Seattle based e-retailer, Amazon, announced last week that it would open a new Research and Development centre in Cambridge, employing 400 engineers working on “machine learning, speech processing and mathematical modelling”. Amazon said that the technology being developed would be heavily orientated towards logistics applications with Amazon highlighting the central role that technology plays in Amazon’s logistics operations, as well as its web-services activities.
It is the latest of a series of R&D announcements by large service providers involved in e-retailing and last-mile delivery. For example, DPDHL announced last month a continuing investment in electric vehicles known as ‘Streetscooter’. Smaller start-up technology companies are working on new types of products and services in logistics, particularly for last-mile delivery. An example of this is ‘Starship Technologies’ which is running trials in London of a ground-based drone. However, one of the most impressive of these new technology driven logistics providers is the UK-based grocery e-retailer Ocado, which last year opened a warehouse which is largely automated and with an inventory management system driven by Artificial Intelligence. Ocado has just announced a new contract to run grocery retailer Marks & Spencer’s internet shopping business.
Discussing Amazon’s approach to technology development, Jeff Bezos, founder and CEO of Amazon, cited artificial intelligence or ‘machine learning’ as “transformative” to operations. Speaking in the US last week Bezos commented that “a lot of the value that we are getting from machine learning is actually happening beneath the surface and it is things like improved product recommendations, improved forecasting for inventory management”. The CEO said that Amazon would look to market a lot of these capabilities to corporate customers through its ‘Amazon WebServices’ business.
Information Technology has been important to the logistics sector for several decades. What is new is that technology driven companies are now developing capabilities to outperform their rivals both operationally and strategically. These capabilities are not so much incremental improvements, rather they are transformative. Companies who do not possess such technology will not be able to compete. This cannot be other than a huge threat to traditional logistics service providers.
Source: Transport Intelligence, May 9, 2017
Author: Thomas Cullen
If the application of technology to the supply chain is of interest to you, you may wish to know more about Ti’s report: Trends in Logistics Technologies 2017.
