Balancing the Benefits & Challenges of Automation Technology

The logistics industry is no stranger to the benefits of automation, with productivity increases of up to 30 percent and more than 90 percent error reduction rates. As a result, autonomous delivery vehicles and drones are gaining popularity among business owners — even convenience stores are looking to incorporate them.

However, like most novel technologies, many retail businesses experience challenges using automated tools due to their complexity and novel functions. Hence, both large and small-scale retail companies need to carefully evaluate their challenges and the options to boost profitability and productivity while offering e-commerce fulfillment services to their customers.

In this article, I will discuss the benefits and challenges of logistics and delivery automation and provide insights on how retail companies can balance them to optimize their workforce.

The Benefits of Automation Technology

In today's logistics and delivery industry, automation technology has revolutionized commercial and retail businesses by offering several benefits that can significantly impact any operation:

• Increased efficiency and productivity — Owning a convenience store implies offering your customers 24/7 availability and on-time delivery. Incorporating automated devices into your logistics and delivery processes makes it easy to complete tasks quickly. Automated devices like drones or a sorting system reduce the time it takes to sort packages and improve the accuracy of the sorting process. 7-Eleven Inc. is a good example of a convenience store that employs drones and automated vehicles to facilitate efficient delivery processes. In 2016, 7-Eleven partnered with Flirtey to deliver food items to customers' homes using drones, which ensured increased efficiency.
   
• Cost reduction — When businesses use machines that replace human work, they can reduce labor, transportation, inventory and error costs, which lessens fuel surcharges and minimizes the risks of accidents. Consider Amazon, for example. Its use of robots in warehouses has led to a 20 percent reduction in operating expenses.
   
• Improved accuracy and timeliness — Advanced automated devices can minimize human errors, and ensure efficiency and timeliness, especially when balancing accounts and other data in your retail store. For instance, companies like DHL use a robotic process automation (RPA) system to automate invoices, avoid errors and reduce the processing time by 80 percent. Also, 7-Eleven uses autonomous robot delivery services to reduce delivery costs and ship products within 25 to 30 minutes, which is twice less than what human drivers need.
   
• Enhanced safety and security — Investing in automated systems helps retail and commercial businesses monitor their vehicles and keeps users' data safe through GPS tracking devices or blockchain technology. Companies like Amazon, Microsoft and Alibaba use it to avoid breaches of data.

The Challenges of Automation Technology

Although automation technology can bring significant benefits to delivery and logistics, it also poses certain challenges that convenience store owners must address:

• High initial investment — While autonomous vehicles and drones are great, they are expensive to acquire and implement, especially for small convenience stores. However, for large retail businesses, the initial investment may not be a challenge. For instance, in 2022, Walmart announced a significant investment in automation technology for its distribution centers. This investment aims to streamline its supply chain and improve overall efficiency, showcasing the commitment of large retailers to leverage automation technology for optimization purposes. 
   
• Technological complexity — Convenience store owners may also find it challenging to effortlessly operate autonomous vehicles, especially since they have fewer skilled workers than big retail companies. Many automated vehicles and systems require advanced hardware, software and communication systems to function maximally. Due to the lack of specialized technical expertise to operate the machines, convenience store owners may constantly experience errors and costly downtime. Besides this, they also have to factor in training costs for staff.
   
• Job displacement — According to a report by Oxford Economics, automation could displace up to 20 million manufacturing jobs globally by 2030 as implementing automated vehicles reduces the need for manual labor. This points to one thing: While convenience stores are small, they reduce the unemployment rate in the country. Hence, investing in autonomous vehicles may increase unemployment rates fast.
   
• Cybersecurity risks — Whether a small or large-scale business, automated technologies face the risk of data breaches, system hacks and malware attacks, which can compromise sensitive data, disrupt operations and render cooperation unreliable.

Balancing the Key Benefits & Challenges

Automation plays a crucial role in improving the efficiency of commercial and retail operations. However, without the right management strategies, convenience store owners may be unable to maximize the benefits of automation and enjoy ecommerce fulfillment.

Simply put, if a corporation introduces autonomous delivery vehicles and drones without proper training, employees may lack the knowledge to operate and maintain the new technology, leading to errors and inefficiencies.

To balance the benefits and challenges of automation in logistics and delivery, small retail businesses should:

1. Identify key areas for automation — Map out your logistics and delivery processes to identify areas that are time-consuming or prone to errors.

2. Develop a comprehensive implementation plan — Retail stores that develop a comprehensive implementation plan can ensure a smooth transition to automated processes. For instance, Amazon has developed an automated system for its warehouses that uses robots to move goods and items around the warehouse; however, it still relies on human workers for more complex tasks such as quality control and improving inventory management. 

3. Train and reskill employees — When you invest in training programs, they give your staff the problem-solving, safety and technical skills (i.e., computer programming) they need to properly operate and maintain the automated vehicles. Also, it reduces workforce displacement by reskilling employees to prepare them for their new roles.

4. Collaborate with technology partners — Technology partners help companies get technical expertise, access to new technologies, and customized solutions that meet their specific needs and challenges. Consider partnering with a tech partner to get personalized vehicles for your specific business operation. 7-Eleven partnered with Flirtey and Nuro to ensure convenient delivery.

5. Evaluate and optimize regularly — If your convenience store experiences delays in order fulfillment and uses systems like autonomous mobile robots (AMR), regular optimization helps to identify inefficiencies, minimize delays and improve efficiency. Regular evaluation and optimization also ensure that your automation systems are flexible and scalable to meet the changing needs of today's competitive big data era. If your store uses an AMR system, you need to keep in mind that tech tools advance each day, so make plans to adjust the routing algorithms as your store's inventory or shipping volume changes.

In conclusion, logistics and delivery optimization are crucial to the success of any industry, whether it’s a small startup or a large corporation. However, autonomous vehicles are only machines and may offer less-stellar results than anticipated when used erroneously.

Fortunately, convenience stores can successfully enjoy the benefits of automation and provide a better experience for their customers provided they can identify areas where they require automation, develop an implementation plan that helps them identify and mitigate risks, train and reskill their employees, collaborate with technology partners, and evaluate their devices regularly.

Alex Selwitz is director of SEO for Red Stag Fulfillment, an e-commerce fulfillment warehouse. He has years of experience in e-commerce and digital marketing.

Editor's note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.