How Can Self-Driving Reshape Urban Middle Mile Delivery?
If you want a taste of just how deep the supply chain crisis has burrowed into the consumer packaged goods (CPG) sector, look no further than the cold drinks case at your local convenience store. You just might find more than a few empty shelves.
“We’ve seen supply chain disruptions across the board,” says a warehouse manager named Joseph, whose beverage distribution facility services nearly 2,500 customers throughout southern New Jersey on a weekly basis. Long before the pandemic, consumer behavior and workforce trends began shifting; the pandemic, Joseph says, simply accelerated them. “Every week,” he continues, “is an adaptation exercise.”
One mode of adaptation that’s quickly emerging on the horizon for the CPG industry is self-driving technology, and Argo AI is one of the innovators leading the way, thanks to unique partnerships with Ford and Volkswagen. Argo is developing autonomous vehicle fleets for commercialization in dense urban areas, where self-driving technology can help address gaps in the middle-mile segment of the supply chain. Currently, Argo is testing its self-driving system on roads in eight cities across the U.S. and Europe.
“We’ve already amassed a ton of knowledge on the power of self-driving vehicles in these key cities,” says Lehren MacKay, Argo’s Head of Business Development. “So, we’re seeking partnerships with innovative companies that are committed to our vision of changing the middle-mile landscape for the better.”
The urban middle-mile challenge
CPG companies must manage inventory across an array of urban warehouses and distribution centers, then transport their products from these locations to retailers across busy cities. They are endlessly searching for ways to optimize the flow of their delivery fleet to maximize efficiency and minimize pain points like driver fatigue, lack of parking, and empty return trips. Minor driving incidents are also an issue, because they take vehicles off the road, drive up maintenance costs, and risk further delaying deliveries.
“There’s lots of value in having smaller shipment sizes, in being able to go from point A to B straightaway, without having to wait around to group multiple deliveries,” says Israel Kosistky, Argo’s Director of Product Management. “If we rethink how to deliver within the urban middle-mile, including what type of vehicle to deliver goods in,” Kositsky continues, “we’re positioned to positively influence how businesses optimize delivery operations.”
A time for ‘bold moves’
Since the pandemic, the urban middle-mile landscape has grown trickier. Shortages in raw materials have delayed the production of myriad products. Fuel prices have surged. And a labor shortage continues to have outsize effects on the CPG industry, contributing to a “supply chain crisis unlike anything our industry has seen before,” according to Consumer Brands president and CEO, Geoff Freeman.
At the same time, global lockdowns, and the profound shift they’ve triggered in both how we work and attain goods, have led to huge upticks in consumer purchases. This in turn forces retailers to place more orders, putting pressure on CPG companies to keep shelves stocked.
In a recent memo on these tectonic shifts underway in the supply chain, global consulting firm PwC called on CPG manufacturers to “make bold moves to help reshape the industry.” The memo also emphasized the importance of enterprise agility, which includes the heightened focus on supply chain transparency and leveraging analytics to predict customer order patterns and optimize delivery operations.
PwC’s call-to-arms, along with other industry reports that overwhelmingly show CPG companies prioritizing resiliency and agility, align with Argo’s goal of bringing self-driving technology to market at scale.
“Not only have we integrated our technology in multiple vehicle types, but we’ve also worked in lockstep with Ford and Volkswagen throughout every stage of development,” says MacKay. “Our close relationship with automakers ensures our vehicles are designed for safety and the requirements of commercial operation.”
From Austin to Miami, Hamburg to Munich, test cars equipped with the Argo self-driving system—a combination of lidar, camera and radar sensors that provide 360-degree awareness out to more than 400 meters—are being operated on public roads in preparation to scale self-driving vehicles across a range of business applications. These vehicles, and the unique technology they boast, have the potential to maximize delivery efficiency by complementing human drivers to optimize delivery speed and uptime. “Our vehicles are constantly monitoring for safety with a 360-degree view,” says Kositsky. “They don’t get distracted or get fatigued like a human driver.”
A fleetwide vision
Ultimately, Argo’s vision is to scale autonomous delivery across a range of customer use cases. A partnership with Walmart is already in place with Argo and Ford to streamline transportation of groceries and other goods. Soon, Ford Escape Hybrid autonomous vehicles will begin carrying Walmart goods to customers in Miami, Austin, and Washington D.C. While this collaboration focuses on the last-mile segment of the supply chain—the transport of goods from retailer to consumer—it is the perfect test case for expansion into the urban middle mile component.
“The ‘driving’ portion of the urban middle mile is a prime area for automation,” says MacKay. “Our self-driving vehicles could supplement existing operations to make employees more efficient and productive—imagine having workers at either end, loading and unloading vehicles, or sorting goods within the vehicle, to optimize the drop-off efficiency.”
On top of Argo’s continuous focus on safe vehicle operations, the company is also building out cloud infrastructure that equips CPG companies with real-time, fleetwide dispatch and management systems—tools that ultimately provide a greater, more holistic perspective of the movement of their products.
“Companies are now really seeing that they need more visibility into their supply chain,” MacKay says. “Our technology can uncover areas where the biggest efficiency gains can be made, including within workforces where high-value tasks can be prioritized over driving.” Self-driving vehicles, she continues, can enable CPG enterprises to rethink the supply chain, from optimizing package loading and delivery, to operating vehicles around the clock on focused routes.
Back at the distribution center in southern New Jersey, Joseph agrees that a profound—and permanent—shift in the way businesses ultimately deliver their products is underway. “If you’re not adapting to what’s going on around you,” he says. “You’re not going to be able to bounce back.”