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November 18, 2017
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Drones in the supply chain: more than just last-mile delivery

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Amazon and Google's efforts to use drones to deliver small packages may get all the press, but the case for using drones is actually stronger further upstream in the supply chain, says one expert.

Google and Amazon may grab all the headlines with their pilot projects for unmanned aerial vehicles, also known as drones, to deliver small parcels (or even burritos) directly into the hands of consumers. But the more interesting story—and the stronger business case—actually exists further up the supply chain, argues Bob Barr, managing director of Accenture Interactive, a division of the consulting firm Accenture that focuses on digital business.

Because there are so many restrictions on how and where drones can be operated, companies that are considering using them should think about applications within their own supply chains before they think about delivering to customers, Barr recommended during a recent interview. "Begin by staying within your own air space, and by that I mean inside your warehouse or manufacturing property or yard," he said. "Then, at least, the only regulations that you may be subject to are how high the drone can fly."

From raw material to final delivery

Barr believes that the first place drones can be used is where the supply chain starts: with raw materials. Drones are increasingly being employed for mining operations such as prospecting, or in the case of farming, for crop spraying and mapping soil conditions and crop yields, he said.

Further down the supply chain, they can be used at manufacturing and warehousing facilities for security and safety. For example, drones equipped with cameras can "walk the perimeter" of a facility or to perform safety inspections. Using drones as a way to make employees' jobs safer and more secure is a good way to gain initial buy-in among workers for the technology, Barr suggested.

Drones also have potential uses in maintenance and repair, especially in large manufacturing plants or distribution centers. For example, facilities using drones could send one 50 feet in the air to inspect a potential roof leak at a warehouse. Or repair technicians may no longer have to walk back to a supply cage, which may be a quarter of a mile away, to retrieve a tool or bolt. Instead, they could simply call the cage and have a drone fly the item to them, reducing travel time and nonvalue-added work. Barr even anticipates that some day a drone, probably operated remotely by a worker with a joystick, might be able to perform simple repairs.

But perhaps one of the most fertile areas for innovation is inside the warehouse. Drones could be used to move small items around the warehouse in a faster, simpler, and more flexible way than conveyors, belts, or forklift trucks, Barr said. They could also be used for putaway and picking on high shelves. Finally, drones equipped with sensors could scan bar codes and RFID chips for the purpose of taking physical inventory. The retailing giant Wal-Mart, for one, is currently testing drones for these sorts of tasks and plans to have them in use in their distribution centers in four to seven months.

Barr expects to see a noticeable presence for drones inside the distribution center and manufacturing plant within the next five years. In the beginning, he predicts, they'll be used by large companies that have manufacturing or warehousing facilities that are several acres in size and/or have very high ceilings, particularly for transporting lightweight products weighing 5 to 10 pounds (and possibly up to 20 pounds.)

In those types of applications, Barr said, drones could provide several economic benefits: cost savings because fewer conveyors or lift trucks will be needed; faster turn times as items are transported and jobs are performed more quickly; and some reduction in headcount. However, he is quick to point out that drones will not eliminate the need for skilled workers. "It may be that the operator is now trained to sit at a joystick instead of at the tool itself," he speculated. "You have to be mindful that behind the drone there is an operator."

Susan Lacefield is Senior Editor of CSCMP’s Supply Chain Quarterly.

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