Walmart Looks to Drones to Speed Distribution

Description:  Walmart, the country’s largest retailer, is testing the use of flying drones to handle inventory at its large warehouses, which supply the thousands of Walmart stores throughout the nation.

Source: NYTimes.com

Date: June 2. 2016

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While a Walmart employee may handle the drone, the technology could “potentially” mean fewer workers would be needed to take stock or replace missing items, Lorenzo Lopez, a spokesman, said. Mr. Lopez emphasized that those workers could be deployed in other areas of the warehouse.

The test is occurring as Walmart is under intense pressure to grow amid an onslaught of low-cost competition, particularly from Amazon, the online shopping giant. Walmart has committed to spending $2.7 billion on labor, technology and other investments, including improving its website and e-commerce business. Last quarter, Walmart beat expectations with $115.9 billion in revenue, but even Doug McMillon, its president and chief executive, acknowledged that the 7 percent growth of Walmart’s e-commerce business was “too slow.”   read rest of story

Questions:
1.  Is Walmart on the cutting edge of logistics management with the use of drones?  Why or Why not??

2.  Why would Walmart want to implement this new strategy?

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59 thoughts on “Walmart Looks to Drones to Speed Distribution

  1. Michael Forster

    Question 1.
    Yes, Walmart is pioneering this new technology as far as big box stores go. Walmart warehouses represent drones on a massive scale and I think this can only benefit how inventory is taken. Many labor hours are lost to this task, and drones are a needed innovation that can greatly benefit warehouses everywhere. Walmart needs to attempt to keep up to the online shopping market and increasing the speed of their warehouses process will allow them more time to focus on this. As drones advance, so will this speed of inventory and workers can be increasingly placed elsewhere.

    Question 2.
    Walmart is falling behind. Online shopping is taking more and more of the market every day, and the convenience of a Walmart superstore isn’t all that convenient anymore. Walmart is scrambling to make up for lost time in terms of technological advancement, and they’re copying what Amazon and others have done as far as drones. At this point Walmart has relied on the older generations who prefer big box stores, they now realize this is fading fast.

    Reply
  2. Todd Bullock

    I think Walmart has an excellent idea here with the use of drones. I have never been apart of inventory checks but I have heard from friends and family how gruelling and time consuming it can be. The use of drones will not only speed up this process, but it will also allow for 100% accuracy. There will be human error at times during inventory checks but with drones taking pictures of all the products and a proper computing system in place that can read and correctly identify the products the error margin will be 0.

    I think walmart would want to implement this new strategy for the sake of cutting costs. Competing daily with other huge companies such as Amazon, walmart has to find ways to cut costs and become more efficient. Drones could help with that. They can help to speed up the work that humans do and eventually they can probably replace the humans. Walmart will go from paying wages to multiple workers in the warehouse to charging the batteries on drones. This sounds like a major cost reduction for the company.

    Reply
  3. Donovan Goeseels

    WalMart has always been on the cutting edge of logistics, that is why they can have such low prices that undercut everything company that tries to compete. When it comes to drones, they are not the only ones with that idea. Amazon is also thinking of using them, but for deliveries. If WalMart is successfully able to use drones, then they will have a significant competitive advantage. In order for the drones to be useful it must be handled by a professional that makes little to no mistakes, otherwise, it will be a waste of time and money.

    WalMart wants to implement drones because they have a lot of inventory to keep track and take account for. With a lot of employees, they can get the job done. Having a lot of employees means having a lot of people on payroll, and that means a lot of money. If the drone can do the same job that 50 employees can, it would be much cheaper simply to hire a professional to fly the drone than pay all of those people for one job. The challenge is maintaining quality and speed.

    Reply
  4. Tristan Lansdall

    The use of drones inside of warehouses is an interesting response to Amazons and Alibabas reports of using drones to deliver products to consumers. I also think that it is a smart response. Walmart knows that it is the big player in the industry and it’s not going to try and turn into something that it is not. Although they may be losing online customers to those online giants, they realize that online is not where Walmart excels. Yes it is an important factor in almost any business these days but Walmart has been dominant for so long they can afford to not excel in that sector. They have been the Godfather of logistics and the results speak for themselves so yes, I would say they are on the cutting edge of logistics. Further streamlining that process will only do them good as they try to fend off Amazon and the online revolution.

    Walmart would obviously want to do this to stay competitive and stay on top of an ever changing industry. They have been at the forefront of logistics and that is what has made them such a power house, so they obviously want to keep improving on this competitive advantage. Keeping online giants like Amazon at bay is a tall task, but this seems like a step in the right direction. It will be interesting to see how it plays out and in 10 years time if Walmart will still dominate the market like they currently do, or if other companies will gain ground on them.

    Reply
  5. Erika Lauer

    Yes, I think that Wal-Mart is definitely trying to be on the cutting edge of logistics management by using drones. Not many, it any, companies in the supply chain business use drones, therefore Wal-Mart using drones is cutting edge. It is important for companies to always look for new ways to improve their business. By using drones Wal-Mart will increase their productivity, which will in turn allow for them to increase overall profit. With the drones being able to do the same work an employee could do in 30 days, in one day it will be beneficial for the company to have drones. Wal-Mart will also be able to lower their labour costs if they use drones. This will result in Wal-Mart being able to lower their prices and be more competitive in the retail sector. The downside to Wal-Mart’s implementation of drones is that it will likely result in job loss because the technology will now be fulfilling the role that normally a person would.

    Wal-Mart would want to implement this new strategy because it will increase their overall productivity. They might also want to implement this new technology to help decrease their production costs, which would allow them to drop their costs for consumers and be able to compete with more business. This is just one way that Walmart is adapting to the new technology now available.

    Reply
  6. Sam Gleim

    Wal-Mart’s proposed implementation of drones in their warehouses is an attempt to match Amazon’s world class convenience; while simultaneously trying to recover a fraction of their lost market share percentage to Amazon. Amazon is continuously progressing and evolving to consumers’ needs and wants. I do not believe that Wal-Mart’s implementation of drones in their warehouses, even if successful, will alter their current status or grant them a competitive advantage. Wal-Mart remains the global leader of one-stop shopping centers, however they are becoming outdated. People desire convenience. What’s more convenient than shopping from the comfort of your own home?
    The proposal is not cutting edge; if anything it is a futile attempt. Not only is it piggybacking off of Amazon’s implementation of drones, it is not recognizing the issue. Wal-Mart needs to go back to the drawing board as they are only tackling the symptoms and not the problem. The problem is not the speed in which inventory is being tracked. The problem is less and less people are willing to go out and actively shop in physical stores. Their attempt may create ease and reduce inventory errors, however I do not believe it will guarantee them a competitive advantage.

    Reply
  7. Samuel Dumont

    The use of drones in the warehouse is an interesting idea. With companies like Amazon providing intense competition, Walmart needs to streamline its logistics to lower costs and compete. Personally I think drones are a bit of a weird choice as they seem more complicated than a different automated system would be. However, drones would be more capable of adapting to different tasks. The increased speed that the drones possess would be useful for keeping costs low and keeping better track of products.
    There are many reasons why Walmart would want to use drones in their warehouses. First, they are much quicker than humans, doing in a day what employees would do in a month. Secondly, they are less prone to error. However, they cannot make decisions in a way an employee can. This could be remedied by having an employee in charge of the drones to make any judgments. Third, drones are much cheaper than humans, and far less demanding. They do not take breaks and they cannot go on strike. For a company with almost 200 distribution centers, these savings would amount to a much cheaper cost of business. The only downside to replacing most employees with drones would be the backlash from the employees and the negative publicity. Of course, since lower costs generally translate to lower prices for consumers, Walmart could probably get away with mass layoffs without losing too many customers. With all these factors, it is necessary for Walmart to at least consider the use of drones in its warehouses.

    Reply

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