Last week the Federal Aviation Administration published its rules and regulations for the oversight of drone usage within the United States. Many will and have argued that these rules are too restrictive for companies such as Amazon or Google to truly take advantage of the technology. The basic parameters of the guidelines set by the FAA:
- Drones must be less than 55 lbs in weight
- Can only fly during the day in good weather
- Must not fly close to airports
- Cannot fly faster than 100mph
- And must be within visible site of the operator
On the surface these restrictions severely limit the dreams of the likes of Jeff Bezos. One of the great opportunities for drones within the supply chain and particularly with the delivery side is the ability to enhance the last mile portion. The last mile is always a challenge since you have to break down the orders to the individual level. Drones seem to offer an affordable and flexible solution - but not if the FAA rules are in place. This does not mean there are not some use cases that supply chains can take advantage of immediately:
- Asset monitoring - this is already taking place in agriculture, oil & gas, and mining to name a few. Drones provide the flexibility for activities such as survey work, monitoring of assets, determining crop growth, etc. In countries such as Australia, mining companies are already leaning heavily on the pilot-less aircrafts to assist with activity on the ground. By some estimates the usage can save close to 90% of the $2000 an hour cost for a helicopter.
- Remote delivery: Logistics firms such as DHL have been able to expand their reach via drones. The ability to connect remote German islands in the North Sea has enhanced the remote locations with a more regular delivery service. Of course these drones are clearly flying outside of site lines of the operator.
These use cases are not necessarily replicable under the FAA rules. However I have to believe that as the technology continues to evolve the FAA will loosen its regulatory grip. So what could we expect from more open drone rules? If and when the drone rules become more open here are some opportunities that supply chains might enjoy:
- Smaller window of delivery for certain items. Think of Kozmo.com with drones rather than people on bicycles. Companies from Amazon to CVS to Giant Eagle to Five Guys will be able to deliver a whole host of items to your door at the drop of a hat. Well maybe not that fast. But why couldn't books or other items from Amazon be delivered within the hour? CVS could deliver your prescriptions and Giant Eagle, your groceries, and Five Guys, your cheeseburger. Once drones become a more viable delivery extension of the supply chain, look for businesses to take advantage of the new reach this provides into the home.
- Untethering the consumer from a physical address. Drones, coupled with the explosion of mobile, will allow delivery systems to ignore the limitations of roads and physical addresses. Today deliveries rely on infrastructure such as roads, as well as fixed addresses in order to manage delivery of goods. What happens when you have a drone that has far fewer restrictions? Couple this with a mobile device that provides the digital location of the recipient. Your mobile can send the drone the exact coordinates and the drone can then fly its way to your location. We will not longer have to worry about having a package delivered to our home or office; we can just tell it what time to deliver it to us as it hones in on our GPS coordinates.
I realize these changes are a ways off. But these are examples of how the supply chain will be expanded beyond the traditional links - loading dock, retail store to name a few. These types of digital disruptions will begin to turn our homes into an extension of our supply chains.
