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  • Drone Delivery

UAVs in Supply Chain: Designing for Today and Tomorrow

By Sid Rupani  August 9, 2017

As part of this year’s SummerCon conference, the LLamasoft Global Impact Team hosted a half-day, interactive workshop to bring together 30 supply chain professionals to discuss the use of unmanned aviation vehicles (UAVs) in today’s supply chain landscape.

LLamasoft built upon its position as a supply chain thought-leader and convener of conversations to bring together customers and partners to discuss the potential of this exciting new technology. Participants represented a mix of global health, retail, consumer goods, 3PL, and consulting organizations.

The workshop was co-facilitated by myself and Brittany Hume-Charm, Head of International Growth for Zipline Inc. Zipline is one of the leading manufacturers in the world of UAVs in supply chains, and the only company globally to currently operate an ongoing regular delivery network using UAVs (delivering blood to 21 hospitals in Rwanda).

Sid Rupani (LLamasoft) and Brittany Hume-Charm (Zipline) present to an engaged workshop audience

The workshop agenda engaged participants in discussion on three key questions about UAVs in Supply Chains

  1. Where are we today?
  2. Where are we going?
  3. What can we do to best prepare and position ourselves?

The session was highly interactive with an open exchange of views. After each content area, a number of live e-poll questions were presented to the group and the distribution of answers was used to spark discussion.

Here are a few key findings from the day’s event.

Where are we today?

After an initial broad overview of existing technology and activity and a special focused session on Zipline’s current work, participants were asked how UAVs compare to existing land transport options in terms of transport cost and given a scale of factors of increased costs ranging from factor of negative one up for a factor of 1000 more expensive. The majority of participants responded that they felt UAVs were currently 5-10 times costlier than land transport.

Brittany Hume-Charm (Zipline) explains the finer details of Zipline’s UAV delivery system technology

Participants correctly pointed to a) payload limits, b) small-scale manufacturing, c) potential maintenance as the factors driving up UAV transportation costs. However, they also pointed out that UAVs could have some cost advantages over land transport in terms of fuel and labor.

In fact, participants were very correct in pointing to the issues and the potential spread of costs. As shown in the figure below, from its project work LLamasoft has found that UAVs can range from cost-competitive with land transport to 100x more expensive than land-transport depending on the type of UAV and they type of land transport being compared.

This emphasizes the need to stay away from blanket statements like “UAVs are too expensive” or “UAVs are as cheap and land-transport” and to analyze particular use cases in detail. We need to ask – what UAV-type is being considered, what volumes will be transported, over what distance, and what is the realistic potential alternative in terms of land transport? There are also important effects on non-direct costs in the supply chain (e.g. inventory holding cost) that will be impacted by the transport mode and delivery frequency selected. Another important point was that the technology is evolving rapidly, with costs and capabilities improving from year to year.

One ting is certain – each use case presents an interesting supply chain design problem!

Participants were then asked to focus on supply chain performance measures besides cost including speed, availability, control, accessibility and non-direct supply chain costs, such as inventory holding.

There was a relatively even-spread of responses, with Accessibility (opening up hard-to-reach areas) being the most popular response and Speed and Availability also receiving multiple responses. Participants insightfully also pointed out that each of these supply chain performance measures was closely linked with cost.

Where are we going?

The discussion then turned to the future and participants shared their perspective on how many years were likely to pass until the use of UAV delivery achieves mass adoption in supply chains. With a scale of next year to more than ten years, the vast majority of respondents felt that mass adoption was a mere 3-5 years away, with some respondents expressing a sense of urgency. One respondent from the public health industry noted that, “The need is so high, we can’t wait anymore.”

While demonstrating an explicit need, participants also underlined that there are a range of hurdles to mass adoption including public acceptance, technical ability and supply chain value-add with the latter receiving the largest amount of feedback. However, there was a bit of skepticism in the group of what “mass adoption” would really entail, as there may be certain industries more apt to adopt this emerging technology, barriers must be overcome for it to be a more user-friendly option.

What can we do to best prepare and position ourselves?

After establishing where the technology stands today and what obstacles could restrict adoption, the group moved on to considering how organizations could best position themselves to take advantage of UAVs in their supply chains. What should they be doing now?

From the discussion of participants at our SummerCon workshop, the public health industry quickly emerged as being ahead of the commercial sector in actively planning for the use of UAVs in supply chains. This experimentation had been driven by the perception of potentially great value. Increasing accessibility, availability, and speed of delivering life-saving medicines in resource-poor countries is a powerful driver! As such, the public health participants had undertaken studies and were already actively engaging in some pilot experiments.

Private sector participants had not yet started as they saw the risk as too high and the investment to experiment as too large.

We pointed to the use of modeling and simulation as virtual pilots that could greatly reduce the cost and risk and provide valuable information about the potential benefits of UAVs in commercial supply chains. Some retail and consumer goods participants were in strong agreement and indicated they would be making the case within their organizations.

Participants had rich discussions (by industry – pictured here, Public Health and 3PLs) on how best to prepare and position themselves to take advantage of UAVs in their supply chains

One goal of the workshop was to link participants to a thriving community of practice to continue the discussion as this technology develops and unfolds. Rachel Powers from our partner, VillageReach presented the UAV for Payload Delivery Working Group (UPDWG) and invited all participants to sign up.

If you’re interested in continuing this conversation, learning more, and staying connected please join the UPDWG working group by emailing globalimpact@llamasoft.com.