Walmart’s 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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67 thoughts on “Walmart’s Drones to Speed Distribution

  1. Laura

    The use of drones has been a round for a while now, but using them to track inventory is one of their newer uses. I believe that Walmart is on the cutting edge of logistics management. By using the drones that are able to cut down on the amount of time that it takes them to run a inventory check. As well it will improve the accuracy of their inventory count if they are able to do it more often now that it is faster. Walmart would want to implement this so that they are able to save money on employee salaries which would bring down the overall cost of the warehouses. Because other competitors are coming in with prices comparable to Walmart they have to find ways to stay competitive and profitable.

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  2. Kemorine R

    Yes, I would agree Walmart’s use of drone places it on the cutting edge of logistics management. Firstly, the use of drone would significantly reduce the time that it currently takes to manage their inventories at their warehouses. That is time that could be spent elsewhere. Second, it reduces the chances of error that is likely to occur in the format that they currently use, where employees scan goods using a hand held scanner. This monotonous activity could potentially lead to boredom or fatigue which could result in errors being made during the process. This may also result in more time and money being spent. Using the drones would help to make the process more efficient and cost effective.
    Incorporating the use of drones is an efficient and cost effective strategy that would enable Walmart an opportunity to better compete with companies like Amazon. Walmart needs to improve its supply chain management if they want to provide better service to online customers. This may include strategies such as increasing the types of products that are available online or decreasing the time that it takes to deliver orders to customers. The reality is that more and more people are choosing to do their shopping online, therefore in order for Walmart to remain competitive they need to improve their logistics to a standard that is on par to that of Amazon or even better

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  3. Cole Malaka

    1) I wouldn’t say that Walmart is on the cutting edge, I think that they are forecasting the inevitable and planning ahead, which is a smart move. With companies like Amazon and Alibaba to compete with, especially with their logistics management goals, I’d say this is a pretty conservative approach in comparison.

    2) This would probably save Walmart and decent amount in labour costs, but keep in mind that drone technology is new, and I can’t imagine commercial drones being cheap to buy or maintain. However, I think the major advantage Walmart would have with this is constant nearly perfectly up to date inventory and stock information. In turn, this would give them far more accurate records. They would be able to pinpoint exactly how much of what they need and when. This level of efficiency could probably save the company millions, possibly even billions of dollars a year. Which would make this well worth it for the company.

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  4. Raj Pannu

    Walmart is not the first company to experiment with drones and are not going to be the last company. A lot of large companies have been trying to implement the drone to replace human labour. If Walmart is able to replace human labour with a drone in a warehouse it will make for more efficient work just like the article says the drone can catalog in as little as a day while it would take the normal employee about a month. Besides the more efficient work place if they replaced humans with drones it would end up saving Walmart money since they would not have to pay employees to do that work. After testing the drones in the warehouse and if it is a success they will be able to implement the drones into stores as well, even though they did not go into detail you could only imagine that the drones would make the stores run more efficiently as well. I do believe Walmart should implement drones to the warehouse for a few reasons, to be a more efficient workplace and to save money from not having to pay employees. Walmart would want to implement this new system of drones because they do not want to get caught up in the past and be behind all the other giant companies. The drones are a way of the future and it can push Walmart far beyond the other companies if they can perfect and get drones into the workplace before other companies can. this is why I think Walmart should implement the new strategy of the drones in the warehouse.

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  5. Leigh Muirhead

    Through the advancements of technology and social media companies are putting more emphasis and resources towards implementing and improving their e-commerce. Wal-Marts competitive advantage has originated around the concept of economies of scale. Where they can purchase mass amounts of inventory from manufacturers at low prices so they can pass on those lower prices to the consumers. However, in order to keep up with competitors like Amazon Wal-Mart has realized they to must constantly evaluate their logistics strategies. I think this thought process is evident through their implementation of drones in the warehouses. This concept is meant to make picking more efficient with less resource output like direct labor. Since Wal-Mart uses a picking strategy for their stores and has constant trucks delivering goods it is essential that “pickers” are quick and precise. This is where I think drones would be a good concept. Since they can just fly around and quickly locate products needed without having to manually drive around the warehouse. The precise aspect through a scanning process would also make picking times quicker.

    Initially, the concept of a drone operated picking system sounds good but there are other factors that come into play. The initial cost of this technology is immense and their upkeep also comes with a large expense. Employment opportunities will decrease. Larger salaries to maintain a tech department will also have to be noted. I do think this concept has good merit but it should be further research regarding its impact on the Wal-Mart community.

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  6. Sandy Derksen

    I believe Walmart is on the cutting edge with the use of drone technology. The use of drones in inventory and other possible sectors in the company have the capability to transform the company’s supply chain management to a higher level than most of it’s competitors. Drones will allow for a significant increase in time management and efficiency for the business. The article mentions that the drones will decrease the inventory time from a process that would take employees a month to complete, to one day. Such technology will give Walmart a greater advantage over its competitors because they will be able to provide much faster service to their consumers. Walmart will want to implement this strategy to gain a competitive advantage over other companies. There are other companies using similar technologies to improve their business and provide a more efficient process as well. For instance, online companies such as Amazon and Alibaba, have mentioned the future use of drones in their business as well. They will use drones to deliver products to consumers faster than ever before. Walmart would see this as a reason to up it’s technology as well in order to not be eliminated in the retail industry. With such technological advances being used in different companies, it will be difficult for Walmart to remain competitively advantageous, therefore, the use of drones in order to improve supply management is important.

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  7. Katie Bergeson

    In my opinion, Walmart is not on the cutting edge of logistics management with the use of drones. Walmart announced possible drone usage in June of 2016, whereas amazon attempted their first drone delivery in December 2016. Amazon has already implemented their drone delivery, whereas walmart is still in the testing phase, meaning the technology is not ready to go, therefore they are, in my opinion, pretty far from “cutting edge” as far as drone use goes. Also, as far as using drones, it is not “cutting edge” to use drones to simply count inventory, when you compare that to a physical, intelligent delivery system.
    The most logical reason that walmart would want to implement this new drone strategy is to increase their profits, as the article says the drone can do in a day what a human can do in a month, which would cut down on labour hours and eventually save money, leading to a higher profit. I think this is a truly awful idea for walmart, coming from a socially responsible perspective. Many people know that walmart is a huge employer, employing approximately 1.4 million people just in the USA. Publicly announcing that they are replacing human warehouse workers (an unskilled labour job) will most likely have a negative impact on walmart. This will be a source of huge profit loss for walmart, as many people refuse to shop there and take their business elsewhere. This begs the question, to what extent can companies replace people with technology? I think in an overpopulated world with rising unemployment, that limit is not very high.

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  8. Taylor Rice

    Unfortunately, I do not believe that Walmart is on the cutting edge. They are on the trailing edge of a retail revolution. As noted in the article, Walmart is simply responding to and trying to keep up with online retails like Amazon by using drones. Amazon has been testing the use of drones for quite some time now and already has plans to use them in a broader customer market. Though Walmart aims to use drones in their distribution centers and not necessarily to deliver products, they are employing a unique use of the technology. Though this does not directly serve customer satisfaction, perhaps, it would likely lead to greater inventory levels in individual stores.
    However, it seems to me that this use of technology has several benefits within the context provided by Walmart. Drones being used to speed up stock and distribution could provide great benefits. They are competing with online retail giants that specialize in warehouse and supply chain management. If they do not cut costs or innovate to become more streamlined and efficient, Walmart could find itself in a great deal of trouble. Amazon CEO Jeff Bezos has already expressed interest in undermining the storefront supergiant by employing numerous strategies designed to weaken the Walmart business model. Walmart likely cannot compete as effectively in their online sales, so they must reinforce and enhance their own competitive advantage. If Walmart can effectively employ a drone system that reduces shipping times to stores and enhances inventory levels across their organization, then they stand a good chance at effectively competing with other retailers.

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  9. Keshah Austin

    With Walmart expanding there supply chain with the use of droves, I believe they are on the cutting edge of logistics management.  Not many, if any other major company has Implemented this method. With the ability to increase function in there supply chain they can put more focus on the other elements of the company. That being said, implementing drones in their warehouses does not come without risks. Being so heavily reliant on technology means they are putting the fate of their company on technology as well. What happens if the technology breaks down? What happens if it breaks down  mid air? Drone technology is still in its infancy.  Not only have they lost all that product they have lost thousands of dollars of equipment. To be the first company to reallt implement this in their supply chain is good, but they really should account the risk involved. Another drawback to one of its most important stakeholders, its employees. Using Drone technology means that they cut back on the employees needed. That has a severe dominoe effect. Loss of employees effects the communities, which effects the customers.  So is this the smartest solution, maybe not. Walmart likely wants to implement this strategy because it will reduce costs, but will it really? I think implementing this strategy will, in the long run, incredibly hurt them. I think that with this new technology, they are thinking the bottom line. But, they are not focusing on their stakeholders .

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  10. Rose-Marie Nyberg

    It only makes sense that Walmart is testing the use of flying drones to handle inventory at its large warehouses, especially since the technology allows machines to catalog in as little as a day what now takes employees about one month. I highly doubt that Walmart will care about the current staff who do this work once their positons have been rendered obsolete. Instead, shareholders of the Walmart corporation will be able to look forward to the increased value of their company shares. Of course, the looming threat of Amazon’s growth in the area of supply chain management and delivery services weighs heavily on Walmart’s current market place even with the stated 7% growth at the mentioned last quarter. The current Walmart supercenters could conceivably takeover many of the current retail locations as the movement towards online shopping continues to spread. Then Walmart will require even less staff as it continues to move towards increased growth with the help of technology. Why should it be concerned with personnel issues of minimum wage and no benefits to its employees when it can just use a drone to help reach its desired growth and profit levels? Walmart has certainly managed to make itself a major presence in the retail environment and benefitted from employees who work at barely a living wage. I only wonder what will happen to the current Walmart employees when they need to secure employment after they have been replaced by a drone. At least the drone will not need to worry about homelessness, or not having a pension. It is a sad state of affairs.

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  11. Ethan Plotnikoff

    Wal-Mart does an exceptional job at organizes it’s product and making sure every store has just the right amount of product. Wal-Mart is feeling the pressure of Amazons online take over and in turn has committed $2.7 billion to labor, technology and other investments, including improving its website and e-commerce business. They saw great improvement with revenue at $115.9 billion and a 7% growth. With Amazon focusing on low cost and quick delivery online services Wal-Mart knew it could not let Amazon gain a competitive advantage. Wal-Mart dominates the logistics industry with 2.3 million employees worldwide and over $200 billion dollars in assets they are extremely good and organizing data and minimizing waste. The drone industry is growing and both Wal-Mart and Amazon see the opportunities it can provide. Amazon is attempting to use them for delivery services were Wal-Mart is trying to use them to organize their warehouses which can cut the number of employees down and create a much more efficient logistics system something they are already great at. It is almost like an arms race with both these retail giants both fighting for the upper hand and will be very interesting to see who’s new technologies and innovations will prevail. Wal-Mart is constantly cutting costs and trying to create the best margins and that starts in the warehouse where they reuse boxes that cost the $250 billion dollar giant a mere 75 cents.

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  12. Jason

    After reading the article it appears that Walmart is on the verge of being on the cutting edge of logistics with drones. Although Walmart is starting to spend money in this field, their President and chief executive, Doug McMillon, said their ecommerce business was “too slow”. Walmart has been feeling pressure recently from their competition Amazon, as Amazon has also been working on drone technology for improving their delivery systems. While Amazon is considering using drones for delivery, Walmart is using drones in their warehouses to improve efficiency. The drones for example, could vastly improve inventory and cataloguing efficiency by taking out the risk of human error. The drones, methodical and calculated vertical movements compared to a human operating a forklift, is cutting edge technology. It is quite clear why Walmart would want to use drone technology because, if working properly, the potential profit that drone efficiency could bring in is quite sizeable. This new strategy of using drones would vastly improve Walmart’s already impressive supply chain and would allow Walmart to reallocate its human resources. As the article said the use of drones won’t necessarily mean that Walmart must lay off its workers. It simply means that they will be able to move them to other areas in the warehouses. Overall this strategy is a way to be more cost efficient to make more profit. Walmart’s competition is already innovating, so being that this technology could be available within 6-9 months, is very encouraging for those who have stake in Walmart’s success.

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  13. Ryan Loman

    I believe that Walmart is close to the cutting edge of logistics management by using drones. This is because drones are one way of making the supply chain more efficient but some could say there are better ways as well. Drones can scan and catalogue as much inventory in one day as an employee can do in one month, however they still need to have one person operating the drone. You could say it is more efficient to catalogue the inventory before it is moved to the shelves. This would cut out the entire process and need for an employee and drone to fly up and down each section of shelving. I realize that it is not always this simple because there are hundreds of other factors to take into account when classifying logistics management. One alternative to drones would be an automated system, where robots can unpack inventory/items, conveyors can move the items to open shelf space, and when orders are received the system will automatically pull those items from the shelving space and stack them on pallets, the computer will than update inventory levels accordingly. Using drones may be cutting edge for Wal-Mart, if they believe it is the most efficient way of logistics management.
    Wal-Mart should implement this new strategy because by using drones in their warehouse, they are on their way to a more efficient supply chain. However it seems like this is a solution that will only partially fix or speed up their processes within the warehouses. With the amount of inventory moving in and out of their distribution centers, you’d think they would have an automated system. Although it might not make sense for Wal-Mart to invest in the infrastructure or technology required with a more automated system either.

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  14. Maddy Durfey

    I don’t believe Walmart is on the cutting edge of logistics management, I think they are acting reactively and not proactively like innovative companies tend to act. Having said this, I still think that Walmart’s intended use of the drones may be different that what other company’s are doing with them. This idea that they are beginning to test will definitely help them to streamline their logistic systems, therefore making the entire business plan more efficient.
    Its pretty obvious to me why they are implementing these changes, competition. Even though they have traditionally been a retailer that offers products at the lowest price they are now experiencing other companies coming in and offering those some products at lower prices. In order for Walmart to keep its stronghold on the consumer good market they have find somewhere to cut the costs of getting their products into the consumer’s hands. There is small mention that the e-commerce side of the business was also receiving some of the money invested and this will also assist in keeping them competitive. With companies such as Amazon not having the cost of that retail store front it will continue to push Walmart to find ways to lower the creation cost involved. If these drones end up being as efficient as the plan intends them to be then we could definitely see Walmart again asserting its dominance and squashing all competitors. But in the end they will have to continue to innovate if they want to stay on top because the industry seems to always be innovating.

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