Attack of the Drones – the Battle of the Supply Chains

Delivery by drone appears to be the way of the future. It has already been tried and tested for both good and evil. From smuggling drugs and weapons into prison systems to dropping off life saving medical supplies into remote and dangerous locations drone delivery has the potential to be a very cost effective and efficient method of transportation logistics.

Zipline is a startup company specialising in the manufacturing of drones. It’s aim is to deliver medical supplies to  otherwise hard-to-reach locations in developing countries using its small robot airplane appropriately named Zip. Zip can carry vaccines, medicine, or blood protected within it’s chassis. It will start with delivering supplies in Rwanda from as early as July.  

. The main source of funding behind this project has been a $US800,000 grant from United Parcel Service, aka. UPS. One of the world’s largest package delivery service providers and, to me, will forever be associated to the opening scene of Ace Ventura Pet Detective.
Through the funding supplied by UPS and with the assistance of Gavi, The Vaccine Alliance, the aim is to perform up to 150 deliveries a day to 21 blood transfusion facilities in the western half of the country. And this can all be initiated by a text message. 

While UPS are funding Zipline’s project, its logistic competitors are starting to get involved in their own drone R&D. DHL are developing their Parcelcopter which, with the use of its automatic package station branded as the Parcelcopter skyport , is a fully automated delivery service.  

Amazon is the another big player in the drone space with its “Prime Air” delivery service using former Top Gear host Jeremy Clarkson as their spokesperson in this video:

Here in Australia, Google have performed test flights of its drone, known as Project Wing, and have even announced that their service will be up and running in 2017. Even Australia Post have commenced trials via drone delivery however it is still very much in its early test phase and realistically will be 5-10 years away.

Why all the hype behind drone delivery? Australia Post chief executive Ahmed Fahour states “We need to get ahead of the curve” (Ferrier, 2016). There appears to be a space that such a service can fill especially for customers in rural and remote locations. At the same time, with the rise of online shopping and services, it has never been easier for Manufacturers to be able to deal directly with Customers. As a result, distribution channels have shifted from the wholesaler – retailer model to direct relationships between manufacturer and customer, cutting out the “middle men” in the process and therefore keeping prices low since the markup from retailers is avoided.

Distribution Channels

Forms of Distribution Channels (Iacobucci, 2013 p.128)

But Manufactures still need a method to transport their goods to the consumer. This is where logistical specialists such as UPS, DHL and Australia Post come into play, not to mention the independent specialists like Flirtey and Zipline that the drone delivery market will inevitably produce. At the same time retailers such as Amazon will need to justify that they, as a retail channel are still essential.

The main roadblock at this moment, is safety. We can’t have drones breaking down and falling out of the sky nor have them pose a threat to manned aircraft. Flirtey is working with NASA to develop an air traffic control system for drones and Google have filed a patent for a safe drone landing system. Australia Post will be working with the Civil Aviation Safety Authority (CASA) later in the year to “ensure there were no risks to people, property or aircraft“(Ferrier, 2016).

In the meantime, the skies will be relatively drone free but the competitive R&D into drone delivery logistics will continue. Drone manufacturers must be licking their lips.



Works Cited

  1. Iacobucci D, 2014, Marketing Management, 4th edition, South Western Cengage Learning, Mason OH USA

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