OPERATIONS MANAGEMENT

CIA 3B

Studying latest trends in sustainability

(Automated Freight vehicles and Drones [Logistics])

Prachi Bhansali

2027641

MBA I
 Introduction:

Sustainability and environmentalism are no longer considered as a theory because it has become
very practical. Most items feature the recyclable packaging and environmental friendly
certifications. The thought about our environment has now rooted in the minds of both the people
and the government. Present level and quality of the environment are directly dependent on our
access to natural resources, as well as their sustainability. In particular production activities and
phenomena associated with it have a direct impact on the future of our planet (Antonyová, 2016).
So now the corporates are very keen on developing new technologies which won't affect our
environment. We will see the current operation and futuristic goals for the betterment of the
environment.

Description of emerging trends in sustainability:

Autonomous Freight Ve hicles:

It will be the future of logistics. We know that around 70% of the goods are gets transported by
trucks. It requires skilled drivers to operate. For years, due to driver shortages, the logistics have
struggled with a lack of space on trucks for packages. That's what triggered the concept of
making an Autonomous Freight Vehicles at first, but now that dream is a reality. Autonomous
driving is expected to revolutionize road traffic attenuating current externalities, especially
accidents and congestion (Soriguerab, 2018). We can reduce the overall cost by cutting the
driver's salary, and also it will be operated by batteries and not the engines, which is an eco-
friendly one. As time goes by and in parallel to technological advances, research on AVs is
bringing to light the huge impacts that they might imply for different fields (Soriguerab, 2018).
These trucks will soon start appearing on the roads, and you might see shipping prices dropping
considerably as big shippers employ them.

Drones:

Drones are self-propelled airborne devices that have no onboard pilot. They are known by
various names, including unmanned aerial vehicles (UAVs), unmanned aerial/aircraft systems
(UASs; to include ground-based elements to the system) and remotely piloted aircraft systems
(RPAS) (Sandbrook, 2015). The transportation of goods won't be the same in all the countries.
Due to the increasing population traffic, the delivery duration of products is more. So instead of
roadways, airways are preferred. We all know that Amazon is using the drones for the delivery
of the goods called amazon prime air. But it is restricted only to the forward logistics.

Since the logistics has many problems associated with it, researchers are trying to solve them. If
the drones are implemented for logistics, then the delivery time of the goods can be reduced. In
addition to that, drones are operated using the batteries, which reduces the emission and also
promote an eco-friendly environment.

Contextual relevance:

These emerging trends can be related with closed loop supply chain systems.

Closed-loop supply chains:

The word "closed-loop supply chain" refers that the chain of supply from the suppliercustomer-
supplier tries to retain and recover value from recycled goods while trying to generate as little
waste as possible. Closed-loop supply chains incorporate forward and reverse logistics systems
so that total waste can be tightly limited. It's a green approach to the dilemma of throwing too
many goods into landfills rather than being resold or recycled. Under a closedloop supply chain,
the unsellable returns can be packaged and sold via liquidation, transferred to a foreign market,
or discarded for useful raw materials. In addition to that, it gains public goodwill, which results
in customer loyalty. To get a greener supply chain, the government will have to allow only if the
reverse logistics or third party logistics employ closed-loop supply chains or would do so shortly.

So without using the Autonomous Freight Vehicles and Drones, the future of the closed-loop
supply chain system looks dull.

Competition:

Due to the increased competition between multinational corporations, they are trying to create a
more eco-friendly process so that people will find them to use it conveniently. Companies like
Amazon in US and DHL in Germany are started implementing the drones into their day to day
activities. So the other key players have to evolve and start implementing the new emerging
trend so that they can sustain in the market as well can increase the customer base.
In the near future, transportation will experience substantial development in the domain of
automated driving systems (ADS), which will revolutionize the way people and freight move on-
road (Wadud, 2017). As we all know, change is obvious companies has to adopt the new
emerging technologies. Governments are trying to construct driverless highway for the better
future. The Netherlands, for example, is working with Germany and Belgium on establishing
‘truck platooning’ — where one human-driven vehicle leads a convoy of autonomous ones — on
major roads (D'Monte, 2019).

Organizational challenges:

There are many organizational challenges associated with implementing these new emerging
technologies. Some of them are,

1. Hugh capital cost

2. Government policies

3. Infrastructure

4. Skilled workers

5. Low payload capacity

6. Security challenges

7. Aviation approval

8. Insurance and cost

9. Weather

10. Database for handling data

Huge capital cost:

For implementing the drones as well as automatic freight vehicles, the capital cost involved is
huge. Investing in emerging technologies is always a challenge for any organization. In the case
of drones, we assume that a drone costs between $3,000 to $5,000 ($1,000 to $3,000 for the
drone and $2,000 for software and maintenance) with an average cost of $4,000 per drone
(Keeney.T, 2015) which is huge.

Government policies:

There are many Government policies present and this may be a challenge to the organization.
Though the use of drones for private use has not been regulated, the Federal Aviation
Administration has restricted their commercial use – drones must be flown below 400 feet and
may not enter airspace within a mile of airports (Sudbury, 2016). According to the Federal
Autonomous Vehicle Policy, there is much for states to accomplish in areas such as traffic
enforcement, insurance, registration, licensing and more.

Infrastructure:

Before implementing these emerging trends, the organization as well as the government has to
check whether it has all the necessary infrastructure. Implementing automatic freight vehicles
require separate infrastructure like separate lanes for them or driverless highway. For drone s, the
maintenance facilities have to be perfect. Otherwise there is no use adopting the emerging trend.

Skilled workers:

Skilled workers are required to operate the drones effectively. People who have trained in
operating the drones are in demand. In an industrial/commercial setting however, it’s not as
simple as picking up the controls and taking flight. Depending on where you are working you’ll
need a license or certification.

Low payload capacity:

Drones have a low payload capacity. Currently the drones have an average payload capacity of
2- 5 kg which is not sufficient for some products to deliver. Top Flight’s drone can fly for more
than 2.5 hours - enabling ranges of up to 100 miles - while carrying up to 20 pounds (Matheson,
2017). Some drones have the capacity of lift a payload of more than 15 kg but it is not
impossible to implement in the logistics control since it incurs a huge capital cost. In the case of
AFV, the payload capacity is not the issue.
Security challenges:

One of the important challenges to look after is security challenge. Either it is drone or AFV,
security challenge is a key factor which prompts an organization to implement this emerging
trend. If drone delivery is taken as example, the problem of theft may arise. If somebody lives in
a block of flats, this will mean that a parcel could be left unguarded in plain sight (Hill, 2019). If
it a AFV it has valuable goods. So it must be delivered without any security issues like accidents,
etc.

Aviation approval:

The biggest challenge that retailers hoping to utilize this technology have found is that the use of
airborne delivery systems requires a significant amount of approval. Not only from boards and
engineers, but from aviation authorities across the world (Hill, 2019). Similarly for AFV, the
organization may have to get clearance from the highway department.

Insurance and cost:

Since this a new emerging technology, the insurance policy has to be framed. If the product is
delivered in a damaged condition, who will accept the cost? Since this logistics involves a huge
cost, insurance policies have to be framed. At first, insurance premiums are likely to be high and
the likelihood is that these additional costs will be transferred to customers, making deliveries
more expensive and slower to spread as a mainstream method (Hill, 2019).

Weather:

An organization will take this factor in a serious note before implementing the emerging
technology. Weather conditions like heavy wind, rain, etc will affect the delivery of the products.
In AFV even if the AI is used, it is very difficult to counter the tough weather conditions.

Database for handling data:

Since the drones and AFV has inbuilt AI and ML tech, it takes a huge amount of data to process
and to analyze. So the organization requires a bigger database to organize all the data. Just as
with big data, the challenges of drone data include analysis, curation, search, sharing, storage,
transfer, visualization, and information privacy (Snow, 2019). Similarly AFV requires the large
chunk of data to operate which requires a huge database. Installing a new database may pose a
challenge to the organization.

Managerial implications:

On skilled workers:

Several stakeholders have high stakes concerning automated driving. Therefore, the following
guidelines are given to successfully implement automated driving. Vehicle users with a high
education level or much AFV experience are most willing to release driving tasks. Therefore, it
is recommended to focus marketing plans on vehicle users with high education and with much
AFV experience (Han, 2015).

On transportation planning of AFV:

The following recommendations concern transportation planning. Most support to release control
can be found on highways. For this reason it is advised to stakeholders to first focus on creating
strong collaborations and feasibility studies for automated driving on highways. Eventually
public parties should aim at also enabling automated driving on regional roads, because this
could offer highest safety benefit levels. Additionally, it is advised to enable automated driving
on dense roads. Here the benefits for society are highest. The density on the road does not have
much influence on the willingness of vehicle users to release control, therefore vehicle drivers
will agree with this implementation plan. Stakeholders should be careful with implementing
partial and high automated driving. Although vehicle users indicate that they prefer not to
perform a secondary task while driving automated, many accidents have happened because
drivers were distracted. In addition, vehicle users have indicated to prefer automated driving on
familiar routes. Still, people tend to pay less attention to the driving environment when they are
familiar with the route. Hence, although highly automated technology should provide sufficient
lead time to obtain the drivers attention when necessary, this is risky as small human errors could
lead to fatal accidents (Han, 2015).

In Amazon smart warehouses, robots are used to do perform pick and place functions which is a
part of AFV. Similarly a logistic manager should check whether he can implement the AFV for
his company by test running.
On handling drones:

Logistics companies should strive to make consumers have a favorable attitude toward drone
delivery system. First of all, the eco-friendly aspects of drone delivery by advertisements need to
be stressed by logistics firms, because green advertising helps to shape a favourable customer
perception towards a certain object. As previously explained, drones run on batteries, which can
reduce greenhouse gas emissions and energy use. Therefore, if logistics companies make
commercials that highlight the essential role of drone delivery in protecting the environment by
similarities with existing methods of delivery services, such as greenhouse gas emissions and
energy use, customers are more likely to have a favourable attitude toward the services, which
contributes to positive behavioural intentions to use the services. In order to protect the
environment, several businesses are adopting different policies, from manufacturing to sales,
which help to make customers aware of the dangers of environmental degradation. In the same
vein, if logistics companies inform consumers of the risks of natural destruction through
environmental campaigns, they will have high levels of the awareness of consequences, which
will increase the use of drone delivery (Hwang, 2020).

On sustainability:

Sustainability refers to actually meeting social and environmental needs in addition to firm
profitability, and therefore represents the implementation and outcomes of companies’ CSR
voluntary intentions (Porter, 2008). Managers should try to promote drones and AFV since it
comes with environment friendly process. Power players in the supply chain should possibly
even consider enabling suppliers to contribute more to the sustainability initiatives by helping
them with the necessary resource investments (Brockhaus, 2013).

On other factors:

A manager has to check whether the drones for delivery system can be implemented or not by
operating in inbound and in-house supply chain.

Similarly, before implementing the drones and AFV a manager has to check whether mistake
proofing (POKAYOKE) was done or not so that we can save the accidents.
The other important factor which should be taken into consideration is the database. A manager
has to pick a perfect database based on the needs of the data which is required for drones and
AFV because it involves AI and ML.

Conclusion:

The doubts and challenges to overcome are still huge, as the implementation of an autonomous
driving environment encompasses not only complex automotive technology, but also human
behavior, ethics, traffic management strategies, policies, liability, etc. (Soriguerab, 2018). As a
result, in the near term, carmakers do not plan to deploy fully-driverless cars commercially.
From a technological point of view, one of the biggest problems to be met is the unambiguous
identification of obstacles at high speeds and long distances. Both methods share the vision that
vehicles should act cooperatively with respect to traffic management strategies. Similarly drones
also need to overcome certain factors like, Government policies, payload capacity, Security
challenges, Aviation approval, Insurance and cost and Weather before implementing in a large
scale environment. In the upcoming days, these factors can be overcome by the proper training
and using different strategies. If this type of supply chain is planned in a well effective way, then
it will yield a profit not only to the corporates but also to the end consumers as well as our
environment. Due to the pressure of competition facing by the corporates, all are trying to adopt
a greener solution so that they can acquire the customer satisfaction. We are in need of more
futuristic innovations in the field of supply chain management. Let us hope it will happen soon.
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