United StatesChange Country

FX International Payments

The Impact of Drones on Supply Chain Management

By Megan Doyle

In 2016, the White House estimated that drones and other UAVs – unmanned aerial vehicles – could result in up to $82 billion worth of economic growth and generate 100,000 jobs by 2025.1 Lately, supply chain management solutions such as using drones for parcel delivery are getting major attention as companies make strides to test and improve the technology. But as of Spring 2018, the combination of a complex regulatory environment and complicated technology continues to delay widespread adoption.

While drone delivery isn't out of the question, some experts say the case for using drones earlier in the supply chain may be stronger.2 A variety of other supply chain management drone applications are being implemented already.

 

Drone Applications in Supply Chain Management

 

Organizations are beginning to adopt drones in the first phase of supply chain management: obtaining raw materials. Drones are also used in mining, prospecting, and land surveying applications.3 In farming and agriculture, UAVs are used to inspect plant health, photo-log plant growth, and map crop yields.4 Drones are also testing soil to help optimize water content and fertilizer usage, with the intent of improving crop yields.

 

Drone use in manufacturing, warehousing, and distribution facilities is expected to rise in the next five years, aiding the work-in-process inventory stage of supply chain management.5 UAVs promise to enhance safety and security as well as promote overall efficiency. For example, drones with cameras can "walk the perimeter" of facilities, seeing areas an ordinary security camera might not reach.6 Inside of facilities, drones can perform safety inspections, perform maintenance and repair functions like fixing a leaky roof, or fly across a campus to retrieve a forgotten tool – all of which could potentially reduce work hours.7

 

In warehousing, developers at the Massachusetts Institute of Technology say UAVs are the best new way of tracking inventory anonymously.8 Using RFID, QR-codes, and IoT, drones can take physical inventory. Walmart Stores, for example, is currently testing drones for that purpose.9 Drones can move small items quickly, reducing the need for forklifts or possibly replacing the conveyor systems often used to transport boxes around distribution centers.10 Outside of the warehouse, drones may also be used for supply chain deliveries. For example, UAVs could ship inventory between production facilities and distribution centers, potentially expediting order fulfillment.11

 

Supply Chain's Last Mile: Drone Possibilities …

 

The last mile to the customer is often the most expensive and inefficient aspect of supply chain management, but drones' potential to speed up deliveries and reduce costs has some believing they will change the way the world delivers goods. And although the technology is still developing, it's easy to use and is becoming readily available. According to Roger Sollenberger of 3D Robotics, a commercial drone company, some drone-flying software is open source and "it's gotten incredibly easy to fly" – meaning anyone can create flight paths.12

 

Shipping firms like FedEx and UPS can use drones to monitor traffic and optimize drivers' routes based on real time data, taking some hassle out of the end-stages of the supply chain.13 But imagine placing an order online and a drone delivering it to your front door within 30 minutes. Logistics companies like DHL and organizations like Amazon and Google are developing and experimenting with drones to do just that, especially for lightweight consumer goods.14

 

But drone delivery might not be only for small packages. Boeing, for instance, recently developed a UAV to carry up to 500 pounds of cargo. The multinational aircraft company aims to build its own large-scale cargo platform and ultimately "deliver solutions that will help shape the future of autonomous flight."15

 

... And Obstacles

 

Depending on how quickly regulatory agencies allow the technology to advance, as many as 1.6 million drones may be in skies by 2021.16 Hurdles like privacy and security, safety risks, and risk of interference with other private, military, and commercial aircraft are currently preventing this futuristic supply chain management solution from becoming a widespread commercial reality.17,18 Other concerns include susceptibility to hacking or theft, invasion of privacy, and collision liability, with potentially high insurance costs.19,20

 

Some technology limitations also remain to be addressed. Battery life is limited, which constrains operational range.21 Most successful drone deliveries so far have been in rural areas, but approximately 80 percent of Americans live in urban areas, where unmanned drones are more challenged to maneuver.22 Another concern is weather – will drones be able to operate in high winds or rain while keeping packages safe?23 If UAVs can only deliver in certain weather conditions, their impact on the last-mile of supply chain management may be limited.

 

The

Takeaway:

Despite the rapid pace at which drone technology is progressing, privacy and security concerns continue to delay widespread adoption. In the meantime, drones are being employed at earlier stages of global supply chain management systems.

Megan Doyle - The Author

The Author

Megan Doyle

Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.

Sources

1. “FAA: Drones will fill the skies in 2021,” Supply Chain DIVE; https://www.supplychaindive.com/news/FAA-commercial-drone-use-delivery-logistics/438710/
2. “Drones in the supply chain: more than just last-mile delivery,” Supply Chain Quarterly; http://www.supplychainquarterly.com/news/20160912-drones-in-the-supply-chain-more-than-just-last-mile-delivery-/
3. Ibid.
4. “Using Drones To Improve Manufacturing And Supply Chain Capabilities,” Forbes; https://www.forbes.com/sites/stevebanker/2016/09/06/using-drones-to-improve-manufacturing-and-supply-chain-capabilities/#23190a0d5b01
5. “Drones in the supply chain: more than just last-mile delivery,” Supply Chain Quarterly; http://www.supplychainquarterly.com/news/20160912-drones-in-the-supply-chain-more-than-just-last-mile-delivery-/
6. Ibid.
7. Ibid.
8. “MIT tech enables drones to track warehouse inventory via RFID,” Supply Chain DIVE; https://www.supplychaindive.com/news/drones-warehouse-management-RFID-MIT/503627/
9. “Drones in the supply chain: more than just last-mile delivery,” Supply Chain Quarterly; http://www.supplychainquarterly.com/news/20160912-drones-in-the-supply-chain-more-than-just-last-mile-delivery-/
10. Ibid.
11. “The Drone Delivery Report: Opportunities and challenges in automating logistics with drones,” Business Insider; http://www.businessinsider.com/the-drone-delivery-report-opportunities-and-challenges-in-automating-logistics-with-drones-2017-5
12. “Drone Delivery is About to Revolutionize the Supply Chain Industry,” RedStag Fulfillment; https://redstagfulfillment.com/drone-delivery-is-about-to-revolutionize-the-supply-chain-industry/
13. “Drones – A “Buzz” Kill to Supply Chain Optimization?,” Fronetics; https://www.fronetics.com/drones-buzz-kill-supply-chain-optimization/
14. “Drone Delivery is About to Revolutionize the Supply Chain Industry,” RedStag Fulfillment; https://redstagfulfillment.com/drone-delivery-is-about-to-revolutionize-the-supply-chain-industry/
15. “Boeing Unveils New Unmanned Cargo Air Vehicle Prototype,” Boeing; http://boeing.mediaroom.com/2018-01-10-Boeing-Unveils-New-Unmanned-Cargo-Air-Vehicle-Prototype
16. “FAA: Drones will fill the skies in 2021,” Supply Chain DIVE; https://www.supplychaindive.com/news/FAA-commercial-drone-use-delivery-logistics/438710/
17. “FAA: Drones will fill the skies in 2021,” Supply Chain DIVE; https://www.supplychaindive.com/news/FAA-commercial-drone-use-delivery-logistics/438710/
18. “Drones in Distribution: Thinking Inside the Box,” Logistics Bureau; http://www.logisticsbureau.com/drones-in-distribution-thinking-inside-the-box/
19. “Drones – A “Buzz” Kill to Supply Chain Optimization?,” Fronetics; https://www.fronetics.com/drones-buzz-kill-supply-chain-optimization/
20. “5 Problems With Using Supply Drones,” Innovation Enterprise; https://channels.theinnovationenterprise.com/articles/105-5-problems-with-using-supply-drones
21. “Drones – A “Buzz” Kill to Supply Chain Optimization?,” Fronetics; https://www.fronetics.com/drones-buzz-kill-supply-chain-optimization/
22. “5 Problems With Using Supply Drones,” Innovation Enterprise; https://channels.theinnovationenterprise.com/articles/105-5-problems-with-using-supply-drones
23. Ibid.

Related Articles

What is Supply Chain Management Today?
Getting to Know Your Supply Chain
Clearing the Confusion About Supply Chain Finance

Make International Payments

Existing FX International Payments customers log in here