An autonomous vehicle uses software and sensors to navigate from point A to point B without any human involvement. Using machine learning, computers are trained to identify lanes, cars, pedestrians, speed limits, weather and through experience, learn how to navigate safely. The effect that this will have on our supply chain and transportation industries is going to be massive.
Think about the journey of any food product, say a banana, from growth to consumption. Likely, it is transported from a plantation in South America to a packaging facility where it is loaded into a truck then onto a ship. When it arrives at a port it’s then picked up from the ship onto yet another truck and sent to a wholesaler then trucked again to a grocery store where it’s picked up and then delivered to your doorstep as part of your latest Instacart order.
Looking at how many vehicles it took to get that banana to your doorstep, think about what happens to the speed and cost of delivery if there were no human constraints. With autonomous vehicles boosting efficiency and bringing down costs dramatically, what will be the effect on your business if products can be manufactured & shipped more efficiently and with significantly less labor?
Where it is now
In the past few years, the technology has gone from a pipe dream to being commercially available in some markets. There are 5 levels of vehicle autonomy that range from level 1 driver assisted automation that has a single automated system (such as cruise control), to level 5 which is full automation that requires zero human attention.
Leading autonomous vehicle companies such as Waymo are currently at Level 4 where they offer a fully self driving taxi service but it is limited to specific locations and/or conditions. For example, it only works within a certain geo-fenced location and may have constraints on the speed it can go or weather conditions it operates in. GM’s Cruise is also launching their autonomous taxi service in San Francisco by the end of 2020.
Who’s Using it
Outside of ride sharing services such as Uber and Lyft who have an obvious incentive to stay at the top of their field, there are a lot of companies who are planning now to take advantage of the autonomous vehicle boom.
Doordash for example recently acquired Scotty Labs, which makes technology to remotely control self driving cars. They have also partnered with GM’s Cruise to test self-driving food delivery vehicles. Using algorithms that can predict demand at a restaurant, an autonomous vehicle can use deep learning to optimize for the fastest possible delivery and pickup times on multiple orders, at many restaurants to many customers at the same time. This means that Doordash orders will be delivered more quickly and at significantly lower cost.
Daimler is the largest truck manufacturer in the world and they intend to stay at the top with their heavy investment into autonomous trucking. Autonomous trucks can operate 24 hours a day where human operated trucks are limited to the amount of time they can run due to federal law.
Amazon is looking to make their delivery process completely autonomous. In addition to testing their compact, slow paced, neighborhood delivery vehicle, called Scout, Amazon recently purchased an autonomous vehicle of their own called Zoox.
Amazon’s Scout is an autonomous vehicle that delivers packages directly to your door (Photo Cred: Amazon.com)
How Does This Affect Your Business
The largest effect of autonomous vehicles on most businesses will no doubt be on the supply chain. Take our earlier example of a banana. As stated earlier, taking human constraints out of the equation can improve the cost and efficiency of transporting bananas. As the supply chain shortens due to autonomous vehicles, retail stores won’t have to keep as much inventory on hand which can free up funds and space for other offerings.
As inventory decreases so does waste. Did you know that 1.4 million bananas are thrown out every day? A grocery store, for example, tends to received shipments once a week because the cost to receive five different orders a week of bananas is well… bananas. As autonomous vehicles help shorten the shipment cycles by reducing labor cost, it becomes possible to stock fewer excess bananas, which means fewer bananas in the trash.
A recent report by SAFE suggests that autonomous vehicles will contribute $800 billion annually in “economic and societal benefits” when deployed. The report cites fuel efficiency, reduction in crashes and better access to transportation as the contributing factors. With such massive labor savings to be had in transporting goods, any business that sells goods can be a delivery business. If I’m the owner of the best banana stand in town, what’s preventing me from offering my product to anyone within a 50 mile radius? Now that I don’t have to worry about paying an employee just to get it there, the market can open up for small businesses to create a larger direct to consumer customer base.
This is Part 1 in a series titled, How Artificial Intelligence Will Affect Your Business. To see the introductory article, please visit this page.
