Amazon and The Service Delivery by Drones in the UK

This operational management report explores the introduction of drone delivery services in the UK. The paper provides a discussion of the aims and objectives of the drone delivery services and the ways by which the introduction of these services will contribute to the improvement of organizational performance of Amazon via the V's of operation management model. It also assesses the connection between, and importance of, the elements of process design which have been selected to help develop the proposed drone delivery services by applying the Triple bottom line (TBL) framework. Lastly, an analysis of the effects and significance of, the five operations management performance objectives on the proposed drone delivery services are also carried out.

Overview of Amazon and the Service Delivery by Drones in the UK

Amazon is an American company located in Seattle, Washington; mainly dealing in cloud computing and electronic commerce. Jeff Bezos founded the company on 5th July 1994 (Maylor 2010, p. 213). By a measure of market capitalization and revenue, the company is the most extensive internet retailer globally. However, concerning total sales, it is the second largest after the Alibaba Group (Maylor 2010, p. 215). Moreover, Amazon also produces consumer electronics such as the Kindle e-reader, echo, fire TV, and fire tablets and it is the world-leading provider of cloud infrastructure services (PaaS and IaaS) (Maylor 2010, p. 214).

Amazon intends to introduce service delivery by drones in the UK. Adoption of drones is increasing among both companies and consumers primarily within the retail industry (Slack, Brandon-Jones and Johnston 2016, p. 127). Drone delivery services have presented great potential that tech giants such as Alphabet and Amazon have recognized it as future of e-commerce satisfaction. The main aim and objective of Amazon regarding the introduction of drone delivery services are to deliver orders by its customers within 30 minutes to eliminate the current two-hour prime deliveries and two-day prime shipping (Chase, Aquilano and Jacobs 2005, p. 231).

The Input-Transformation-Output Model is critical in Amazon’s plan to introduce the delivery via drones service. The goal of the IPO model is to ensure that a company prudently uses its inputs to gain a competitive edge in the market (Rodrigues, Marques, Wood and Tukker 2016, p. 524). In amazon’s case, parcel delivery is a critical aspect of business that requires heavy capital and time input. Introducing drones, however, is expected to significantly reduce the finance concerns and delivery time. By using drones, therefore, Amazon’s delivery procedures will be transformed a factor leading to positive outcomes such as improved profits.

Amazon’s Service Delivery by drones can also be analysed through the four V’s of operation management. The 4 V’s framework is built on the premise that an organization needs to align its resources such as finance and human resources in such a way that positive outputs such as a positive bottom-lines and competitiveness are realized. The alignment of inputs has to take the 4 V’s into consideration. In Amazon’s case, the introduction of drone delivery in the UK points towards the adoption of high volume processes. It is anticipated that drone delivery services will help Amazon deliver more products within a shorter time. The implication is that the high-volume delivery will lead to a repetition of tasks by Amazon employees, which will lead to high levels of specialization (Battistoni et al. 2013, p. 45). Besides, high-volume processes lead to a considerable reduction of operational costs. Service Delivery by drones will indeed aid in the reduction of costs by facilitating high-volume delivery of products.

While the introduction of service delivery by drones in the UK will reduce costs due to high-volume delivery, Amazon will encounter complexity of operations due to the high variety of products delivered. Variety within the 4V’s model points towards operational processes that involve a range of products or processes. On one side, Service Delivery by drones will allow Amazon to deliver a variety of products, but the downside is that high variety operational processes are costly (Silvestro 2001 p. 264). Drones that handle numerous different sizes and weigh will require heavy capital investments from the company.

Variation is the next piece of the four V’s of operation management and points towards the predictability of the demand for services or products. In conventional; business setting, constant demand yields process that are easily manageable. Amazon operates within an environment which is predictable, where demand for specific products is determined by seasons such as the demand for presents during holidays (Battistoni et al. 2013, p. 45). Amazon’s Service Delivery by drones in the UK will, therefore, operate under predictable demand, a factor that will reduce operational costs. The Visibility Dimension of the four V’s model refers to the extent to which a customer experiences the operations process. Amazon’s Service Delivery by drones in the UK will score highly in the visibility aspect since customers will easily track their orders.

Aim and Objectives of the Proposed Service Delivery by Drones in the UK

The following section analyses the objectives of the proposed delivery by drones service, with emphasis placed on how the new service will help Amazon realize a positive triple bottom line.

Similarly to its opponents, Amazon intends to cement its position among the best in the retail industry. Through the introduction of the new service, delivery by drones in the UK, Amazon stands a good chance of meeting the objective as mentioned above. From the Triple bottom line (TBL) point of view, the new service also offers Amazon an opportunity to broaden its financial bottom line focus to cover social and environmental responsibilities such as reducing energy consumption and release of harmful gasses (Hindle 2008, p. 121). The delivery by drones service in the UK will enable Amazon to cater for the people, the environment, and the profits.

The Profit Bottom Line

First, Amazon will realize the profit bottom line since drones will significantly cut the costs involved in shipping. Using drones in the delivery of products will enable the company to reduce the number of items that go through shipping or eliminate shipping absolutely (Lysons and Farrington 2012, p. 233). Therefore, Amazon will conceivably carry out better control of the delivery costs especially if the drone delivery services become widespread as anticipated by the company. Additionally, it is common knowledge that there is a lot of money made in the shipping industry and is the company can get even a fraction of this money; it can lead to substantial improvements in its bottom line.

Secondly, the profit bottom line will be improved through increased self-reliance. While Amazon prefers getting involved in all aspects with regards to the sales process, logistics is not within the control of the organization (Johnston, Clarke and Shulver 2012, p. 413). Through drone delivery, Amazon will have in-house distribution and therefore not have to worry about how packages are handled or interruptions in partner services. Drone delivery services will also help to eliminate cases of delays that are at times witnessed by the company primarily during holidays (Johnston, Clarke and Shulver 2012, p. 413).

The People Bottom Line

Given the privacy controversy that surrounds the use of drones, the people bottom line is potentially the most challenging one to realize. Through the delivery by drones in the UK, however, Amazon will recognize some sense of social responsibility by delivering products to underdeveloped areas that are characterized by damaged roads and poor infrastructure (Lysons and Farrington 2012, p. 239). These places become difficult to be accessed through other delivery methods such as the use of delivery trucks and motorcycle couriers. The drones will help in the realization of a sense of justice for the Amazon customers in the underdeveloped areas.

The Environmental Bottom Line

Amazon will improve its environmental bottom line due to the view that drones are environmentally friendly. Drone delivery services lead to minimal environmental impact when compared with other delivery methods which use the road, rail or air and this will be important for Amazon concerning improving its “green credentials” (Andersen 2008, p. 441). Use of drones will help to reduce not only the delivery time but also the total footprints of delivery on the environment. According to the report of a study that was carried out by researchers from Carnage Mellon University and Lawrence Livermore National Laboratory that was published in Nature Communications, it was found that use of drones in delivery help in reduction of climate change (Turner 2008, p. 342). For instance, using smaller drones such as octo-copters instead of the large drones used for military application and delivery trucks that use diesel leads to a reduction in both energy consumption and emission of the greenhouse gases that contribute to climate change.

Some experts have argued that even though drones use less energy per package delivered compared to delivery trucks, the extra warehousing energy needed and the more extended distance covered by the drones per package significantly increase the life cycle impacts (Deming 1991, p. 171). Nevertheless, the research proved that in most cases that were examined, the effects of product delivery using small drones was still lower than that of ground-based distribution. In other words, using drones for product delivery will remain environmentally friend provided the delivery services keep their warehouses and copters lean.

Service delivery via drones will, therefore, help Amazon realize various objectives. The objectives, as discussed above are three-fold; and will lead to a positive triple bottom line for the company.

Adoption of the Batch Process Design in Creating Service Delivery by Drones in the UK

The following section analyses the process designs Amazon may employ in the creation of the proposed delivery by drones service. Ultimately, the batch process design is adopted to highlight the significance of various aspects critical in creating Amazon’s delivery by drones.

The success of Amazon’s plan to introduce the new delivery by drones will be significantly determined by the process type adopted. Various process designs such as project, jobbing, Batch Mass and Continuous can be applied in the delivery of the new service. The jobbing process involves the concentration of a company’s resources to the production of a variety of products and services (Cleland 2007, p. 84). This is in sharp contrast to the project process design where the resources are allocated to complete the production of a single product or service. The two processes have their advantages but are not appropriate in Amazons case. Mass processes present other opportunities for Amazon, where the service will be rolled out in a considerably high volume after the establishment of a standard mode of production. Continuous process designs involve the production of high volumes of a product or a service, but with low variety. Given the fact that mass and continuous processes are capital intensive, they are not appropriate for Amazon’s case.

There are six critical aspects of the process design towards the realization of the proposed Service Delivery by drones in the UK. These are Problem analysis, Idea Generation and Screening, Concept Development, Prototyping, Evaluation, Service Development, and Commercialization. The six key components are based on the Batch Process Design. The selected process design is defined by constant manipulation of inputs, in a bid to come up with acceptable outputs (Cleland 2007, p. 83). In amazon’s case, the batch process will involve the setting up of short and controlled production cycles of drone delivery. The results at this design phase will inform the mass roll out of the service into the market.

The batch process design requires a heavy input of research, skill and knowledge in order to produce a product or service that meets the required standards (Bevilacqua et al. 2013, p. 10). In Amazon’s case, the batch process design will begin with problem analysis, idea generation and screening and concept development. A key feature of the batch design is the allowance given to customization and flexibility. In Amazon's case, the aspects of evaluation and prototyping will allow the drone delivery service to be tailored to the needs of different customers. The implication is that the proposed service will be more flexible to address a variety of customer needs, an aspect that will positively influence profitability (Bevilacqua et al. 2013, p. 12).

The six aspects of process design applied in the development of the proposed Amazon drone delivery service are discussed below:

Problem Analysis

The beginning of the process design involves extensive research to obtain concrete figures and facts with regards to the problem at hand. The data collected is then used to suggest possible solutions to the problem and to come out with the best solutions out of the suggestions provided (Maylor 2010, p. 217). Amazon, in this case, has to review its service delivery process to identify the problematic issues. Here, the analysis team finds out the critical issue or issues (Maylor 2010, p. 217). To do so, the conditions of the problem are used as the objectives whereas the constraints are used as parameters for operation to help the team to narrow down the acquired information.

Idea Generation and Screening

Idea generation is the beginning point in drone delivery services development. It starts with the business finding sources of the idea with regards to the new service. Some of the other sources of the new service idea that the company considered include competitors, customers, journals, suppliers, and the employees (Munns and Bjeirmi 1996, p. 86). This stage is significant as it helps the company to lay the foundation for all other steps since the whole process of service development is guided by the ideas generated.

The second development stage of the drone delivery service development is screening which involves considering all the generated ideas and filtering out the ones that are viable. To ensure that the selected ideas are not costly and unfeasible, the company seeks the views of the customers, employees, and other businesses (Winter and Smith 2006, n. p). Other factors that are also considered at this stage are the external industrial factors such as competition, changes in technology, and legislation. At the end of the process, the company will have selected a few feasible ideas from the initially large pool of ideas.

Concept Development

In this stage the company carries out extensive research to determine the possible costs, profits arising from the service, and the revenue. To do so, the business conducts a SWOT analysis to find out the strengths, weaknesses, opportunities, and threats that are within the market (Herman and Siegelaub 2009, n. p). Market strategy is them applied to help in identifying the service target group leading to segmentation of the market. It is essential to carry out market segmentation to enable the company to determine its niche which will in turn influence several market decisions. This step will determine whether the introduction of the new drone service delivery will be beneficial to Amazon in regards to the bottom lines.

Prototyping

In this stage, the solutions are made into ideas and the most appropriate once highlighted. The concepts of the design are turned into prototypes upon which actual services are based. It is at this stage where various solutions and ideas are brainstormed, and the best bank of ideas is developed without judgment or bias with regards to the information presented (Maylor 2010, p. 223). The ideas that have gone through the brainstorming process are narrowed down to a few that can provide the best outcome and plans for implementation are then created. A prototype is developed, and the program becomes a service.

Evaluation

Evaluation is the final stage whereby the prototype created is tested, and necessary adjustments are made (Maylor 2010, p. 226). If the performance of the prototype is below what is anticipated by the company, then there may be a need to brainstorm further ideas, nonetheless, if the outcome is as expected, the prototype is turned into a service, which in this case is the drone delivery services.Ensuring that all these aspects of process design are considered during the creation of the service is essential because it will help Amazon to provide customer satisfaction by not only providing fulfilment to the needs and wants of the consumers but also creating value for them (Maylor 2010, p. 229). Moreover, it will also make sure that the process of service design takes into account the implementation process and the feedback from the customers which leads to minimization of cost and also gives the company a competitive advantage and this, in turn, enhances the profitability of the company.

Service Development and Commercialization

The Service Development and Commercialization stage constitutes that actual design and implementation of the service. It begins with the creation of a prototype that is used for market testing. Taking into account the outcome of the test, the company decides on whether to carry out the large-scale implementation of the service or not (Schneier 2008, p. 53). Favourable results facilitate widespread use of the services and its commercialization. The business then launches promotion campaigns for its freshly introduced service; the market research carried out during the conception stage will be essential at this point by influencing the location and timing of the service launch.

Integrating Technologies Process Technology

Process technology and particularly integrating technologies will be a critical in Amazon’s plan to introduce delivery by drones in the UK. Integrating technologies process technology type is most appropriate in Amazon’s case, since drone delivery is multidimensional and requires the input of other process technology types (Yamamoto and Bellgran 2013, p. 481). Material processing technologies entail the tools and automated machines, which will be integral in the entire drone delivery service. The proposed service will also entail the use and processing of customer information. Integrating technologies process technology will, therefore, be at the centre of developing the proposed drone delivery services, since it will provide a platform where other process technology types are intergtrated (Yamamoto and Bellgran 2013, p. 481).

Amazon’s drone delivery service, therefore, will employ the batch process type and the integrating technologies process technology type, which have been discussed in depth above.

The proposed stages of theservice development

The development of the delivery by drones service will be done in six stages, which are diagrammatically illustrated below:

Figure 1: The proposed stages of the service development

Source: Author, 2018.

The Impact, and Significance of, the Five Operations Management Performance Objectives on the Proposed Service

The following section analyses the impact that five operations management performance objectives will have on Amazon’s delivery by drone service.

Amazon’s proposal to introduce Service Delivery by drones in the UK will be affected by quality, speed, dependability, flexibility, and cost, which are essential operations management performance objectives.

Quality

Quality is a critical management performance objective. Any proposal taken up by a company has to meet the anticipations to fit within the existing quality standards efficiently (Howard 2009, p. 359). The drone delivery service, therefore, should be able to meet the customers’ needs with regards to product delivery to limit or eliminate complains from the clients. If the consumers get fulfilment from the use of the services, they are likely to use it again, and this will, in turn, create more revenue for the company. Besides, the quality aspect will demand that the implementation of the proposed service should lead to very few mistakes if any (Howard 2009, p. 361).

Speed

Speed as a management performance objective refers to the duration that it takes from the time a client makes a request and time he or she receives the delivery. Drone deliver services will be useful regarding speed as it will reduce the delivery time from an hour to just 30 minutes (Hall and Johnson 2009, p 57). If the clients can receive their orders within the required time, they will be satisfied in turn will order more products from the company. Moreover, fast delivery can allow the company to charge high prices for its services without receiving complaints from the customers. The speed of the drone delivery services will also help in cost reduction by reducing inventory and risks.

Dependability

Dependability refers to “being on time” meaning that the customers receive their products within the stipulated time. Though Amazon has been able to carry out the quick delivery of products to their customers, there have been cases of late deliveries of items which have led to irritation of the clients (Hammer and Stanton 1999, p. 7). Drone delivery services will help Amazon to reduce delivery time by half, and this will ensure on-time delivery to the consumers. If the customers feel that the delivery service is dependable, they are likely to return with more business. Internally, using drones to deliver products to customers will also help to reduce cost (Hammer and Stanton 1999, p. 7). For instance, it will help in saving time, money, and provides stability to the company which will be essential in improving its effectiveness.

Flexibility

Flexibility means being able to change in some way. Drone delivery services are flexible concerning volume and delivery. With regards to size, drones are adjustable because they do not carry fixed package quantity but instead, can be used to deliver items of varied capacity to the customers (Slack, Brandon-Jones and Johnston 2016, p. 131). Moreover, concerning delivery flexibility, drones can be used to deliver products to every location including the remote and less developed areas that other forms of delivery may not be able to access (Slack, Brandon-Jones and Johnston 2016, p. 134). Both volume and delivery flexibility are essential because they will allow the company to make adjustments on its delivery procedures and level of output to respond to unanticipated changes in customers’ wants with regards to the number of items, the time they are required, and where they are needed.

Costs

Since drone delivery services have high quality, speed, dependability, and flexibility, the services lead to a reduction of the expenses of operation within Amazon Company (Slack, Brandon-Jones, and Johnston 2016, p. 139). All these management performance objectives help in cost reduction and if managed well can significantly minimize the overall cost of operation.

Conclusion

Amazon, one of the world’s leading companies in e-commerce quotes product delivery as one of its significant challenges. Amazon’s proposal to introduce Service Delivery by drones in the UK bears the potential of positively influencing the company’s triple. Through the adoption of a batch process design discussed above, the company can create a service that will cement Amazon’s place as one of the biggest players in the e-commerce industry.

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