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August 23, 2016

In Managing Director Tim Waters’ most recent column for Essential Retail, he addresses the topic of automation in the supply chain as it pertains to driverless lorries and automated delivery.

Just as technological innovation has dramatically changed our everyday lives, it is transforming the retail supply chain. GPS tracking, real-time updates, and hand-held-scanners are all well-known features of home delivery, serving to cut costs, improve efficiency, and enhance the customer’s experience.

But in recent years, supply chain officers have turned their attention to more cutting edge technologies, ones that have the power to shake up the retail industry beyond recognition. No more is this the case than with driverless lorries; a concept that, until fairly recently, was most at home in a science fiction film. But after the government’s promise that the UK would lead the way in testing HGV platoons, and road tests set to begin in Cumbria before the end of the year, it seems the wheels are firmly in motion. Driverless lorries may well be a fixture on our roads within a few decades and for those working in retail, the message is clear: this could change everything.

Alvarez & Marsal - Automated Truck

Of course, there are undoubtedly many benefits for an automated delivery service, most obviously the costs saved on labour.  It’s also been said driverless lorries could have a significant impact on reducing fuel costs, a welcome thought for fleet owners across the UK (though these savings could be offset by the higher capital investment required for an automated vehicle). Many countries are also suffering from a serious shortage of drivers, which is shaping up to be one of the industry’s biggest challenges.  It’s not difficult to see why for many businesses, driverless lorries are an increasingly exciting prospect.

One sometimes overlooked hurdle is insurance; who is to blame when a driverless 40-ton truck kills another motorist? The cost to insure the lorries might even be so high as to outweigh potential savings made on fuel and labour.  After all, though human error is known to be one of the leading causes of road accidents, it will take some time to establish the risk dividend of unmanned vehicles. When it comes to the supply chain, we may need to wait until the regulation catches up to the technology.

Some of these concerns extend to other technologies that have the potential to disrupt the retail industry. Drones are a particularly hot topic in the world of retail at the moment, seen by many as the next step in home delivery. But just for a moment, consider the reality of iPads, iPhones, and laptops soaring above our streets or even, in the case of non-airborne drones, trundling along a busy city pavement.  It isn’t just about technological capability, it is the practicality of ensuring these small unmanned machines (and their cargo) make it to the destination in one piece without being tampered with. 

Moreover, human interaction remains a vital part of the delivery process. Across a range of sectors and industries, today’s consumers are increasingly demanding the ‘personal touch’ when it comes to customer service. Indeed, in grocery home delivery, the delivery driver now represents the grocer's brand and is often its main touch point with the consumer. Technology has played a large part in enhancing this; for example, by giving the consumer the ability to track their driver. But the removal of the delivery man altogether may be a step too far.

When adapting supply chain models to the shifts in technological innovation, companies would be wise to utilise technologies that enhance and support human agency, rather than remove it entirely. A hybrid supply chain that uses advanced technology to cut expanding costs and improve operational efficiency, whilst maintaining the human touch, is a truly exciting business model of the future.

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