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OM in the News: Amazon’s Drive to Revolutionize Logistics

April 28, 2017

Drones are a focus for Amazon

Amazon’s new initiative could help the company overcome one of its biggest logistical complications and costs: delivering packages quickly. Amazon is navigating the use of autonomous vehicles including trucks, forklifts and drones to move goods, reports The Wall Street Journal (April 25, 2017). In addition, driverless cars could play a broader role in the future of last-mile delivery, enabling easier package drop-offs.  “Amazon has a plan in place to shake up the entire supply chain as we know it today,” says one industry analyst.

There have been early signs of Amazon’s interest in autonomous-vehicle technology. The firm just won a patent for coordinating autonomous vehicles in a roadway. Over the past few years, Amazon has been building out its supply chain and logistics network, aiming to deliver more of its own packages. It also envisions transporting goods on a large scale for other companies, one day competing with delivery giants UPS and FedEx.

The company is leasing 40 planes and has bought thousands of branded truck trailers. Tractor trailers have long been considered a likely first target for implementing widespread driverless technology, in part due to how regularly they drive the same stretches of highway–so Amazon is very interested in autonomous trucking. Humans have a 10-hour limit when driving, but a self-driving truck could drive through the night. Instead of taking 4 days to drive coast to coast, it will take a day and a half.

The biggest portion of Amazon’s spending and energy has gone toward another type of autonomous means of transport: drones. That 2013 initiative is further along and is expected to continue to be the major focus of the company. Drones could communicate or pair up with driverless vehicles, for example, to coordinate deliveries.

Classroom discussion questions:

  1. Describe Amazon’s driverless ideas.
  2. Why does the firm want to get more involved in transporting goods?
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