In this article we discuss the impending role of autonomous vehicles in the intelligent supply chain—and how they could benefit enterprises.
Self driving trucks and ‘platooning’ have featured a lot in the news lately, drawing a heavy amount of skepticism, criticism and concern from the public. While few doubt that the future will bring autonomous fleet vehicles to our roads, the majority don’t expect it to happen any time soon. Most people expect regulatory and safety issues to take some years to resolve, despite the fact that government feasibility studies are already well underway.
The ‘Amazon effect’—the increase in point-to-point movements of products and people—is considered by industry leaders as the primary reason to move towards autonomous vehicles (AVs) in supply chains, although there are many benefits of driverless technology.
Autonomous vehicles in the supply chain: the future is already here
There are plenty of opportunities to improve productivity and reduce costs by adding autonomous vehicles to your supply chain ecosystem. While we aren’t seeing them on the open road (yet), autonomous trucks are already in operation at airports, seaports and container bases. Autonomous forklifts and robotic arms are also being widely used in modern warehouses to act as flexible ‘conveyor belts’.
As regulations change to allow wider use, we could soon see rapid transformation of the role that organisations play in the supply chain, as Original Equipment Manufacturers (OEMs), manufacturers, suppliers and service providers all embrace new opportunities for improving their contribution to the end user and the supply chain ecosystem itself.
For example, OEMs could improve the reliability of delivery schedules by mapping and intelligent tracking to avoid traffic bottlenecks before delays occur. The Internet of Things (IoT) can improve efficiency by tracking individual components from manufacture, to container, to road haulage, and to multi-drop local delivery. It doesn’t require much imagination to understand the benefits of these developments.
The benefits of autonomous vehicles
There is an obvious payback in terms of reduced fuel cost and environmental impact—but there is also a less obvious payback in terms of value-added ‘as a service’ offerings that transfer knowledge as well as products between the organisations in the supply chain.
Supply chain insights
The biggest early disruptors could well be the organisations that can already manage entire supply chains from raw materials through to repair and recycling. The advanced sensors and AI built into AVs could be used to provide datasets and insight into previously opaque areas of the supply chain ecosystem. This could provide currently unimagined opportunities for improvement.
The ability to manage the availability of scarce and valuable resources—whether at the point of extraction from the soil, in transit to a just-in-time manufacturing facility, or being recovered from end of life devices—can drive productivity gains, cost reductions, time savings and a myriad of other improvements for planning and resourcing. AVs could enable improvements in just-in-time manufacturing by sharing better data about the location and availability of everything from raw materials to finished components.
For example, heavy metals in circuitry and batteries in phones, laptops and other devices are subject to ever increasing demand. Planning for future production needs to take into account all of the potential sources of those materials, from raw state, right through to the eventual recycling, reclamation and reintroduction to the supply chain. AVs will be able to provide unprecedented insight into where those valuable resources are, and the exact time they will be available for use.
New entrants to the supply chain
As if supply chain ecosystems weren’t complex enough already, the addition of AVs will bring in more participants in the form of technology suppliers, for hardware, software and services.
The barrier to entry for these suppliers is going to be a lot lower than for traditional entrants to the supply chain market, which will mean more suppliers and more rapid innovation. The last few years have seen a rush of investment into businesses that are supporting the development of AVs.
At the OEM end of the spectrum, some well established technology companies like Nvidia have experienced meteoric growth in their stock market value since they embraced AVs. They now power virtually all the major AV manufacturers from high end consumer brands like Tesla, BMW and Volvo, to new low cost entrants from China (supported by the Apollo project from Chinese internet search giant Baidu).
In the commercial vehicle sector, NVidia’s collaboration with Paccar has already driven growth for the Truck maker. A recent earnings announcementstated that “PACCAR’s investments include autonomous driving and truck platooning, truck connectivity, augmented reality (AR), and an integrated software platform.”
Even businesses that are traditionally part of the automotive supply chain themselves are moving to take advantage of the AV opportunity. Bosch, Continental, Magna and Delphi are all investing heavily in autonomous R&D.
Despite the seemingly enormous investment required, new entrants to the sector are not restricted to massive corporations. Innovative high growth startups are also entering the market—for example, Oxford’s StreetDrone, who are providing the software, hardware and services for universities and business R&D teams to develop their own AVs.
What this means for the existing supply chain industry is a need for new relationships to be forged and maintained. Competitive pressure is almost certainly going to force some of the existing players out of the picture. The added complexity creates opportunities for service providers to play a part by making AVs more accessible. Could we soon see Autonomy-as-a-Service?
This leads us to consider the questions of just how supply chain will transform to take advantage of AVs, in order to improve the competitiveness of their organisations.
How will supply chains embrance the digital transformation of autonomous vehicles?
At its core, the use of AVs is a digital transformation. While the challenges of digital transformation are nothing new to supply chain, the rate of digital adoption is increasing exponentially, and the cost of inaction is becoming ever more threatening to late adopters. Organisations that are rushing to adopt technologies as ‘magic bullets’ risk wasting significant resources on applications that don’t realise their promised benefits. Worse still, the costs of implementing the wrong technology, or implementing it in the wrong way, can reduce productivity and competitiveness.
Bill Gates famously said:
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
So before implementing AVs in your supply chain, you should invest time and effort in thorough strategising and planning. Which leads us to another question:
How will organisations find and develop the talented people required?
Skills shortages, and increasing demand for AV technologists by the industry’s leading players, means that building the teams needed to implement this digital transformation is a challenge. As the technology is new (and rapidly evolving), the skill sets required may not even exist yet. It is becoming more and more important for organisations to share expertise, grow their own talent pools and invest in the development of their own people, as well as offer in-depth training and support for new employees.
How will innovation be supported by the people using the technology?
Successful supply chain business, by their very nature, have to be process driven. But this often comes at the expense of innovation, creativity and personal development. We believe (and can prove) that enabling your people to take ownership of the challenges they need to overcome can open up the potential of your organisation to innovate, while remaining process driven.
How will cost competitiveness and ROI be measured?
We believe that supply chain is one of the sectors most able to take advantage of the benefits of Autonomous Vehicles. But it is also at risk of getting it catastrophically wrong, if the industry’s focus is only on efficiency and cost savings, rather than on looking at what can be done with the data generated through the use of AVs.
AVs have the potential to drive down costs and improve ROI right across the supply chain from raw materials to recycling.
Ultimately, there must be a demonstrable improvement in a business’ cost competitiveness, and a clear return on the investment made. As outlined above, AVs have the potential to drive down costs and improve ROI right across the supply chain from raw materials to recycling, so you need to plan how to measure those benefits in areas not directly in contact with the AV itself. These could be related to improved planning and decision making at board level, or to the reduction of maintenance costs on the ground.
Increase the ROI from your supply chain with this approach.
Unipart’s view on autonomous vehicles in the supply chain
It is the sheer volume of previously unavailable or inaccessible data (brought about through the use of AVs) which will be most disruptive for the supply chain industry.
Tim Cook, CEO of Apple (and one of Unipart’s supply chain partners) recently spoke on Bloomberg News about Autonomous Vehicle Systems:
It’s a core technology that we view as very important.” He likened the effort to “the mother of all AI projects,” saying it’s “probably one of the most difficult AI projects to work on.
While the technologists grapple with creating the AVs of the future, the challenge is already on for Supply Chain to work out how to best make use of them.
Adding AVs to your intelligent supply chain requires simultaneous efforts to embrace digital technology, develop talented people, drive continuous improvement and innovation, and track the ROI and cost competitiveness across the supply chain ecosystem.