Autonomous vehicles, whether they operate on land, on sea, or in the air, have moved beyond theory to become a reality. Some, like warehouse drones and driverless forklifts, are already in daily use, while others, such as autonomous heavy-duty trucks and ships, are in the testing phase. As demonstrated in a previous article in this publication ("The coming Age of Autonomy: How robotics will change the future of logistics"), the opportunities to apply autonomy in the supply chain are many and varied—more so, perhaps, than many supply chain professionals have considered.
While numerous companies are pouring time, money, and research into this exciting and promising technology, autonomy remains a source of concern for many people. With headlines about robots replacing humans in a wide range of jobs and accidents involving self-driving vehicles capturing the public's imagination, it's understandable that people would worry about the impact of autonomous technologies on their own lives. For autonomous technology to be fully accepted, these concerns as well as others that may arise will have to be addressed. Yet there is no going back; the "autonomous revolution" is well underway.
![[Figure 1] Where will the profits come from?](/media-library/20190222ecosystem-ex1.jpg?id=53611733)
It's important to recognize that the impact of autonomous vehicles and technology will not be limited to the operation of the vehicle itself. Consider that demand for automobiles led not only to the launch of automakers around the world, but also to the development of highway, toll, and parking infrastructure. It also created markets for auto designers, engineers, mechanics, and technicians; auto insurance, financing, and driver instruction; networks of fueling stations; original equipment manufacturer (OEM) and aftermarket parts (including retail outlets that sell those items to consumers); and related technologies such as software and electronics. Without a doubt, similar support systems—what could be characterized as autonomy "ecosystems"—will be required for autonomous vehicles.
Instead of seeing this technology as a threat, therefore, businesses should focus on these ecosystems, viewing the advent of autonomous vehicles as an opportunity not only to develop new products and services, but also to create new types of jobs and careers. Supply chain leaders should start planning now for how their companies can participate in these revolutionary opportunities and create new business value. A good first step is to start considering what types of supporting ecosystems autonomous vehicles will need and what challenges and opportunities they offer.
Autonomy ecosystems: Opportunities and complexities
The complementary business opportunities offered by autonomous technology will be many, and the direct impact of these ecosystems on supply chain activities will be plentiful. Some may develop far in the future, while others will likely be needed quite soon. More than a dozen come to mind right away. (See the "Autonomy Ecosystem" infographic.) It's not possible to go into the full details here, of course. However, the following overview of those ecosystems and their associated jobs, including some of the important questions anyone who wants to participate in them should consider, provides a sense of both the opportunities and the complexities that lie ahead.
Financing. Vehicle financing today is based on standard models, and there has been very little innovation. As autonomous vehicles become more common, new financing models that provide buyers with more flexibility and data-driven offerings, primarily aimed at reducing the cost of ownership, will emerge. Much will depend on the ownership and/or asset-usage model. The former might include actual ownership (full or fractional) or other arrangements such as limited-time leases, renting, or pay per use. Financing based on asset use would reflect how the vehicle will be deployed by the end user, involving either a standard model of fixed capacity to avoid variability and increase predictability or, more flexibly, an as-needed model. Financing may be offered not just by traditional vendors like banks but also by fleet providers, vehicle manufacturers, and insurance companies. There will be a need for specialists who understand the implications of autonomy for vehicle-finance products and other offerings. Questions to consider:
- What financing model will make the most sense for the vehicle—pay as you go, fractional ownership, or full ownership?
- In a sharing economy, what kind of partnership will be leveraged to maximize the use of the financed assets, and how will that partnership affect the type of financing offered? If three companies that operate on the same lane could share assets, they may choose to finance fixed capacity, which would be cheaper than a flexible-capacity model. In this model, capital costs and depreciation are spread across the partners, reducing the overall cost of operations.
Insurance. Autonomous vehicles will also require insurers to create a new class of vehicle insurance that is not based on the driver's attributes or behavior. Instead, pricing could be based on a usage model, such as on a per-trip basis. Or, it could be based on the kind of activity that the vehicle performs or type of product that it is hauling, type of operating system used, transport mode (air, ocean, road), safety record and standards, and so forth. Traditional insurance functions such as pricing and claims processing and management will need specialists who are well versed in how autonomous vehicles operate.
- What pricing method will be embedded in the insurance instruments? Will it be on demand, built into the asset purchase, pay per use, or based on the reputation of the operating system driving the asset?
- How will human interfaces and interactions with the autonomic processes be accounted for in the insurance instrument?
- What would a consortium of insurance buyers look like in a sharing economy, and who would likely participate?
Fleet management. Whether we're talking about drones, cargo ships, or cars and trucks, companies will need to manage fleets of autonomous vehicles just as they do conventional equipment. These companies could include fleet operators, OEMs, distributors, or third-party service providers. Some of the things that fleet managers may be responsible for include: tracking and monitoring the location of the asset, managing and controlling temperature, vehicle routing and scheduling, preventive maintenance, management of parts inventory, incident management, software synchronization, collection and management of driving and maintenance records, vehicle acquisition and insurance, and cleaning services. Most of those tasks exist today, but since the assets will be using various types of sensors to provide real-time information, many of those responsibilities will become more predictive in nature than they are now.
- What kind of records will fleet managers have to maintain for their assets, and how will they share them with law enforcement agencies?
- How will fleet managers gain the skills they need to handle autonomous vehicles' new technical requirements?
- What technical infrastructure will fleets need to maintain in order to manage vehicles outfitted with sensors and very sophisticated electronics?
Maintenance. As with any type of vehicle, there will be a need for suppliers of parts, maintenance, and repair services, vehicle recovery and recycling, fueling system upgrades, and recall management. Managing inventories of specialized electronic parts and providing the highly skilled labor required for the repair and upkeep of autonomous vehicles will be early business opportunities.
- What type of infrastructure will be needed to ensure reliable service, and what service models will be used? For example, will maintenance services be offered by OEMs, third parties, or retailers, and will they be provided by mobile units or at parking stations?
- Because assets are driven by software, mechanical wear and tear will be limited. Maintenance will largely consist of operating system management, sensor data interpretation, and sensor replacements. What training will be required to upgrade the skills of the current workforce to support the asset-maintenance needs of the future?
- Will this service competency be developed by the asset owner, or leveraged from external providers? If the former, could it be extended to other participants as a revenue-generating opportunity?
Traffic management. Both the private and public sectors will be involved in the development of technology, structures, and systems for traffic management and for monitoring the safe operation of vehicles. These will include routing design (to impose restrictions on where the vehicles may operate, for example) and infrastructure upgrades (to ensure adequate data-collection and -transmission capabilities within a specific jurisdiction, for instance). It will also include the design, construction, and operation of control centers for vehicles, operators, and infrastructure. For example, cities will implement centralized control centers for autonomous vehicles—like air-traffic control for planes. Someone will also need to develop and implement protocols for the seamless "hand-off" of control as vehicles leave one control center's jurisdiction and enter another. Finally, there will need to be ancillary services like traffic-signal integration to maintain synchronous movement of autonomous vehicles. Bureaucrats and engineers will have new responsibilities, such as establishing traffic-related policies and regulations and managing harmonization among the various levels of government that have a stake in traffic safety. For example, governments will have to develop policies for such issues as "cohabitation" of autonomous and non-autonomous vehicles and zoning approvals for operation and domiciling of autonomous vehicles.
- What communication protocols will be used to enable seamless human-machine interfaces?
- What data and cybersecurity protocols will be adopted to protect the assets in motion?
- How will traffic systems communicate with the assets and coordinate them to prevent or avoid traffic incidents?
Applications. Users of autonomous vehicles will create demand for a variety of related software-based services that will be available to them, as applications either on their own devices or incorporated into the vehicle and accessed via touchscreen, for instance. Examples might include navigation, digital payment, content streaming, messaging, e-commerce links, and communication with a connected home or office. Those and other software applications could be delivered via an open platform, where developers could plug in an app for a specific function. This would be similar in concept to apps for Apple's iOS and Google's Android. Building a software "fabric" that would make "plug and play" not just feasible, but easy, could lead to the creation of a large company in itself. App developers' jobs may not change much, but there will be more demand for their skills.
- What applications will be needed to provide real-time visibility of the vehicles for supply chain operations?
- What kind of applications will increase the effectiveness of autonomous vehicles' performance: messaging, three-dimensional (3D) maps, virtual reality, augmented reality to better interface with autonomous systems?
- What kind of applications could be offered on board the vehicle to improve the customer's interaction with the vehicle and/or the delivered product?
Parking. Several aspects of vehicle parking could change significantly. Most parking structures today are built with a clearance that is suited for human access throughout the structure. In an autonomous world, vehicles could be summoned to drive out of the parking structure by themselves, so a different design with lower clearance and perhaps more space for vehicle parking and storage would be feasible. One interesting business opportunity will be providing parking locations with battery charging services for autonomous vehicles. It's likely that almost all self-driving cars will be electric; they are easier to control with computers, and they will comply with ever-tighter fuel-efficiency requirements. Plus it will be easier, cheaper, and safer to recharge an unmanned car than to put gas in its tank.
Parking facilities for autonomous vehicles could be purpose-built, but retailers might potentially use parking lots that are empty at night as overnight parking stations for autonomous vehicles, while distribution centers could use their parking lots to park and charge autonomous trucks.
- The design and operation of parking lots and garages today are based on drivers' behavior and needs. How would that change when there is no driver?
- Can existing infrastructure be leveraged for use by other companies' autonomous vehicles, and how will that service be priced?
Tolls. Toll roads will need to be redesigned to accommodate autonomous vehicles. Many states already have automated toll-collection systems on their highways, but in the future, all toll roads will need such systems in order to communicate with autonomous vehicles. These systems will have to become both ubiquitous and harmonized for the sake of efficiency and accuracy, as autonomous assets need a smooth flow and pace to maintain their coordinated movement. Universally accepted "smart" readers, "smart" license plate tags, assessment regimes, entry/exit verification, and payment links will support safe operation and equitable tolling of autonomous cars and trucks. This will create new jobs for engineers and state and local transportation departments.
- Who will pay the toll—the asset owner, the service provider, or the vehicle user? Given the shared ownership and operating models that are expected to develop, this could potentially be more complicated than today's typical payment regimes.
- Who needs to participate in discussions with local governments and get involved in regulatory activities to influence toll structure and traffic management?
- What onboard technology, payment-linkage infrastructure, and navigation systems will be needed?
Commerce facilitation. Companies will develop new ways to use drones, delivery bots, and autonomous highway vehicles to facilitate commerce and make it more efficient. There are two main ways this will happen. The first involves what you might call industrial applications, some of which are already either in use or in the test phase. These include using drones for inventory and asset counting in warehouses and transportation (truck, rail, and container terminals, for instance), and robots for inventory counting and shelf replenishment in retail stores. More such applications will doubtless be developed in the future.
The other involves delivering products and services directly to consumers. A top priority for providers of autonomous vehicle-based services, then, will be determining how to maintain a beneficial customer interface in a world with fewer human-to-human interactions. There will still be a need for retail salespeople and product-installation technicians. But autonomous vehicles can provide a new, additional avenue for offering services that can provide value to the customer. For example, vehicles that carry passengers could offer e-commerce ordering and pickup opportunities to commuters. "Delivery logistics"—where autonomous vehicles bring products directly to the consumer—will present many opportunities to fine-tune the robot-customer interface. For example, autonomous bots making home deliveries could act as a platform for on-the-spot ordering of the next delivery. Delivery drones could pick up returned goods or take product packaging back to their home base for recycling. We could even see on-board preparation of meals or other items, and robot-to-robot transfer of items for delivery.
In this scenario, humans that used to deliver products and services to customers themselves may take on new responsibilities, such as managing a fleet of delivery bots, preparing orders and programming delivery routes, and so on. However, these examples also suggest that autonomy could help companies overcome a lack of capacity or labor while continuing to provide services to customers.
- What types of customer service activities could autonomous vehicles perform, and could they provide those services more quickly and efficiently than humans do now?
- Can autonomous assets engage customers in additional selling and marketing opportunities?
- How can last-mile autonomous assets preserve customer intimacy and satisfaction while ensuring that promises to the customer will be accurately fulfilled?
Fuel. Obtaining fuel—whether fossil fuel or electric charges—will be a major factor in the successful deployment of autonomous vehicles. Someone will have to design, develop, and operate fueling stations specifically for driverless vehicles. These could be operated by vehicle OEMs, energy companies, third-party or independent vendors, retail outlets, or even through crowdsourcing (for example, by offering homes as charging points for electric vehicles).
- How will companies dispense and charge for fuel, and will fueling and battery replacement for autonomous vehicles be automated?
- What are the charging needs of vehicles that automatically charge using the motion of the asset, and does the infrastructure support power requirements for every type of vehicle being operated?
- How will companies dispose of items like batteries in a safe and environmentally sustainable way?
Design and manufacturing/OEM. Autonomous vehicles will, of course, require businesses that are focused on product and component design. Both traditional manufacturing and 3D printing will be needed. Original equipment manufacturers (OEMs) could adopt such approaches as end-to-end "design to delivery" control, becoming a mass producer of designs developed by other companies, assembling and integrating components from multiple sources, or building individual vehicles to order. In addition, there will be a need for businesses that can either build new factories or retool old ones to manufacture autonomous vehicles at scale. Some job classifications, like product design and quality compliance, will be familiar. Others—robotics mechanic and algorithmic operations, to name just two—will be closely tied to autonomous technology.
- Who will be the OEM, and who will be involved in related partner networks? How will their services be priced?
- How will the solution be delivered to the customer, whether that is a consumer or a business—directly, through an existing dealership network, a third-party seller, or a retailer?
Data management. Each autonomous vehicle generates, sends, and receives—to and from a "home base," other vehicles, and local communications infrastructure—enormous amounts of data each day. The more such vehicles are in service, the greater the need for capacity and services to collect, store, analyze, and distribute the data they create. Additionally, with public safety at stake, managing governance and access to that data will be critical. This will open up numerous business opportunities in hardware, software, data management, and data security. Information technology (IT) professionals such as systems architects, data scientists, and cybersecurity specialists, among others, will be in high demand.
- What data infrastructure will be needed (readers, edge computing devices, sensor networks, and more) to support new autonomic processes?
- How will data be safely and securely captured, processed, communicated, and stored?
- What analytical and interpretive skills will be needed to harness the power of the data that will be generated?
Jobs, training, and education. Most of the jobs humans will perform in the autonomous era will require skills in three main areas: technology, knowledge sciences, and operations. Some of those jobs will be entirely new, while some exist now but will be transformed by autonomy. Many autonomy-related jobs will involve some common supply chain functions. Just a few representative examples:
- Algorithmic operations planning, with algorithms recommending decisions and then executing operations approved by humans (supply chain planning)
- Innovative contract management for on-demand suppliers (supplier management)
- Traffic command and control (transportation)
- Automation troubleshooting and fault management (manufacturing)
- Training of collaborative robots (warehousing and distribution)
- Maintenance of autonomous delivery assets (last mile)
Some of today's skills and knowledge will translate well to autonomous vehicle ecosystems. But others will not, and even familiar functions—legal, human resources, safety, and so many more—will require rethinking and revision. Training and education that are specific to autonomy will be an absolute requirement and a huge business opportunity. Educators will need to develop educational curricula and skills certifications that can support autonomous technologies. Importantly, they will also have to upgrade the skills of professionals such as fleet managers, design engineers, and many others.
- What training strategy will be effective in preparing the workforce for autonomy-related jobs—apprenticeships, university and community college courses, professional certifications, "learn by doing" programs?
- Will a consortium of industry, educators, and professionals be needed to create and make training programs widely available? How could technologies like blockchain help with credentialing learners?
The development of these autonomy-related businesses seems certain; in fact, I would argue that they are inevitable. Yet we should not assume they will be the only ones that we will see. As people gain more experience with autonomous vehicles and their ecosystems, new business opportunities with associated jobs are sure to arise. (For a complete listing of future job possibilities, see the "Human Jobs in the Autonomous Era" infographic.)
Getting ready for an autonomous world
For these ecosystem businesses to succeed, four major components must be present. The first is technologies that complement or support the vehicle. Examples of complementary technologies include routing algorithms and customer interfaces. Support technologies may include things like launch pads, batteries, specially outfitted buildings, and other infrastructure.
The subject of infrastructure deserves special attention here. In the autonomy context, this refers to two things that are deeply intertwined: physical infrastructure such as warehouses and factories that are designed to accommodate autonomy-related businesses, and IT infrastructure that enables the collection, processing, and sharing of autonomy-related data. Both physical and IT infrastructure will have to be upgraded to support real-time processing of data without latency and to handle the enormous volumes of data generated by these systems. Rather than simply provide a building shell, for instance, real estate owners could offer fully equipped premises and related services to support autonomic processes. On the technology side, upgraded infrastructure (think edge and sensor "fabric" and data storage, communication, and connectivity) will be needed to support such technologies as computer vision, sensor technology, Internet of Things (IoT), artificial intelligence (AI), machine learning, robotic process automation, and virtual and augmented reality.
The second major component is an end-to-end operating model that considers the entire lifecycle of all the possible activities the autonomous vehicle might be involved in, from deployment through to the end customer's experience. The third is regulatory approvals and compliance, concerns that are relevant both in the proof-of-concept phase and during ongoing operations. For example, autonomous vehicles will have to comply with safety regulations designed to enforce the requirement that they not harm people, the environment, or any other assets (autonomous or otherwise) during their lifecycle. Regulations governing vehicle design and usage will be developed specifically for autonomous vehicles and will factor in whether they carry passengers, operate in the vicinity of people, and carry a load, among other concerns. We are already seeing this in regard to commercial drone applications, such as package delivery.
And lastly, there must be a profitable, sustainable economic model that outlines the financial impact of autonomous assets. Figure 1 provides some examples of the potential revenue-generating opportunities the ecosystems described in this article might offer.
Many participants and technical elements will need to come together to facilitate the adoption of autonomous technologies. (This by itself represents a huge opportunity for consultants with project-governance skills.) For autonomy to work safely and effectively, those involved will have to create a common operating system with universally accepted technical standards and algorithms that, for example, determine how a vehicle will behave and react in specific situations or environments. We must make autonomy work so vehicles, infrastructure, and systems are not in conflict. For safety's sake, how we put that puzzle together may be more important than any other aspect of how we approach autonomy.
In other words, people will have to recognize that there is more at stake than what is within their immediate control. Success will not lie with one person or company, or just a few people or companies. It will depend on a broad aggregation of people and organizations working together to solve problems and integrate their solutions and services in a way that benefits everyone.
In an autonomous future, however, business models and partner networks may look radically different than they do today. Traditional transport providers may be replaced by the likes of Uber, Mercedes Benz, Microsoft, Google, and Apple. It's important to give serious thought to these potential changes now, rather than wait until they happen sometime in the future. That's because they throw into question not only the sustainability of existing companies and which company you should bet on as a future partner, but also what business models, pricing approaches, and payment structures would make sense to get involved in.
So, should you play in the autonomous vehicle space? It will not be an easy decision, as it is likely to significantly change your capital structure and operating costs. This will be especially true for long-range supply chain decisions like network design, building a factory or distribution center, modernizing the fleet, building or buying assets, labor costs, and technology upgrades. It will be important to consider how such capital-intensive decisions would affect the journey toward autonomous vehicles and the ecosystems that will support them. For example, as the cost of labor continues to rise, the cost justification for autonomy will likely also increase. However, as discussed earlier, this will also create new jobs for humans that will require redefinition and new kinds of education and training. It is not too soon to plan for this eventuality.
Although autonomous vehicles are already here, most of the changes they will generate still lie in the future. That is why preparing to participate in an autonomous vehicle ecosystem is like playing the game of chess: supply chain leaders should always be thinking two moves ahead. It requires a very strategic mind to be thoughtful, yet provocative enough to lay the foundation for a successful business that is not yet reality.
