the same advanced logistics practice and technology that are common practice in the corporate world, but the SMEs may be unaware of the many benefits they could realise. “SMEs would be far better off implementing better inventory management and warehouse management systems, before investing in over-hyped technology such as drones and robotics.”