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Will autonomous vehicles transform the supply chain?

Autonomous vehicles are being road tested and companies are predicting added value if these vehicles become integrated in supply chains, but certain obstacles must be overcome.

As the U.S. supply chain grappled with bottlenecks this fall, Walmart and transportation company Gatik sent out driverless box trucks along a delivery route in Arkansas, ferrying customer orders between a Walmart fulfillment center and one of its stores. The runs happened multiple times a day, seven days a week, along public roads.

Company officials said in a news release that these new trucks, which started driving the route in August of 2021, unlock the full potential of autonomous delivery including increased speed, responsiveness, asset utilization and safety for all road users.

According to the company, the deployment is the first time an autonomous trucking company has removed the safety driver from a commercial delivery route on the middle mile. That's a big step on the path toward a more autonomous supply chain.

Automation is certainly nothing new in industrial settings, which have had robots on production lines and in distribution facilities for decades. Now, however, industries are automating much of their transport, too, from the first mile to the last. As such, autonomous vehicles promise to ease bottlenecks within the supply chain, bring efficiency and transform deliveries in the process.

"A lot of what will happen will be invisible at first. It might start on college campuses and in ports, and as the technology improves, it will show up on our roadways. In 2030, you'll look around and see autonomous vehicles on the road," said Mike Ramsey, vice president and analyst for automotive and smart mobility at Gartner, a tech research and advisory firm.

6 levels of automation

The Society of Automotive Engineers (SAE) has defined six automation levels for vehicles, ranging from 0 (no automation) to 5 (full automation).

"There are already many examples of autonomous vehicles at work," said Akshay Singh, the industrial and automotive industries principal at professional services firm PwC.

Consumers are driving cars with some self-driving features that are classified by the SAE as level 2 or 3, meaning partial automation. Plenty of organizations are using level 4 vehicles, although many of those use cases have been confined to geofenced areas such as shipping ports.

There is also a small yet growing number of use cases at the top of that scale. Examples include Waymo, an autonomous driving tech development company owned by Alphabet (Google's parent company), which has been road testing its self-driving cars in American cities this past year.

Another example is TuSimple, which in November of 2021 announced it was close to testing its self-driving trucks on public roads without a human safety officer. Finally, there's Kodiak Robotics, which became the first company in the autonomous trucking industry to announce "disengage-free" customer deliveries in January of this year.

There's also a host of other autonomous technologies within the supply chain, such as autonomous cranes at shipping ports, automated forklifts in various facilities and automated order-picking systems in warehouses.

Robots are even making deliveries directly to consumers. Starship Technologies' robots are rolling around college campuses and a Domino's partnership with robotics company Nuro is launching autonomous pizza delivery.

autonomous vehicles slowly gaining speed

Amplifying human talent

Evan Pohaski, founder and CEO of flatbed freight transportation and logistics company JLE Industries, said he's now looking at how he will include autonomous vehicles in his operations.

"We see these opportunities to employ autonomous vehicles as ways to amplify the human talent we and our peers are investing in. That's where the promise of autonomous vehicles appears now," Pohaski said.

They are needed, he added, noting that the transportation industry is facing a growing shortage of drivers. He believes automation can blunt the impact of that labor shortage as well as ensure speed deliveries, pointing out that autonomous vehicles don't need to meet federally mandated breaks and driving hour limits.

Still, Pohaski said he doesn't see autonomous vehicles replacing his human drivers or significant portions of his fleet in the near future. He believes the technology infrastructure, insurance and regulatory environments aren't ready for such a bold move.

"We're very far from seeing broad-based employment of this over the roads," he added.

Problems to solve, challenges ahead

Despite such assessments, supply chains throughout industry verticals need transformation according to Ambrose Conroy, CEO of strategic consulting firm Seraph. "We're going to have to do things differently in the coming decade," he said.

Conroy thinks autonomous vehicles are needed to ease the labor shortage as well as eliminate tedious, and oftentimes dangerous, work. They're also needed to boost efficiencies and speed up the movement of goods to meet consumer expectations with faster response times.

Organizations will need to implement and scale the infrastructure needed to support autonomous vehicles, including skilled technologists who build, deploy and maintain it.

However, he and other experts said organizations that want to add and scale autonomous vehicles for use in their supply chains are facing a bumpy road ahead thanks to several notable challenges. For starters, the industry is still sorting out how to program these vehicles to make life-and-death decisions should they encounter emergencies on the road, Conroy said.

"It will only take one death involving an autonomous truck to create a media storm," added Alan Amling, distinguished fellow at the University of Tennessee's Global Supply Chain Institute and CEO of advisory firm Thrive and Advance. He and others stressed that this creates a lot of risks for organizations to overcome.

Organizations will need to implement and scale the infrastructure needed to support autonomous vehicles, including skilled technologists who build, deploy and maintain it. That's a tall order for many, Conroy said, adding that many organizations will struggle to find and fund what they need to bring autonomous vehicles into their supply chains.

Roadmap for transformation

These points make some experts cautious about predicting how transformative autonomous vehicles will be -- at least for now.

"It has delivered efficiencies and lowered costs, and it could be transformational, but it's not completely transformative yet," Singh said.

Others agreed. It's clear to Amling that autonomous vehicles, which he calls "disruptive innovations," are letting you do what you do today better, faster and cheaper.

As an example, he pointed to heavyweight drones that can carry upwards of 5,000 pounds from a hub to a store, instead of from airport to airport, and said they promise disruptive transformation in the future.

However, he and others have said it's still an open question as to when this disruption will happen. They believe it will happen incrementally, as organizations develop new products and services enabled by an increasingly automated supply chain.

"Over time, it will be transformative. Currently, it's just helpful," Gartner's Mike Ramsey said.

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