When thinking of digital transformation, we first think of companies that have the most impact on our daily lives. Supermarket chains, courier companies, software companies and applications that can enhance the modern conveniences we enjoy today. We have chosen to focus on Amazon, which is the eighth largest retailer in the world. Theory shows us that there are several reasons for Amazon to deliver packages itself.
-To gather more knowledge about the customer
-Lower dependency on third parties
– Faster delivery results in better competitive position
In their current fulfillment centers, as stated on Amazon’s website, Amazon uses their own developed Amazon Fulfillment Technologies (AFT) ‘to build and operate software, hardware, and processes that run the global network of fulfillment centers that distribute many millions of units of inventory, employ tens of thousands of people, to ensure that customers get what they want when Amazon promised the ordered products would get to them’ (Amazon, 2016).
The following video will explain why an automatic UAV system is the right technology to enhance their current business.
The new system fits the strategy of the company because it allows certain customers to choose a timeframe for the delivery beginning in 60 minutes from order time, since that is the minimum time it would take to bring the package from warehouse to customer because packages are sent individually. Therefore, this system enables Amazon to focus more on when, where, and how the customer get their delivery, making it more customer centric, which fit to their vision. UAVs are able to go to places which are not accessible by car due to bad roads. The new system allows the entire earth to order packages without the disadvantages of bad roads. This way, Amazon can increase their market or expand their business to otherwise inaccessible people. The customer should also be able to send the package to a specific GPS location since people in third world countries might not have an address. This fits the need of Amazon to serve the entire world.
Based on three scenarios we have calculated the new delivery costs, savings per year and ROI of the new system. In table 1, one can read the financial consequences of integrating UAVs in the current fulfillment centers, which are astonishing.
Table 1: Estimation of delivery cost and saving for delivery by UAVs.
Since, unmanned aerial vehicles already exist, the challenge of this system does not lay at the physical vehicle. The challenge is to develop a network of UAVs that fly autonomously and is integrated in the current delivery system. Amazon should hire developers that develop the most efficient routes for the drones to fly while considering weather conditions and physical obstacles.
Recommendations
The need for Amazon to deliver their own package come from the need of a.o. the customer as a source of information, lower dependency on third parties and increase of the delivery speed. Amazon currently uses their AFT on fulfillment systems and technologies to bring the package to multiple distribution centres. The current systems are able to divide large packages from small packages. The new system extends this current system by implementing the delivery system for small packages. The new AEV system should extend the current system to deliver packages autonomous to the front yard of the recipient. For a successful development and integration of the new system, the most relevant recommendations are:
Link the system to the current AFT;
Hire new type of employees namely, developers to develop the routing and so-called sense and avoid software for Amazon’s AEVs;
Include customers and government into the development and testing stages of the AEV system.
