The Driverless Supply Chain - Can Logistics be Fully Automated within 5 years?

Authored by Charles Edwards

Driverless Supply Chain

The driverless supply chain is coming, it is no longer a question of if, but when.

Autonomous cars are already starting to hit the road with Uber recently introducing a fleet of 100 driverless Volvo SUVs in Pittsburgh, US. Though this implementation will have a driver behind the wheel in case of emergency, the technological leap has been made. Other car companies have made promise to release fully autonomous cars by 2018 (Tesla, Audi), 2019 (VW), 2020 (Toyota, GM) and 2021 (BMW, Ford)[i].

Along with fully autonomous cars, we can expect to see fully autonomous trucks make redundant swathes of logistics workers and slow to adapt companies in the not too distant future. If the mining industry is anything to go by, Rio Tinto saw a 13% reduction in load and haul costs in 2015 with just 69 driverless trucks (a fifth of its Pilbara fleet), these autonomous trucks outperformed their human counterparts by 12% on average[ii] and together with autonomous drilling have delivered an ROI of between 3:1 and 4:1[iii]. The capabilities of motorway truck automation were also displayed in April this year when Volvo, Daimler and Volkswagen trucks completed a week long journey of predominantly autonomous driving across Western Europe to the Netherlands[iv].

There are obvious and significant advantages to autonomous logistics trucks, by eliminating the human driver trucks can drive 24 hours a day at approximately 25% of the cost per hour[v] of a truck with a human driver – who is currently restricted to a maximum of 12 hours work per day in Australia[vi]. That’s double the current daily throughput at half the daily cost. Transport costs will likely reduce further with trucks travelling at optimal fuel efficient cruising speeds and extremely close to each other in a formation called ‘platooning’. With the likes of Tesla also entering the truck market, one can also expect the costs to decrease further once trucks are electric powered and, in some cases, connected to a free power network.

Within a decade driverless taxis, trucks and couriers will dominate our roads (regulations permitting). So what are the implications for supply chain?

Automation in the warehouse is not new, many organisations utilise Automated Guided Vehicles (AGV), Automated Storage and Retrieval Systems (AS/RS), in-line conveyors and other autonomous technologies such as truck loading systems. Amazon is a seasoned champion of autonomous warehousing. But the next big leap will be fully autonomous logistics.

Though it is inevitable, we cannot be certain when and at what rate logistics will be automated. While driverless trucks may be perfect for servicing main routes, complete automation of multi-nodal and expansive supply chain networks is likely to be some time away. The human element will remain in the near-term due to the intricacies and sheer variety of location and product shapes, sizes and handling requirements.

Aside from unknown legislative requirements, there are a number of risks which may prolong fully autonomous logistics. In the short-term it remains unclear whether insurance companies will support the implementation of driverless vehicles, perhaps some premiums will outweigh efficiencies until providers are well and truly satisfied with driverless vehicle track records. Further, the value add of a human driver cannot be ignored in situations where things don’t go to plan. If a tyre blows what will the autonomous vehicle do? Continue to drive unsafely or delay delivery? In such situations a human driver could readily correct the issue in a matter of minutes. This risk will also subside as predictive maintenance and IT integration to organisations such as RACV allow for efficient management of maintenance and unplanned failures. Other risk management issues include the potential for GPS outage and rural areas where mobile networks do not reach.

By the time autonomous cars and trucks are legalised, it will be feasible to automate significant portions of many logistics networks. This includes transportation, loading and unloading, sorting, packing, storing and even stock counting. Drones such as Hardis Group’s EyeSee[vii] can replace the human task of stock counting by flying around isles and scanning barcodes – DHL is currently planning to implement drone counting technology into its stock taking process[viii]. So the question really is; where and to what extent will humans be needed in future logistics operations and will your organisation be ready for that world?


 

Notes:

This article was first published in the SCLAA Newsletter. 

[i] http://www.driverless-future.com/?page_id=384

[ii] http://www.ft.com/cms/s/0/43f7436a-7632-11e5-a95a-27d368e1ddf7.html#axzz4K1CbuPKG

[iii] http://www.itnews.com.au/news/rio-tinto-it-investment-unlocks-cost-productivity-gains-408851

[iv] http://www.cnet.com/au/news/driverless-truck-convoy-platoons-across-europe/

[v] https://techcrunch.com/2016/04/25/the-driverless-truck-is-coming-and-its-going-to-automate-millions-of-jobs/

[vi] https://www.nhvr.gov.au/safety-accreditation-compliance/fatigue-management/work-and-rest-requirements/standard-hours

[vii] http://www.hardis-group.com/en/our-activities/reflex-supply-chain-solutions/eyesee-drone-allowing-automate-inventory-warehouses

[viii] http://dronelife.com/2015/03/16/dronescan-takes-inventory-management-to-new-heights/

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