The twenty-first century has seen a surge in innovation and the use of new technology in company operations. More particularly, developments in computing, information technology, and robots have aided in the advancement of corporate activities. The logistics industry has not been left behind in these advances; nowadays, a myriad of innovations are being used to handle developing difficulties in a more dynamic global environment. Yet, while some technologies may be generally beneficial, they have had a substantial impact on the status quo in terms of the need to reinvest, re-invent, and re-design activities (Christopher, 2016). This paper delves on the influence of one specific technology –drones – on supply chain management. It specifically adopts a case study approach using a DHL Express Oman. The benefits and challenges of drones are explored in detail and recommendations offered on the future of the company with regard to the disruptive technology.
Summary of Case Study and Available Technologies
DHL Express Oman is a branch of the world’s leading express and logistics company (Coltman, et al., 2010). It is a company that has been depending on trucks and motorcycle couriers to deliver their services to consumers around the globe. The current transport system takes time to deliver services and some deliveries are not possible in inaccessible areas. The service also is costly because of the large numbers of drivers required to drive the company’s trucks. There are suggestions to curb such problems thus improving the company’s supply-chain management operations using emerging technologies such as cloud computing, digital supply chains, big data analytic and the internet of things, advanced robotics and drones / self-guided vehicles (Bernon, 2017). The company has already implemented a larger part of computer and data related technologies but is facing a huge decision in initiating the use of drone-technology (Coltman, et al., 2010). In this regard, the main arguments presented in this paper serve to advance the arguments for and against drones within the company’s context.
Critical Analysis
Drones or Unmanned Aerial Systems/ vehicles (UAS) (UAV), are devices that have the capability to move on their own accord, using computer assisted or remote human controllers (Welch, 2015, p. 2). They present myriad benefits to the company. To begin with, a drone has the ability to reach inaccessible destinations such as remote areas, and locations without good road networks (Mukhopadhyay & Su, 2011, p. 257). Therefore, drones will promote the delivery of packages to inaccessible areas. Drones unlike trucks and motorcycles, fly in a straight line to their destinations. They also do not navigate curvy roads, which may be congested with traffic, therefore, promoting fast delivery. The company will increase its operations through promoting quality service delivery of goods and parcels to the users in the downstream of the supply chain. According to the table below, both drones and trucks exhibit complementary delivery features. However, the only distinguishing feature that makes drones superior over the trucks is their high speed making them reliable for short distance deliveries (Marris, 2013, p. 157). Moreover, the time value will increase exponentially. The time dimensions are also affected positively where the lead-time variance decreases leading to an inventory boom. The delivery frequencies also increase due to the high speed of drones (Dupont*, et al., 2013, p. 168). Responsiveness is also enhanced because of the improved technology where all the drone activities are monitored by satellites. In this regard, they will reduce delivery time and shorten the supply chain of DHL Express Oman hence giving the company a vital competitive edge over its competitors.
Table 1: Complementary features of Drones and trucks exhibit
truck
drone
speed
low
high
weight
heavy
light
range
long
short
Secondly, with the increasing concern about environmental pollution, there has been the increasing need for companies to adopt technological advancements that prevent environmental pollution. DHL Express Oman uses vehicles in its supply operations that emit carbon (IV) oxide gas that has been found to deplete the ozone layer leading to global warming. By adopting the drone technology -that is more environmentally friendly due to the use of rechargable cells- the company will comply with the internal environmental policies that aim to protect the environment (Lowman & Voirin, 2016, p. 231). The technology will save the company from incurring penalties that may be attributed to environmental laws hence saving costs upstream. The use of UAVs will also promote the image of the company attracting a larger consumer base.
Drone technology has also been equipped to handle inventory control. For companies such as DHL, inventories must be carried out in the warehouse. For the operation to take place, the company requires the mobilisation of materials and the input of human resources. The operation also involves the stoppage of the company’s logistical activities, which have detrimental impacts on the company’s business. From a case study of drone use in Amazon Prime Air, drones that have been developed to handle inventory control are equipped with onboard RFID systems that read tags in large warehouses. The system detects any missing pallet in the warehouse, therefore, saving the company billions lost through faulty inventory records (Dupont*, et al., 2013, p. 170). The radio frequency identification burst (RFID) system translates the captured image into a logistic address that can be comprehended by the supply chain management. The use of drones can be useful in DHL Express Oman since they can improve the warehouse productivity by reducing materials and human resource required to carry out inventories. The most interesting part of the information collected by the drones is the ability to be used by any warehouse management software in the market (Welch, 2015, p. 10). The drones can be used to locate goods in the warehouse and allow regular checking of the goods. This helps logisticians to identify and correct storage errors throughout the year. In this regard, UAVs can improve the overall quality of services provided to their customers on the downstream and promote proper warehouse management in the upstream. Oman as a country vested under the United Nations sustainable development goals and it has an obligation to ensure its enhancement technologically; therefore, companies in the country are required to work towards achieving the goal (Coltman, et al., 2010, p. 1). By venturing in the new technology, DHL Express Oman will be ensuring the country meets its ICT goals.
Under the positioning of drone deliveries in place of trucks, the supply chain management several intern and external relationships (Christopher, 2004). It creates transactional relationship with drones manufacturing companies and cut ties with the insurance companies that were covering for the human resource (Kersten, et al., 2015, p. 132). However, new ties are created with the insurance companies that deal with the operation of drones. Partnership relationships are also created when DHL Express Oman decide to create ties with ICT firms and other consultancy agencies to smoothen the operations of drones across the country (Dupont*, et al., 2013, p. 168). The ICT firm will repair soft wares and provide recommendations in cases of advancements to ensure that the delivery operations are always consistent. A Collaborative relationship may occur when DHL Express Oman decides to partner with bank institutions that provide financial assistance when purchasing drones and during installation of computer systems that will run the drones (Bernon, 2017).
Finally, the application of automation technology in the supply chain management of the company increases the cash-to-cash cycle time. This is attributed to the fact that drones being faster than trucks will make frequent deliveries to customer (Welch, 2015, p. 8). With a good technological operation on drones, the company will be able to make frequent deliveries simply because transportation factors such as traffic jams are not encountered during deliveries. The concept of drones also means that the door-to-door service delivery is enhanced
On the other hand, drones will present some significant disruptive features at both individual and organisational level. Additionally, the use of automated drones will shift the attention of the supply chain management processes from investing in human resources to technological advancement (Bernon, 2017). When the method of parcel delivery to short distance is automated, UAVs will also improve the company’s income by increasing the company’s efficiency. Additionally, drones fly over to the destined locations unlike trucks, which can be caught by traffic and improve the company’s accountability by taking accurate inventory check in the warehouse eliminating errors that could be made by human resource (Kersten, et al., 2015, p. 140). In this regard, drones could replace human beings in functions that have been conventionally assigned to them. The costs may be severe, given the size of the company’s operations and the number of employees employed.
Furthermore, the application of drone technologies will have an immense impact in terms of the capital costs of the company. To begin with, drones will replace some motor vehicles on the road which will have to be disposed at far less values than they are actually worth (Welch, 2015, p. 6). Moreover, the investment costs in acquiring the drones will be massive given the machinery cost, operational costs, and the recruitment costs. At a wider scale, the company will have to restructure its overall strategy to adjust to the disruptive forces of drone technology. In addition, drone technology is still proprietary and has not been commercially utilized in the mainstream (Marris, 2013, p. 158). Adopting the technology will cause the company to incur further costs in research and development for sustainable use.
Conclusion
Overall, drone technologies have been portrayed as potentially useful advancements in the field of logistics. They offer benefits in both upstream and downstream channels of business. Nevertheless, the analysis has revealed that UAVs cannot be a downright replacement of the entire supply chain and will require complementary means to meet the goals of the company, as well as the needs of the consumers. The technology is significant, and is bound to have far-reaching effects within the industry especially for companies seeking to increase their reach to remote and undeveloped areas with poor road networks.
Recommendations
Incorporation of both the truck delivery and automated drone delivery systems is a viable opportunity for the company to adapt to shifting global trends. The company should implement a strategy that provides for the absorption of drones into the company’s operations due to their effectiveness and their ability to guarantee customer satisfaction. The country’s legislation system that should provide security for the drones should be recommended. The company should brand their drones so that they are easily identifiable sealing loopholes for the operations of foreign drones that could be used for spying purposes.
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