Monday, March 20, 2017

Walmart Looks to Drones to Speed Distribution

New York Times writer Rachel Abrams wrote that Walmart is testing drones to enhance their distribution of inventory from their monster distribution centers to their retail stores across the country. Walmart has already been at the forefront of retail automation with their idea of self-driving shopping carts, but utilizing drones in the retail space has created major buzz among competitors. The recent push for advancing technology has been driven by their low-cost competitors, such as Amazon. According to Abrams, Walmart has “committed to spending $2.7 billion on labor, technology, and other investments,” such as improving their e-commerce business. With drone technology, many logistical challenges that come with managing massive amounts of inventory could be addressed.

I think that implementing drones into Walmart’s supply chain is a great idea. They would greatly increase the efficiency of Walmart managing its inventory by automating the cataloging process. Walmart employees currently scan each pallet of goods manually with a hand held device, which costs time and money. By implementing drones, these workers could be used in other areas of the warehouse to address specific issues. According to Shekar Natarajan, the vice president of last mile and emerging science at Walmart, “the [drones] could help catalog in as little as a day what now takes employees about a month.” Drones will not only have a direct impact on warehouse efficiency, but it will also allow workers who would normally be scanning inventory to tend to replacing missing items, take stock, etc. I think that Walmart will permanently install drones in their warehouses to compete with their largely automated competitors, such as Amazon.

On the other side of the argument, implementing drones will inevitably lead to job loss. Phil Wahba from Fortune.com reported that Walmart is cutting hundreds of jobs as of January 10, 2017. While automation in warehouses has directly lead to layoffs, it has not impacted the warehouse workforce. Walmart has fired many regional executives in an effort to invest more in automation and improving warehouse efficiency. It will be interesting to see if Walmart will reduce their warehouse staff once they feel comfortable with their proposed drone program, but for now the workforce is still intact. Cutting costs and eliminating jobs are synonymous terms in today’s retail marketplace. I would suggest that Walmart outline a plan for the near future regarding warehouse jobs; they do not go into much detail regarding how they will use the labor ‘freed up’ from the use of drones. This could lead people to believe that they don’t know if they’ll have a long-term need for them.


Supply chain automation, specifically with the use of drone technology, is an incredible asset to retailers such as Walmart. However, while there are many potential benefits, Walmart needs to outline a specific plan to integrate the existing workforce with the proposed plans for warehouse drone automation. Walmart stated that it will continue assimilating drones into the workplace by applying them in retail stores to enhance the customer experience.

https://www.nytimes.com/2016/06/03/business/walmart-looks-to-drones-to-speed-distribution.html?_r=0

http://fortune.com/2017/01/10/walmart-jobs-layoffs/

3 comments:

Brian Silard said...

Bobby,

It’s hard to not have mixed feelings about this article. To think that drones are able to distribute products that are eventually handed over to a company’s customers is spectacular. This article presents a huge opportunity for Walmart and for other large retailers that are trying to cut costs. Because innovation is going to continue to thrive, there is the question of where the ceiling is for how effective businesses will be. On the other hand, it’s relatively upsetting to see the number of near-future job cuts these companies will make. Systems such as these drones are only going to make the rich man richer, and the poor ones jobless. This is going to continue because customers don’t necessarily care how products are being brought to stores, but more that they end up with a product at a reasonable price. Can this perspective change? CRM can only go so far, and for a business like Walmart, there isn’t a need for that sort of relationship. Drone technology will eventually be integrated into almost every big name company, so what will the lower-class workers do? Is there going to come a point where the distribution of drones creates a surplus of drones, and more jobs will be eliminated?

From a technological standpoint, how much more efficient can the technology get? The reason why the drones seem so evolutionary is because they’re eliminating the human aspect of work. Is there going to be a more efficient piece of equipment, one that’s cheaper and quicker than a drone? Realistically, humans are pretty efficient when it comes to working, minus the fact that they have to be paid. Walmart is more concerned with making money than the job loss situation they created. At the end of the day, the workforce is going to continue innovating until there becomes a need for humans in distributing products to customers. Will there be a day where humans are needed again? I don’t think so…

Brian

Michael Bacci said...

The issue of job loss to technology is an uncomfortable one to talk about. Unfortunately, it is one of today’s most pressing issues and it needs to be talked about more. There is a natural tendency to villainize anyone who implements technology in a way that eliminates jobs. This seems to be the tone in the article. I tend to disagree with sympathetic viewpoints that encourage us to foster our by gone “glory days” of manufacturing jobs or other labor intensive professions. Living in the past is no way to create a successful future. For Wal-Mart, it is becoming hard to ignore the effects that technology can have on their bottom line. As a brick and mortar competitor to companies like Amazon, Wal-Mart must fight for every penny. It can do that by employing drones which are more efficient and less costly than their human counterparts. It is unfortunate that profit should come at the cost of hard working Americans’ jobs, but unfortunately this is the world that we live in. For anyone, who loses their job at Wal-Mart, I would say you need to adapt. There is a new world that we live in and it is one that no longer allows you to support a family on labor intensive factory jobs. In the past you could easily support yourself and a family on such jobs but not today. It has come time to allow the natural market forces to have their way with these labor-intensive professions. These natural market forces have been held back for too long. Adversity forces people to adapt. In the face of this adversity, people must adapt by learning skills that are relevant in today’s economy. Coding is an example of a skill that firms are needing at an increasing rate. Because technology and IT are such a big part of today’s businesses, it looks to be a good skill to have going forward. Coding is a relatively easy skill to learn and it does not require complex degrees. It can be learned online through sites like Codeacademy. The United States has overcome adversity in the past with shining examples of perseverance. We must regain our perserverance to adapt to a changing world.

Sam Norton said...

I agree that Walmart’s use of drones is needed to forecast and plan ahead with their logistics management goals. The use of a drone would reduce the time that it takes to manage their inventories in each of their many warehouses. Second, it reduces the chances of error that is likely to occur in their current format of taking inventory, where employees scan goods using a hand held scanner. This would result in significant labor savings for Walmart. I think the major advantage to Walmart with using a drone is that a drone provides a nearly perfect up to date daily inventory. This means that the inventory is almost error free allowing Walmart to know exactly how much of what they need and when they need to order it from suppliers. This level of efficiency would save Walmart millions of dollars. Using the drones would help to make the process more efficient and cost effective. If Walmart replaces human labor with a drone in the warehouse it will be more efficient. If the drones are then used in the stores, it would make the stores run more efficiently too.
Incorporating the use of drones is an efficient and cost effective strategy that would enable Walmart an opportunity to better compete with companies like Amazon and Alibaba. Walmart’s competitive advantage originated around the concept of economies of scale. Walmart can purchase mass amounts of inventory from manufacturers at low prices so they can pass on those low prices to the consumers. To keep up with their competitors like Amazon and Alibaba, Walmart must constantly evaluate their logistics strategies.
Walmart needs to improve its supply chain management if they want to provide better service to online customers. This may include strategies such as increasing the types of products that are available online or decreasing the time that it takes to deliver orders to customers. Because more and more people are choosing to do their shopping online, Walmart needs to remain competitive by improving their logistics to a standard that is equal or better to that of Amazon and Alibaba. The concept of using a drone makes picking inventory for shipment more efficient with less resource output like direct labor. Drones can fly around more quickly to pick the inventory for shipment, making picking times quicker which would lead to Walmart shipping more daily. With such technological, Walmart could enhance its competitive advantage especially if it wants to expand.
I believe that Walmart should implement this new strategy because by using drones in their warehouse and eventually in their stores, they are on their way to being an efficient supply chain. With the amount of inventory moving in and out of their distribution centers, it makes sense for Walmart to invest in the technology required for using drones.

http://fortune.com/2017/03/13/amazon-delivery-drones-sxsw/