Morai-Logistics-Blog-international-womens-day-logistics

Yesterday was International Women’s Day (IWD), a celebration and tribute to women’s rights. This year marked the 108th anniversary of IWD.

IWD 2017’s goal is to speed up the timeline in reaching parity between men and women in opportunity, wages and leadership representation. According to the World Economic Forum, it’ll be nearly 170 years before the gender gap is closed. That’s a long time to wait for equality.

Let’s have a look at how far women have come. Both in the workplace and in field of logistics.

Women Internationally

Women have made tremendous progress across the globe in terms of rights and in the workforce. However, the last few years haven’t been as promising.

Despite an additional quarter billion women entering the workforce since 2006, women are a third less likely to participate than a man. In fact, in the ten years between 1995 and 2015, globally, women’s labour force participation dropped over 2%. Representation in administrative roles isn’t much better as women only hold 12% of the world’s board seats according to a report by Deliotte.

The disparity continues in wages. Globally, women earn around a third less than what men earn.

Women in North America

The numbers are a little more optimistic if you narrow the scope to just North America.

In Canada and the U.S for example, the difference between the number of men and women in the workforce was 9.6% and 12.4% respectively.

The two countries show very different numbers when it comes to women in management positions. Women hold around 35% of management and professional roles in Canada, whereas in the U.S, the number goes up to 51%.

Only modest gains have in regards to the number of women serving as Fortune 500 CEO’s. There’s only 24 women (4.8%) in the top levels of these companies. However, Fortune is reporting that the number is increasing to 27 by the end of first quarter 2017. While still low, these numbers are big improvement over 20 years ago, when women were completely absent from these positions.

Women in Logistics

The logistics industry continues to struggle with equality. There are several reasons for this, but a root cause is perception. It’s hard for the industry to escape the perception that it’s all about heavy lifting and moving. This image problem has affected the number of women seeking out a career in logistics.

Currently, around 65% of graduates going into the logistics field are male. Only 35% of graduates are female. The difference is the greatest of any business field. The number drops to 5% when looking at women in logistics holding top level positions.

These figures are troubling not just from an equality perspective, but from a business point of view as well. Financial performance significantly improves if there’s at least 30% women in higher-level leadership positions according to a 2009 report by McKinsey.

Women have come a long way since the first IWD 108 years ago. Organizations are increasingly seeing the value of having qualified women on their teams, from entry-level to CEO positions. The logistics industry especially has a lot of work left. But, we’re confident that as the industry continues to modernize, the number of female leaders will grow as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-logistics-pizza-delivery

Few people appreciate what goes into having an item made and delivered to their home. For most, they simply order an item, wait the estimated time and then receive the package. It might as well be magic that made the delivery possible as far as they’re concerned. We explore the complicated business of pizza delivery from a logistics and supply chain point of view.

Those of us in the logistics and supply chain industry understand the level of work and coordination that goes into each successful delivery. Giant retailers like Amazon and Wal-Mart spend millions in technology, infrastructure and personnel just so their customers can get their packages a days earlier. It’s gets even more complicated for those involved in the food delivery industry.

Getting warm food to a customer without it getting ruined, is a complicated task. Just ask the dabbawalas.

It’s no surprise then that as the number of deliveries grows, the logistical systems in place become more complex. One company stands as a shining example of food delivery logistics. Not only has it reinvented itself, but it is also pushing the envelope of innovative technology—all in the name of better customer service.

There is a Western company that has not only mastered the art of hot food deliveries, but is also pushing the envelope for what’s possible. That company—is Domino’s Pizza

Domino’s is Dominating Innovation

If you lived in the right place in New Zealand, you could have a pizza delivered to you via aerial drone.

On August of last year, Domino’s Pizza partnered with Flirtey to test the first commercial drone pizza delivery model.

Up until then, the only companies dabbling in unmanned drone delivery were e-commerce giants like Amazon and Alibaba and a few others. Having a pizza business adopt similar technology may seem like overkill. That is, until you realize that it’s only the latest effort by Domino’s to become a leading innovator. The company is even investing in artificial intelligence, autonomous vehicles, DRU and voice technology to further improve its delivery services.

The Goal—Excellent Delivery

Prior to 2010, Domino’s was just like any other pizza delivery chain. It’s one highlight being that it had particularly bad pizza.

It wasn’t until Patrick Doyle became CEO of the company that things started to change. For Doyle, it was about seeing the bigger picture. Domino’s was always a pizza company, but its also in the business of delivery. It needed to excel in both areas to be successful.

Doyle’s plan for success, was to remove customer barriers. Anything that would impede a customer’s ability to select, place and request an order needed to be removed. Thus, the entire business model and company were restructured.

Invest in Your Customers and They’ll invest in You

Almost overnight, Domino’s saw a return on their efforts after they announced their plans through a series of bold commercials. The company stock jumped 15% by the end of quarter and it continued to grow. It’s now worth 18 times what it was six years ago. Domino’s reach has also grown as its stores can be found in more than 80 countries across 12,500 locations. The company’s commitment to better customer service paid off big time as it’s now the second largest pizza chain in the world.

The lesson that Domino’s teaches us is simple, but often forgotten: invest in your customers, and they’ll invest in you.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-TPP-NAFTA-2

Earlier this week, newly inaugurated president Donald J. Trump withdraws from the Trans-Pacific Partnership (TPP). Hence, the U.S withdrawal from the 12-country agreement effectively rendered seven years of negotiations a waste.

Pulling the U.S out of TPP was one of Trump’s campaign promises. Though, aside from the possible global-political ramifications of the action, what many are wondering now is if he’ll do the same to NAFTA and what all this will mean for the logistics industry.

Consequences of the Withdrawal

To say TPP was controversial would be an understatement. Several protests around the world were held throughout the negotiations.

There are many reasons for and against TPP, with both sides passionate about their position. But, the trade agreement would have created a network encompassing 40% of all world trade and affected millions of people across the world. Other global concerns would’ve been impacted as well, including cyber security, environmentalism and free trade.

Fallout of the withdrawal is being hotly debated across the professional and media landscape. So we have detailed the three key concerns that are being discussed:

  • Loss of North American competitiveness — TPP would’ve eliminated more than 18,000 taxes and trade barriers across its member countries. By pulling out of the trade agreement, the U.S and by extension Canada, is losing out on a large section of the global market. Farming manufacturing, and the services and technology sectors will be impacted the most. While Canada and Mexico can still negotiate on their own, they lose a lot of bargaining power without U.S backing.
  • Loss of North American influence over global trade — One notable absence from TPP was China. Some experts theorized the exclusion was intentional. TPP they argue, was an attempt to counter China’s growing economic influence on global trade. China has pushed its own trade pact, called the Regional Comprehensive Economic Partnership (RCEP), which currently has 16 members. By backing out of TPP, Trump may’ve pushed some countries that originally signed to seek other trade agreements, like RCEP.
  • Risk of protectionism — The U.S is not part of the RCEP. If it goes through, experts are worried that it will have tariffs against the U.S. This, along with the shaken confidence of TPP members may raise the number and cost of tariffs.

What Will Happen with NAFTA?

Trump promised Americans to either renegotiate or outright end NAFTA during his campaign. His actions with TPP indicate he’s serious about his promise.

When asked on Monday, White House press secretary Sean Spicer said Trump would rather renegotiate NAFTA rather than tear it up.

“Mr. Spicer said Mr. Trump’s complaint is with “multinational” trade deals because they are more complicated to renegotiate. But he said the President was open to bilateral deals – a sign that he might be willing to keep a deal with Canada, even if he makes good on his pledge to change the terms of NAFTA to make it harder for American companies to move to Mexico” wrote Adrian Morrow, reporter for the Globe and Mail.

Trump will be meeting with Prime Minister Trudeau and Mexican President Enrique Pena Nieto in the coming weeks to discuss a renegotiation.

If NAFTA were to end, it would have serious negative repercussions for the transportation, manufacturing and logistics industries across the three nations.

The end of TPP is already having an impact on offshoring efforts. Thus, the coming weeks will see if nearshoring efforts will be upturned as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Outsourcing is business strategy of contracting work out to a third-party. Companies use outsourcing to gain access to cheaper labour, larger specialized labour pools, and/or obtain other benefits through an economy of scale. The term encompasses both the setup of a subsidiary, and the off-site activities of a company.

For decades, companies used outsourcing strategies to meet the needs of their business, but it was not formally identified as business strategy until 1989.

The three main types of outsourcing are: offshoring, nearshoring, and reshoring in the logistics and supply chain industry. The main difference between them is the location of the third-party. Each has its own benefits and costs, but because of the dynamic nature of global political-economy these are always changing.

We created this eBook to kick off 2017 to clarify why companies choose a particular offshoring option over another. This way, you can see how manufacturers think about these strategies.

What is the Difference Between Logistics Oursourcing Options

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Choosing Shoring Options

There are many advantages to outsourcing certain jobs and functions—cost advantage, access to bigger pools of skilled labour, increased efficiency, and saving on infrastructure and technology. However, the biggest advantage is that it allows your business to focus on core areas. Your business will be able to spend more time on building its brand, R&D, and providing higher value added services.

Offshoring, nearshoring and reshoring each have their own distinct advantages and disadvantages. Though, what will work best for your business will depend on its goals and core competencies. Talking to a third-party logistics provider is a very useful way to learn more about sourcing options.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-supermarket-amazon-go

In last week’s post, we covered the reveal of Amazon Go.

This week, we’ll cover the steps Amazon’s competitors have taken to stay competitive. We will also be going into why with just a teaser video, Amazon may have already won the war for the future of retail.

Before we begin, we need to do a recap about what we know so far.

What the Reveal Video Tells Us

Amazon Go will work like this:

  • Amazon Go aims to give customers a ‘grab and go’ feeling similar to how its digital shop operates.
  • You enter the store by waving your smart phone across a scanner.
  • You will need an Amazon account (likely Amazon Prime) to use the store.
  • If a customer changes their mind about an item, he/she just puts it back.
  • The store will be using AI and facial recognition technology similar to that found in a self-driving car.
  • Seattle will be the first test city which makes sense given the city is also home to Amazon’s head office.

The video is meant to cement the idea of a friction-less retail experience. Simply go in, get what you want, then leave. The video makes the idea believable, influences buyer expectation, and affects the future of the industry.

Let’s look at the strategies Amazon’s competitor’s have been testing to expand their market share.

Competitor Response

Big retail and food companies are using a number of different strategies to stay competitive. Companies such as RetailNext, Euclid, Nomi and others are part of a trend that provides brick-and-mortar stores with analytics that looks similar to website traffic reports. The aggregate data is used to project purchasing trends, decide how to build a layout, and produce more detailed reports for shareholders.

Food heavyweights such as Tyson Foods Inc., Campbell Soup Co. and Hershey are taking a page from UberEATS with their strategy. They are trying to get into the home delivery and meal kit market as Wall Street Journal correspondent Kelsey Gee explains. They are working with online couriers to challenge companies like Blue Apron and HelloFresh that have carved out a $1.5billion market delivering parcels of fresh ingredients.

Wal-Mart is also making an aggressive push into online groceries. Wal-Mart Pickup and Fuel lets customers order their items online and pick them up when they are ready.

Future of Retail—Has Amazon Already Won?

While the strategies used by Amazon’s competitors are innovative, they haven’t had the same media buzz. With just a video, Amazon has created an expectation amongst consumers. They will expect greater convenience in the way the video promised. Companies using alternative models will need to work harder to convince their consumers that their way is superior.

However, being king of retail may not be Amazon’s true goal. Amazon Go is more likely to be a proof-of-concept and a retail model it can sell to other businesses as this video speculates.

Conclusion

The reveal of Amazon Go is recent, but it’s already beginning to disrupt the retail industry. Time will tell which new retail method becomes the standard, but one thing is certain—retail will be undergoing a drastic evolution very soon.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-supermarket-amazon-go

A couple of weeks ago, Amazon.com Inc. announced it will be opening a grocery store. This is an unexpected move for the e-commerce giant.

Amazon Go is the name of the name program. The reveal video promises “no lines, no checkouts, no registers”. It’s about to enter the pilot phase, being limited to a single store. The only customers to test it out will be employees.

So why the hype?

More Than Meets the Eye

It might seem strange that the announcement of physical store is having such an effect on news outlets. After all, e-commerce sales continue to grow each year. The sale of groceries isn’t new for the company as its AmazonFresh program made its debut back in 2007. This being Amazon however, means the project is more nuanced then it first appear.

A 2014 patent filed by Amazon gives more insight into how the store could work. Basically it involves a whole lot of cameras, sensors and tracking. Natt Garun, from the Verge, comments:

The patent describes a system where cameras could capture you as you walk into the store, then identify who you are based on an ID card that’s associated with your Amazon client

There are cameras lined within the store as well. They’d determine if multiples of the same items are taken. So if you took several bags of chips to get to one in the back and you put the rest back, then the cameras would recognize the action and keep you from being charged.

Sensors in the shelves are another way for the store to know what you have taken. They will check to see if the weight has changed from its original state.

Why Invest in a Grocery Store?

There are some unique ways Amazon Go stands to benefit the company.

Amazon Go, even if it were expanded far and wide, would generate a shadow of the sales of the parent company. E-commerce will have the advantage over physical stores because it isn’t limited by the geography of its customers.

What Amazon Go represents for the company, is valuable information on its customer’s buying habits. Customers would be enticed by the promise of a hassle-free grocery experience, and the cameras in the store would collect information about them. Nat Garun continues:

The patent says this is used to identify the shopper’s hand to see whether they actually pick up anything off a shelf, but combine that with the fact that Amazon knows what you’re buying and who you are down to your skin colour and this is pretty next-level market data

Information gathered this way could be used to strengthen its other programs, AmazonFresh in particular. The company would be able to see what works to move a product and what doesn’t. Having physical stores would also allow Amazon to broaden its influence in the retail market.

Conclusion

Time will tell how much of a disruption Amazon Go will be on the industry. The promise of “no lines, no checkouts, no registers” sounds appealing but customers may not like being always watched.

The store will also be a model for other industries to consider. In the same way the reveal of Amazon Prime Air made waves in 2013, the same will be true for Amazon Go.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-santa-ecommerce

eCommerce operations is the true Santa’s workshop and its logistics and supply chain professionals that scramble during the holiday season to make sure that your gifts and goodies arrive just in time for the holidays!

Most people are readying themselves and their bellies for the holidays, logistic providers are readying themselves as well. eCommerce businesses in particular, started preparing for the holidays back in August. Although Black Friday and Cyber Monday are behind them, there is still Christmas Day and Boxing Day still looming later this month.

Right now, operation teams across North America are making their lists (of inventory and personnel) and checking it twice (and several more times for good measure). Thanks to Black Friday and Cyber Monday they’ve found out which retailers and shippers are naughty or nice. This is because when the holidays come, customer shipments are comin’ to town (every town)!

Getting the Workshops Ready

According to a recent Wall Street Journal Logistics Report written by Loretta Chao, Transportation and warehouse companies added about 8,900 jobs across the U.S in November.

The number of warehouse operator jobs grew by 3,100 jobs from October to November. Payrolls have also increased as its grown by 47,000 jobs over the past 12 months.

It wasn’t only fulfillment centers that saw an influx of newly hired associates. As Chao points out,

Courier and messenger companies, including the package carriers that deliver online orders, increased their payrolls by 5,700 jobs last month, expanding employment in the industry by some 26,300 jobs from a year ago, according to the U.S. Department of Labor jobs report. The gain followed the addition of 12,200 transport and logistics jobs in October

Big Business in Gift Giving

The reason the holidays are such a scramble for retailers is because of the amount of business they stand to gain. In the U.S alone, the holiday season generated over three trillion dollars for the retain industry in 2013. The holiday sales accounted for 19.2% of retail total sales that year.

Increasingly, people are turning to online shopping. In terms of numbers, by 2010 B2C ecommerce sales totaled $283 billion USD in North America. By this year’s end, ecommerce sales are predicted to reach nearly $600 billion according to Statista.com.

In 2015, the holidays season saw desktop retail e-commerce spending in the U.S reach over $56 billion USD. Most of that money was spent online on Cyber Monday.

Cost of Late Deliveries

Understandably, customers will be upset if the items they ordered online don’t arrive on time. The main draw of purchasing gifts online is the promise of convenient and speedy delivery after all. Failing to hit deadlines means not just having angry customers, but also losing their trust when they need to do their holiday shopping in the future.

The holiday season of 2013 is the worst example of this. A shortened holiday season and erratic weather were cited as the reason for delays, but the damage was done. Customers were angry. It took costly good will gestures to regain their trust.

As 2016 ends, remember all the people that helped make your holiday special. Receiving gifts is great, but more amazing is the gift’s journey and the people around you!

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-blockchain-logistics

The Port of Rotterdam tests blockchain logistics which can kickstart a revolution in the level of transparency within the industry.

The Port of Rotterdam, Europe’s largest shipping port, is taking part in a Blockchain consortium which is focusing on logistics, reported Coin Desk. The project has the support of more than fifteen public and private sector companies based in the Netherlands.

Consortium members will spend the next two years designing and developing applications for blockchain technology in the logistics sector. There have been similar efforts in the past, but according to the founders, this blockchain project is unique because of its scale in the logistics chain.

What is Blockchain Technology?

According to the Economist, a blockchain is a distributed database that maintains an ever-growing list of records called blocks. The information in a block cannot be altered retrospectively as each block contains a timestamp and a link to a previous block. The nature of blockchains makes it function like a public, digital, distributed ‘ledger’.

The technology is relatively recent having first been put into practice by Satoshi Nakamoto in 2009 as a core component for the digital currency known as bitcoins.

Since its debut, blockchain technology has had a disruptive impact on several industries. Financial technology was the first to start adopting blockchains, but its started to move into the logistics sector as well.

How Blockchain Technology Can Benefit Logistics

There have been several articles published online about the benefits blockchain technology can bring to the logistics and supply chain sector. Here are a few ways the technology can improve the industry.

  • Transparency for customers. For most people, little is known about the products they use. As LetsTalkPayment.com phrases it, “an almost incomprehensible network of retailers, distributors, transporters, storage facilities and suppliers stand between us and the products we use.”

    With blockchain technology, customers will be able to see every part of the journey their product took before arriving in their hands. The network behind the store shelf will no longer be hidden, allowing the customer to make better informed decisions.

  • Transparency for auditors. Because the history of transactions is locked into each block, auditors will have an easier time understanding where items and resources have gone. This, as Adam Robinson of Cersasis puts it, “help[s] supply chain leadership, such as C-level executives understand how to make the supply chain more efficient and productive.”
  • Greater security. The technology will enable supply chain companies to identify attempted fraud more easily.

    “For example, an employee that goes into the system to change past events will alter the coding of the event” writes Robinson. “However, the altered coding appears so differently that it would be practically impossible to not notice the change. This will allow companies to recognize the fraud and who initiated the change almost immediately.”

The two-year project undertaken by Port of Rotterdam will give insight into the scope of the benefits, but the technology has already shown promise.

“With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems” concludes Robinson.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-tips-holiday-peak-season-logistics

November is almost at an end. As December nears, the holiday peak looms for many distribution centers. The season will be the busiest for us in logistics and transportation thanks to Black Friday, Cyber Monday, Christmas Eve, and Boxing Day.

Customers will be expecting to receive their purchases and gifts with little hassle. This means that for many organizations, the sole focus of the winter peak will be to customer satisfaction. Thanks to the increasing number of people shopping online, the winter peak is especially volatile for orders.

Proper planning for the winter holiday peak should have started months ago. Some businesses go all-hands-on-deck as early as August, or October. While strategic planning is important for a smoother peak, it doesn’t guarantee it. There are several ways the plan can become derailed.

This week we’ve decided to focus on the five ways to help make sure your business stays on track.

1. Clarify Your Expectation to the Staffing Providers

As Deborah Ruriani of Inbound Logistics points out in her article, planning for the holiday peak should have involved your staffing providers. With the winter peak so close, it’s important that the expectations of your relationship are re-communicated. Turnover is likely to be high until the peak is over. Staffing providers need to ensure that new hires are of the same standards as those they are replacing.

2. Audit the Preparedness of Your Organization on All Levels

As the holiday season approaches, it might be tempting to hunker down and only focus on your work until it passes. Doing so puts your organization at risk. Fulfillment centers can only succeed if all its parts are all working smoothly and towards a common goal. Any weakness in the management, operations, support, HR or other departments can lead to a domino effect.

3. Regularly Check the Morale of Your Employees

It’s normal for stress levels to be higher during the holidays. A lot is expected of the staff and they’ll have tight deadlines in which to accomplish these tasks. Stress levels can’t get too high however. Too much stress over too long a period will cause mistakes. Too many mistakes will cause more stress, growing and extending the cycle.

4. Check and Update the 5S Lean or Other Quality Initiatives

The 5S Lean Methodology is a strategy on how companies organize a work space for efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order. By this time of year, your company should have a detailed space utilization plan in place. But remember, this time of year is volatile so your plan may need tweaking. You’ll need to check which variables have changed since the plan was drafted and adjust accordingly. Flexibility is crucial in this area.

5. Continue to Audit your Building’s Processes for Best Practice Research

Peak is an important time for many organizations. This is why a record of what worked and what didn’t needs to be kept during and after every peak. Each peak brings with it the opportunity to do things a little bit better.

The winter peak is a stressful time for many of us in the logistics industry. Our customers expect us to deliver so they can have a happy holiday season. It’s because of our customers that we need to ensure that both the planning and execution of peak plans are done with the utmost dedication and care.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-driverless-car-manufacturing-supply-chain

The long road to commercially available autonomous cars is almost at an end. A number of things will be changing when that happens. Chief among the changes is the way automotive manufacturers invest and sell their products.

What separates an autonomous car from a regular car is the onboard computer. Behind that technology are companies such as Intel, Qualcomm Inc. And Nvidia Corp. which provides the chips necessary for the computing power. Cars will need to be turned into essentially mobile data centers meaning that the competition for the future of autonomous cars isn’t only among car manufactures. It’ll also be with and between the world’s largest biggest tech companies.

There’s Big Business in Little Parts

As we approach the final lap on the course towards autonomous cars, automotive manufacturers have already started to change their sale tactics. Where manufacturers used to talk about horsepower, they’ve now started talking about processing power.

According to data compiled by Bloomberg, the total value of automotive supplier deals in 2015 and 2016 were $74.4 billion. For some context, each of those years far exceeded the $17.7 billion annual average of the previous 10 years.
“The number of transactions valued at $500 million or more also skyrocket to 18 last year, triple the level of the previous decade” writes Elisabeth Behrmann, Polina Noskova, and Aaron Kirchfeld from the same Bloomberg article. “There have been 11 such deals so far this year.”

An example is Intel. Its automotive business is currently involved in 30 vehicle programs on the road. By 2020, the company is set to increase that number to 49 with orders worth $1 billion according to the Wall Street Journal.

Many of the deals are still done with makers of powertrain and chassis components. However, electronics-related acquisitions are growing the fastest. Some estimates have the cost of electronics in car manufacturing growing to 50% by 2030, up from around 30% in 2015. A portion of resources have also gone into securing the proper know-how to ensure that their cars have the necessary sensors, cameras, radar, and computing power necessary to safety assess traffic conditions and see their environment as a driver would.

Phone to Pocket PC, Car to Mobile Entertainment Hub

One of the biggest innovations over the last two decades has been in finding new uses for old products. TVs grew ‘smart’, watches and shoes graduated into personal trainers, and cell phones evolved into pocket PCs. Today’s new technology is sold with the promises of greater efficiency and consolidation. Autonomous cars will be no different.

For as useful as cars are in our everyday lives, they spend close to 95% of the time unused. This means there is a big opportunity for the manufacturers of autonomous cars. Captive consumers will be surrounded by the technology for an average of at least five hours a week. The challenge will not just be how to commercially manufacture autonomous cars, but also in building a platform that connects software developers with the passengers.

As Nokia and Blackberry demonstrated in the past, consumers need more than just an effective product. They also need their devices to consolidate their consumption of media.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.