Industry 4.0 — more than manufacturing, part 5: distribution

By Kevin Baker | September 15, 2022

Editor’s note: In a report on industry for Orange leadership prepared this summer, Orange Silicon Valley analyst Kevin Baker examined the technological innovations driving transformation through the interconnection of physical and digital systems. The shift, referred to in this report as the fourth industrial revolution, will shape production and distribution in the years to come in ways we are just beginning to understand. This report is now being made available for our Orange Silicon Valley website readers in a series of five weekly articles. Part 5 looks at distribution. Other articles in the series include part 1, introduction; part 2, strategy and planning; part 3, procurement and sourcing; and part 4, manufacturing. For questions or additional information, please contact Kevin Baker.

Industry 4.0 — more than manufacturing, part 5: distribution

Last-mile delivery looks to big tech for partnerships

Announced January 2022, Microsoft and FedEx will partner on “logistics-as-a-service”. The new cross-platform solution brings together FedEx network intelligence with capabilities from Microsoft Dynamics 365, aiming to increase merchant competitiveness in the e-commerce space by improving customer engagement and providing enhanced shipping options. Microsoft reported, “The companies share a vision for reimagining commerce experiences for businesses so they can offer their consumers more integrated ways to shop, and faster, more efficient deliveries.” FedEx and Microsoft have partnered for several years to transform commerce, supply chains, and logistics.

UPS announced a deal to expand its services with Google Cloud to prepare for a surge in data generated by Radio Frequency Identification (RFID) chips that will be added to its packages. UPS aims to increase visibility and tracking precision with this addition. From the expanded deal with Google Cloud, UPS will receive increased network, storage, and compute capacity. It will continue using Google’s AI and machine learning tools to analyze its incoming data.

Federal Aviation Administration (FAA) to loosen autonomous delivery drone requirements, spurring investment in the space

Current restrictions on delivery drones require them to fly inside the operator’s visible line of sight, limiting them in terms of terrain and ground infrastructure. However, the FAA aviation rulemaking committee (ARC) issued a study in which it expressed concerns that present restrictions do not maximize social and economic advantages. The report calls for a regulatory framework that allows third-party services to operate outside a visual line of sight.

Walmart announced it will expand its drone-delivery service to reach 4 million households. The expansion will bring Walmart’s drone delivery to six states in the US and increase Walmart’s drone delivery capacity to 1 million deliveries per year. In direct competition with Amazon’s sophisticated logistics empire, Walmart looks to offer deliveries to each customer’s doorstep within 2 hours of an order. The announcement comes shortly after the ARC announced its aims to loosen restrictions on drone delivery.

Alphabet’s autonomous drone delivery service, Wing, began operating in Dallas-Fort Worth, Texas. With a regional population of ~7 million, the Dallas-Fort Worth area has proven to be a more complicated region than others previously serviced by Wing. Opening operations in the region represents the largest rollout of delivery drones by Alphabet and marks the first initiative in which drones will provide service independent of Alphabet Wing operators.