Our Supply Chain Leadership Across Africa series continues in earnest with a fascinating discussion around the proposition of using drone technology for social good.

In this episode, hosts Scott Luton welcomes Prashant Yadav to the show, a globally recognized expert in healthcare supply chains and affiliate professor at global business school INSEAD, where he leads the Africa Initiative. Prashant is something of a media virtuoso, having appeared in prominent publications such as The Economist and Financial Times to share his expertise.

Sitting alongside Prashant is Olivier Defawe of VillageReach, a global nonprofit that transforms healthcare delivery to reach everyone by working with partners to build responsive primary healthcare systems that deliver health products and services to the most under-reached.

A key priority for both guests centers around realizing the immense potential for drones to unlock healthcare access, supply chain optimization, and socioeconomic development across the African continent.

During the discussion, they touch on a number of pertinent questions:

• What are the major challenges to scaling and sustaining drone transport operations in Africa?
• How can we ultimately ensure drone transport is more cost-effective for public health supply chains?
• What can stakeholders do on the supply and demand side to increase adoption of drone transport across sectors, beyond just public health?

To hear Prashant and Olivier’s thoughts on these issues, and much more, tune into the podcast now.

Intro/Outro (00:03):

Welcome to Supply Chain Now, the voice of global supply chain. Supply Chain Now focuses on the best in the business for our worldwide audience, the people, the technologies, the best practices, and today’s critical issues, the challenges and opportunities. Stay tuned to hear from those making global business happen right here on Supply Chain Now.

Scott Luton (00:31):

Hey, good morning, good afternoon, good evening, wherever you are. Scott Luton here with you on Supply Chain Now. Welcome to today’s show. I got an outstanding show here today. We’re continuing our popular Supply Chain Leadership Across Africa series. We’ve been conducting this series for several years now. We’ve gotten feedback from around the globe from our global audience and family. All this is focused on innovation and leadership and sheer brilliance that can be found throughout all the countries across the continent of Africa. And we’re pleased to conduct today’s episode in partnership with Village Reach, a powerful nonprofit that’s truly transforming healthcare delivery to reach everyone. In fact, their critical work enables access to quality healthcare, get this, for over 70 million people. Learn more at villagereach.org.

Scott Luton (00:17):

It’s outstanding show here today, folks. If you love drones and all things drones, you’re in the right place. We’re going to dive into a discussion about where we’ve been, where we are, and where we’re headed as we’re working together across communities, across sectors, across industries, really across the globe to realize that are the possible when it comes to globe and other innovative cutting-edge technologies.

Scott Luton (01:38):

So with that said, I want to briefly introduce our distinguished guests here today. I’m really excited to learn from our panel. Our first guest is a globally recognized scholar in the area of healthcare supply chains, as well as supply chains for products with social benefits. He is a distinguished professor, author, researcher, board member that’s appeared in a variety of prominent print and broadcast media to include the BBC and the Financial Times, amongst many others. Please join me in welcoming the affiliate professor of technology and operations management and the academic director at INSEAD Africa Initiative, Prashant Yadav. Prashant, how you doing, sir?

Prashant Yadav (02:17):

I’m doing very well, Scott. Thanks for having me. I’m looking forward to the show.

Scott Luton (02:21):

We are, too. So nice to have you here. I’ve been doing some homework on your journey and all that you do and lead and I’m looking forward to sharing all that with our audience here today. So, welcome, Prashant. Now, our second guest is a repeat guest. I had a great time with him back in — last June in South Africa, and I’ll tell you I know firsthand he’s developed quite the reputation as a global health innovation development expert and he holds a PhD in Biomedical Sciences from the University of Liège in Belgium. He has spent over 16 years working in Africa alone, but he’s also held leadership roles in a variety of operations around the world. Please join me in welcoming the director private sector engagement partnerships lead, the drones for health solution lead, and the founder and facilitator for UAV, the unmanned aerial vehicle for payload delivery working group, Olivier Defawe. Olivier, how you doing?

Olivier Defawe (03:15):

Hey, Scott, very well. Thank you.

Scott Luton (03:18):

It’s so great to have you back and you’ve got quite the title, but as we talked about months ago, you like to get in about two hours of sleep at night, I think, and you’d love changing the world in a variety of ways. Is that right?

Olivier Defawe (03:31):

Yeah, that’s would be a fair assumption. Yeah.

Scott Luton (03:34):

So great to have you back. I’m looking forward to diving into all the cool things you and Prashant are up to. So, this is where we want to start. Let’s get to know both of y’all a little better. Prashant, you were sharing in the pre-show about some of your commutes from the east coast of the U.S. to France and back and forth, and you could probably write a book about some of that travel and some of those travel experiences. But I want to ask you about something a little bit different here today. You’ve worked in a variety of sectors when it comes to supply chain, but you’ve got a love for ham radio communications which you discovered as a youngster. How did that early on technical hobby or passion impact your journey forward?

Prashant Yadav (04:10):

Interesting you bring that up, Scott. So, when I was a teenager, I was very excited about building electronic circuits and one of the things that popped my attention was the ability to communicate with people around the world using ham radio, amateur radio. So, very early I built my own little handset. We used to use it to do a variety of things, not just communicate with people who had set up the first Antarctica station but also provide emergency relief communication services when there was need or sometimes more casual things like help a car rally, car rally get to manage its logistics. So, anyway, so that was my starting point. But somewhere along that journey, I studied engineering, I came out, and I worked for a consulting firm which was doing a project in Bangladesh and my task as a young engineer there was to look at how to schedule barges to offload ocean vessels from the high sea to the Port of Chittagong, which was not a place where the larger vessels could come in. And so, my journey in supply chain and logistics actually started with trying to build a barge scheduling algorithm to offload larger vessels. That taught me hands-on logistics. And from there, I started using it across a variety of things and I now do it largely for healthcare and healthcare supply chains in Africa.

Scott Luton (05:28):

Prashant, I love that story and I love the intersection of many things, but as I’ll kind of follow along from planning, solving problems, logistics, tech, but also the universal value of communications, whether it’s technology driven or otherwise. So, I look forward to learning a lot more about your journey and expertise, especially about all things drone and supply chains in Africa here today. Olivier, again, great to meet you in person. Really enjoyed our conversation in South Africa a few months back, and as I’ve shared a little as I was introducing you, you’ve had a fascinating and eclectic, very eclectic career. So when you think back on that, what has that taught you about the value of diversified perspective and experiences?

Olivier Defawe (06:09):

First being a marine biologist in Europe to ultimately becoming, I guess, a drone transport specialist working in Africa, having acquired a PhD in Biomedical Sciences with six years working with clinical researcher, yes, I would say that it had brought me a lot of different perspective. But the interesting career path has brought me really also a wealth of partnership acumen. Over the years, I’ve interacted and worked with a wide variety of colleagues in many professional areas, biologists, environmental scientists, medical scientists, researcher from all over the world, and finally working with young and bright entrepreneur and technological innovation. And all these experiences have taught me the importance of bringing diverse expertise into your professional entourage to achieve a meaningful outcome. Also, bringing your origin from Belgium and work around Europe, across the Europe, then having spent the last 20 years in the U.S. and working in Africa for the last 15 years really gave me the ability to learn from and embrace various [inaudible] which has really enhanced my professional life.

Scott Luton (07:25):

Going back to your first point, Olivier, and kind of the whole theme of your response there, I think one of my favorite parts about global supply chain is working with folks from all walks of life, whether it’s the technical expertise or just part of the world or part of the role they play in the overall bigger picture, bringing all those folks into a conversation and learning and feeling in the blind spots that we all have and doing big things together. I think that’s one of my favorite parts. It really reminds me of my time in the military because there’s a lot of that at place there when I was in the Air Force and there’s certainly that by the truckload in global supply chain. So, thanks both of y’all for kind of calling that out. Okay. I got a lot to get to here today and I don’t know about y’all, but I’m a big believer in the immense value of context, so I want to offer our audience a little bit of that here, a little more of that on the front end. And I want to stay with you for a minute here, Olivier. Of course, some of our listeners will know about Village Reach, but for the handful that may not, based on some of our past episodes, if you’d tell us in a nutshell what Village Reach does and a little bit more about your role there.

Olivier Defawe (08:26):

Village Reach is a not-for-profit international NGO with the mission to transform healthcare delivery to reach everyone. So, each person has the healthcare needed to try, and to do so we co-develop with governments and private sectors partners solution, solution that improve equity and access to primary healthcare and this includes making sure that products, health products, are available when and where they are needed, which is why back in 2015 Village Reach — at Village Reach we started exploring the use of drone technology as a transformative solution to overcome infrastructure and logistic challenges in Africa. So, over the last eight years I’ve been leading a team that provides technical assistance to test and evaluate and even in some cases scale and sustain outsourced drone transport services. And these last three years, we’ve been supporting ongoing drone transport networks in the Democratic Republic of Congo, in Malawi and Mozambique. And finally, more recently we started looking at market dynamics and exploring opportunities to accelerate the adoption of drone transport by both the public and the private sector for health and non-health application and make this mode of transportation more cost-effective for the public health supply chain. So, this is basically summary of what does Village Reach do and why we started exploring the use of drone.

Scott Luton (10:06):

I love it. What a noble mission, an incredible mission. So many different ways. You mentioned the opportunities a couple of times in your response, so much opportunity. And kind of where you started, I bet all of us, I know I can, leverage lots of external technical expertise because I’m not your resident technologist and there’s a lot of big need for out there so we can accelerate helping others accelerate transforming industry and accelerate moving the world together forward and leaving no one behind. So, I really appreciate what y’all do here, big fan. Prashant, similar question as we’re offering some context on the front end, tell us briefly about the INSEAD Africa Initiative and your role there.

Prashant Yadav (10:43):

Yeah. So, INSEAD is a global business school. We have campuses in Fontainebleau, France; in Singapore; hubs in Abu Dhabi and San Francisco. And we like to think that business both today and in the future requires business leaders to be able to work across geographies, across cultures. So, in that sense we believe business leadership is a lot about expanding your horizons, looking at the world with a wider-angle lens, not just focusing on a select geography. So, the business school has been in the teaching and research area for over 50 years now. But INSEAD Africa Initiative, which I lead, is an attempt by INSEAD to deepen our engagement in Africa with governments, with private companies, with startups, and with NGOs, and academic institutions, to develop joint research programs. So, across all of those four sectors, I think we are on a journey to figure out what can INSEAD’s knowledge, our alumni network, our faculty research capabilities bring to these organizations. And an example of such a partnership is work we are starting to do with Village Reach.

Scott Luton (11:53):

I love that. I love the very practical bridge building, which is a big part of your mission there, Prashant. So, we can really develop stronger leaders. They can do more global things and scale the great things they’re doing in their backyards, but scale it globally. Thank you, Prashant and Olivier, for both that valuable context on the front end. Olivier, now we’re getting into the conversation, we’re talking drones a lot today, right? And I really appreciate your expertise and what you’ve been doing, not talking about but doing in past years. So a lot of us probably have assumptions about what the value proposition is and a lot of our listeners may have heard and seen drones and actions. It’s really cool to see some of the innovations in recent years. But when I pose to you what is the value proposition for using drones for social good in Africa, what comes to your mind?

Olivier Defawe (12:38):

Yeah. So, today thanks to donor catalytic support and the work done by lots of governments and the partner in Africa, it’s clear that drone transport is a game changer in healthcare, from reducing vaccine and health product delivery time, especially during emergencies, improving the availability of health product in remote and hard-to-reach area, reducing lab sample turnaround time, and therefore helping to accelerate disease diagnostic processes, reducing stockout, improving product quality and reducing wastage, even reducing missed opportunity for vaccination. Overall, it’s well accepted now and well demonstrated. A drone technology, when used as an additional mode of transportation, a fit for purpose mode of transportation, provides an opportunity to optimize the supply chain system, making it more effective, reliable, agile and resilient, all in all resulting in an increase of the health workers efficiency and in more equitable healthcare access. And this is really why Village Reach is continuing the mission of developing in the drone transport sector because we really see those value proposition so important.

Scott Luton (14:01):

To make things happen, drive outcomes, right? Yeah. Olivier, I really appreciate — that is a very robust value proposition, very holistic value proposition. Prashant, what would you add to that? What do you think maybe out of that holistic value proposition is most important for our listeners to really understand?

Prashant Yadav (14:18):

So, first of all, Scott, I would say that seeing is believing. I used to be somewhat of a drone skeptic 10 years ago when people had first started drone programs for delivering medicines and health products, and any amount of evidence data modeling wasn’t necessarily convincing me. What convinces anyone is seeing it yourself, seeing it yourself when you see a drone deliver lifesaving medicines to a clinic and being a part of the entire cycle from receiving an order, filling it, dispatching it, and being able to hear that the medicine has now been not only received but administered to a patient all in a matter of an hour and a half or some amount of time like that. So, that changes the way we think about value proposition. It becomes less abstract and it starts to become much more real. If you, anybody, any of your listeners get a chance to visit Zipline’s work, Olivier’s work in Malawi, in DRC, Zipline in Rwanda, in Nigeria and Ghana, you will then get a chance of what actually this value proposition is and how important it is for people.

Prashant Yadav (15:21):

You’ll also come across — when you go to these distribution centers to visit, you also come across people whose lives have been impacted very directly. So, a mother who says, “I would’ve died if it wasn’t for a drone to bring me blood components when I had postpartum hemorrhage when I was giving birth to my child, so I wanted this child to see what this magical transport mechanism is.” That is value proposition. But at the same time, when you go back and put yourself into the shoes of a Ministry of Health or a minister of health, they ask the question, well, drone projects are risky. They are risky to launch. They may fail and they have failed in the past many times because this is still a technology that has only matured in the last few years. I mean, in the early ascent of this, there were projects that were failing. So that’s their first concern. Will I put my own public and political capital at stake by saying let’s start a big drone project in my country? So that’s their first concern. I think repeated evidence that is now coming out is demonstrating that is not a concern. We have good technology now that can guarantee us robust deliveries and it is failproof in that sense.

Prashant Yadav (16:37):

The second question they ask about the value proposition that Olivier pointed out was, well, I understand drones may be useful to reach some far-flung areas, some mountainous regions where my road network doesn’t necessarily get, or sometimes in emergency settings they don’t see that as mainstream transport yet. And then, you dig deeper and ask the question, why don’t you see this as mainstream transport? Why do you think this is only for the far-flung areas, mountainous regions? And the answer is, well, they’re expensive, right? And now are they expensive gets to the question of with what lens do you measure something to be expensive or affordable? If you measure it with a narrow angle lens, a lot of things appear expensive. If you measure something with a wide angle lens both in terms of time and different use cases, then things start looking more economically viable. So, that’s where we are in this journey of mainstreaming the use of drones in the health sector and presumably in areas around the health sector.

Scott Luton (17:40):

Prashant, I love how you couched that perspective that you were a former skeptic because if you were a former skeptic based on everything else you shared, you’ve completely converted and your eyes are open to the possibilities, the very practical, powerful possibilities, really backing up. Because it’s not just about possibilities, it’s what’s being done now. You paint a picture of the mother and other human examples of how drones are already saving lives and changing lives and, gosh, where we can go from here is really, really inspiring. Okay. So, we’re going to keep moving where as we dive more into the just drone conversation really and the things it’s doing and where we’re going across Africa. Y’all both already point out what’s already been happening today and how drones have been utilized for transport across Africa. Olivier, you go back to a quote I grabbed from you earlier, you called it a game changer, how are you leveraging drones. And I tend to agree with you. It’s been going on for now on a decade already, but still there are few drone networks truly operating at scale and operating in sustainable fashion. What we want to do next is eliminate some myths in terms of why this is the case. So, Olivier, let’s start with it’s not the regulatory environment, is that right?

Olivier Defawe (18:48):

Yeah, I would agree with that. While over half of the African countries do not have any regulation and rules or guidance, today there is actually no outright bans on drone operation in Africa. Therefore, the regulatory environment is not a primary reason for not having scaled and ongoing sustainable drone network across Africa. Of course, having a right regulatory environment is important, especially when you start scaling your operation. But in Africa the local civil aviation authorities are willing to take reasonable risk and really work with partners and contribute to the development of this transformative technology. We must remind ourself that the use of drone for non-military uses really started in Africa. They are the pioneers. And the civil aviation, the local civil aviation authorities and the Ministry of Health and Ministry of Transport and so on and so on really believe that drone technology can really improve the quality of life in this setting.

Scott Luton (19:58):

Undoubtedly, and I go back — y’all probably both have lots of examples of your interactions with humans where it’s truly impacted their lives and changed their lives. And that’s the most important thing I think for a lot of our listeners to take away from this. This isn’t just cool new technology or cool technology in supply chain moving stuff, it’s really powering the human factor and taking care of families and saving lives. Let’s talk about another myth, Olivier, because it’s not that the technology is not fit for purpose, that’s not hindering. Your thoughts there, Olivier.

Olivier Defawe (20:30):

Ten years ago, yes, technology was behind, but today I would say it’s correct. For almost a decade, technology has been rapidly evolving and the variety of drone technology is growing really every day from the small cargo that are made for delivering small cargo over short distances. Like in urban setting, you have the Matternet, the Wing, the Skydrops, and just to name a few. Then you have drone that are fit for purpose to transport medium-sized cargo, 10, 15 kilo, 15 to 50 liters of volume for about a hundred kilometer of range. That, of course, the Zipline, the [inaudible], the [inaudible], the Phoenix-Wings, and the likes. And now, you also have drone that can carry over a hundred kilo [inaudible] for 3, 4, 500 kilometer or even beyond like the Pelican Pyka Drone and the Dronamics, Elroy Air, are about to come out as well. So, the technology is there, is catching up. So, today, option for performing cargo drone that are fit for purpose for many needs exist and will continue to grow real fast.

Scott Luton (21:49):

Thank you, Olivier. Prashant, I’ve got another myth I’m going to pose to Olivier in a second and we’ll talk about the root cause in a second as well, but I want to give you a chance to comment whether it’s on Olivier’s first comments around the regulatory environment or the technology and how that’s evolved. Your quick comment there, Prashant.

Prashant Yadav (22:05):

So, regulatory I don’t claim to know as well as Olivier does, but I would agree with him that is not a barrier for expanding drone use, in particular for applications such as the ones that we’ve talked about in the health sector, for humanitarian purposes, for other products that have social benefits. As the technology gets to become more commercial, yes regulatory agencies within the countries will start asking how do we manage this. But at present that’s not a barrier. So I would agree with that. On technology maturity, I think yes, we have come to a point where the technology is mature today. We are at a juncture where there are — I mean, we’re going to try to put yourself in the shoes of how somebody thinks about a fleet of transport vehicles that we have an option of many different sizes of trucks and other transport vehicles, but we then eventually converge and settle on two or three types because industry also cares about standardization because my truck and my trailer should be interoperable with others, et cetera. So, I think we are converging towards something like that where like Olivier pointed out, I mean we think of technology for a short range, small payload technology for a medium range, medium payload and technology for longer range, higher payload. And I think as we converge and start to see some standardization, people’s acceptance of the idea that we have stable working and mature technology will increase.

Olivier Defawe (23:26):

I need to emphasize about the regulatory environment. I’m talking about on the African continent. The situation in the U.S., the situation in Europe is very different. So, we are here focusing on the African continent and its use of drone.

Scott Luton (23:43):

Olivier, that’s a great call out because there are, as y’all both know, major differences in those environments where you go in the world. And I just want to add one more thing, kind of back to your last point there, Prashant. It’s amazing the adoption and how we’re going to get used to these things really across the globe as we see drones carry things here in the states or in Africa, and, Olivier, the sizes — I can’t do a quick pounds to kilogram conversion in my mind, I’ll save that to the smart folks like y’all do. But we’re talking the sheer capability and capacity of these things is also scaling tremendously. We’re not talking about taking a toothbrush here and there. We’re talking about some major freight and cargo there. So, that’s a really important thing for our listeners to pick up on. Okay. Back to myth busting, Olivier and Prashant. We’ve talked a little bit about the regulatory environment, we’ve talked a little bit about the technology maturity as Prashant put it, and that evolution as Olivier was talking about. Now, Olivier, it’s certainly not that end users and patients don’t want drone technology, that’s not it. Prashant has already blown that up. Your thoughts there, Olivier?

Olivier Defawe (24:45):

Yeah, I mean, for sure. We’ve been implementing drone transport in Africa for the last eight years and I can tell you that the communities see the benefits. The healthcare worker, they realize, they see the benefits, they help them do their work better. And as more and more evidence documenting these benefits becomes available, we have seen a surge of governments and private sector interest in adopting this technology and an exponential growth of its application in the health sector but also beyond health sector.

Scott Luton (25:20):

I completely agree. As a father of three kids when I think about my folks or my other loved ones, whatever it takes to get them the medicine and the treatment and the diagnoses, you name it, that will make them feel better or save their lives, I’m sure that that sentiment is probably a global one. Okay. So, now that we’ve busted up those myths, I want to get to the root cause and I’m going to pose this to both of you. So, what is, in your view, the root cause when it comes to what’s preventing truly scaling a drone network and really getting out there and despite all the wonderful outcomes and the opportunities that we’re driving today, results we’re driving today, what else is holding us back from really taking this thing and putting it on steroids? Olivier, your thoughts.

Olivier Defawe (26:02):

In simple words, I would say cost and cost effectiveness. So, today, while the evidence of the benefit of the benefits of drone transport exists, drone transport is expensive when limited to the public health sector, and I insist on this, when limited to the public health sector. The price people are willing to pay and the cost of drone transport just doesn’t line up. The problem is about economies of scale. Today, drone transport in Africa is primary a single sector market with one type of customer, governments and the donors, who are the sole payers and has to cover all the costs from the starting costs, the recurring costs and so on. And because of this drone transport providers only have mostly one pricing strategy. And really, this is why drone transport for social benefits right now is not financially sustainable in Africa.

Scott Luton (27:03):

And as with anything else in this world, when we can give industry a financial incentive to build something out, oftentimes that’s exactly what happens, at least in my thoughts. Prashant, what would you add? What’s the root cause? What’s holding us back here?

Prashant Yadav (27:17):

I think, Scott, what’s holding us back is a combination of people’s mental models and some real questions about cost effectiveness like Olivier pointed out. So, the reason I think it’s also mental models is if you try to establish the cost effectiveness of a platform technology, something that can be used across a wide number of use cases and you say, I will pick one use case and assess whether this technology is cost effective or not, the answer is no. Right? So, if you were to only ask is it cost effective for delivering blood? Maybe. If you ask, is it cost effective for delivering one type of medicine? Maybe. But if you start asking the question with a wider-angle lens, so not only economies of scale but economies of scope, that’s when the cost effectiveness question gets us a different answer. So, people’s mental model and the way the architecture for financing health around the world in Africa typically functions are we think about my job is to think about malaria and I’m going to see if the drone is cost effective in getting malaria medicines to people or not.

Prashant Yadav (28:20):

And if it’s not, I don’t think I’m going to put money into it, irrespective of whether the frontline health worker, the person who manages a clinic or deliveries in a clinic, that person, whether it’s a nurse or a medical officer or other carers of healthcare workers, they don’t think of it as this is for malaria. They have to face a patient every day and their lives are improved when things come to them reliable, quick, and that’s the lens of cost effectiveness that we’ve got to start applying. So, if you say what is the root cause? The root cause is our mental models of thinking about a delivery mode that is new, that is a platform technology, we’ll have to expand in terms of number of use cases, and we may also not know all of the use cases that this technology lends itself till today. We didn’t know four years ago that we will be using drones to transport PPE or touch-free PPE to rural clinics in Ghana. Who was talking about PPE at that time? We were all talking about can we get essential medicines. So, use cases in the future may come up and we have to give some weightage to the idea that something in the future will help this platform technology become even more valuable than it is today. If that’s the mental model you start with, suddenly a lot of value unlocks and capital starts to unlock.

Scott Luton (29:40):

Well said, Prashant. And one of the points you made I think is really important in terms of the human impact. So far in this conversation, I’ve been really speaking and the picture in my mind has been on the end users and the patients, but you make a great point because it also enables and empowers the workforce across the globe that’s in the healthcare industry that’s trying to reach and treat and see as many folks as they can. It changes their day to day and it makes their days hopefully more successful and allows them to focus more on areas that require that human touch. Right? That’s a great, great grand enabler. Quick follow-up question, Prashant, since you really focused your last response around cost effectiveness. You mentioned some things that we should consider and leaders should consider, especially those mental models that a very eloquent way of suggesting we got to think about it different, right? Any other considerations you want to suggest to our audience in terms of that cost effectiveness to a better drone approach? Any other thoughts there, Prashant?

Prashant Yadav (30:36):

Yeah. So, I think we have to start by accepting that the fixed costs are high and the variable costs are relatively low in setting up new drone networks because just the fixed cost of setting things up is high. So, the more we can get out of a drone network that we establish, the better it is in a marginal cost sense. So, the more things we can do and the more volume we can flow through a drone network, the lower will be the marginal cost for that next clinic that wants to start getting things delivered using drones, right, so how do we add more volume and more types of products. Now, that requires thinking with an ecosystem lens. That requires asking the question, which and many of us in the logistics industry say, what are adjacent revenue pools? I have my core revenue pool that comes from asking donors and ministries of health for health products, but are there adjacent revenue pools that I can make a case pull from, and that way I can amortize my fixed cost over a much larger volume base and therefore it starts to become cost effective for more and more end customers. That’s where I think we need to start focusing, and that’s where Olivier and I have been having discussions on this topic.

Scott Luton (31:51):

Prashant, that’s a great segue and I really appreciate that. Of course, the use of the term ecosystem has been so much more prevalent in recent years and thankfully I’m really grateful about that, instead of being so fixated on a single node in the overall supply chain or a single customer or a single product. It’s truly ecosystems that really help us realize the art of the possible almost no matter what industry or heart of global business you’re talking about. So that’s a great segue into, Olivier, when we think of an optimized multi-sectoral approach for multi-sectoral development. When you think of potential opportunities for doing that better, which then will lead back to growing and scaling up these drone networks, what are some thoughts that come to your mind? And first, Olivier, if you would, when we talk about multi-sector, would you define that first and then talk about things we need to be doing better?

Olivier Defawe (32:40):

Yeah. So, by multi-sectoral market development, what we know is the public health. Going beyond the public health, it’s like including the private health application but also going beyond health, looking at other sector, agricultural sector, energy sector, environment sector and so on and so on. So, this is what we really are talking about when we are thinking about promoting multi-sectoral development of the drone transport. We have to remember that cargo drone is agnostic to the cargo it’s transporting. Therefore, the same drone transport provider used for a public health application, transporting blood for example, could be used to transport veterinarian products or to transport seeds for client in agricultures or carry equipment per part to all platform offshore or to remote construction sites in hard-to-reach area. So, for example, in the energy sector, an equipment that fails often means a huge loss, sometimes to the range of hundreds of thousands of dollars per day. That’s a real incentive to use cargo drone to speed up the supply chain of spare parts. So, once the type of cargo transported by drone becomes more versatile, the use cases are literally endless. And actually, a recent cargo-drone market report estimates today’s market at 0.6 billion U.S. dollar in its forecast to reach 9.4 billion U.S. dollar by 2030, compound annual growth rate of 39% between now and 2030. But these number are only possible and can be reached only if cargo drone industry grows across vertical sectors.

Scott Luton (34:40):

Well said. And that kind of goes back, Olivier, to what Prashant was talking about earlier. We leverage these ecosystems to have the conversations we need so we can develop new opportunities, those adjacent revenue goals as Prashant was talking about so we can really maybe fly past that 9.4 billion projection for you said 2030, is that right?

Olivier Defawe (35:01):

Correct. And I’m only talking about cargo drone market, not drone in general, just the use of drone for transporting goods.

Scott Luton (35:11):

Wow! What a tremendous opportunity. And really, my favorite part about that is beyond companies doing it because it needs to be done for our fellow citizens around the globe because it’s the right thing to do. What my favorite part about that is I know when there’s business opportunities to do all of that, a lot of times that’s what makes the growth and make the decisions happen to do just that. So, thank you for sharing, both of y’all, on cost effectiveness and some of the market dynamics out there. Let’s shift gears a bit. I want to talk about the private sector and what different private sector stakeholders need to do to make this work beyond the potential revenue opportunities, perhaps. Olivier, from a supply perspective, how do we involve more private logistics in transport companies?

Olivier Defawe (35:59):

Yeah. So, if you look at the trend of the new technologies, most providers are now original equipment manufacturer, OEM. So in other words, the drone technology providers do not operate their own technology. The business model like the Matternet, the [inaudible] or even the Zipline, where a provider not only developed, produced their own technology, their own drone technology, but they also operate its technology for their customer. That business model is slowly fading away. And today we have two main private sector categories of provider. You have the drone technology provider like an OEM, and you have the drone transport service provider like the Skyports, like the DroneUp and [inaudible], who have fleets of various type of drone that they either lease or purchase from OEM and operate them as a service to the customer. So, this differentiation of role between technology provider and service provider is a really good thing, but we need more drone service provider to promote cost competitive pricing.

Olivier Defawe (37:15):

So, there are two ways to get there. We either need more drone transport service provider that only use drone platform to move cargo, so we call them also a drone airline, or we need to leverage existing logistic and supply chain firms that start and they start offering drone transport services. Those are the Polar Air, the Freight In Time. I’m focusing on Africa here. So, today, there is an area where we want to work more and more, to assisting drone airline in entering the African market or helping existing transport companies explore, help them integrate and add drone transport in their service offerings.

Scott Luton (38:04):

So much opportunity, Olivier, and I bet — we’re going to make sure our listeners know how to connect with both of y’all in a minute. But, Olivier, I’m sure you welcome any conversation for companies out there to explore some of those things you’re mentioning. Is that right?

Olivier Defawe (38:17):

Correct. Correct.

Scott Luton (38:18):

Okay. So, Prashant, from the demand side, what are some of your thoughts in terms of how we can create more aggregate demand for public and private sector companies and organizations to get involved and help us reach the art of the possible here?

Prashant Yadav (38:31):

Yeah, Scott, so before I talk about the demand side, just one additional point on what Olivier said. So, I think — let’s think of it as technologies mature, there is a clear end customer demand which may not be translating into purchase orders for actually doing transport. So we have two sides clear. Now, what business model will be best suited to make these two things come together? It’s still a little bit unclear, right? One business model is fully integrated. The OEM provides the full service. The other business model is that the OEM sells technology and the equivalent of 3PLs, third-party logistics companies, either existing ones or drone-specific ones emerge and they provide a drone as a service to the end customers. Now, I mean, I’ve seen many new technologies evolve and business models come around them. I think initially there will be multiple business models. We won’t be able to say here is the only one that everybody will converge on. And over time, we will see some succeed, some not succeed. So where we land is unclear, but I think we should try with different ways of looking at this.

Scott Luton (39:38):

I’m very practical optimist to how you finish your response there. I feel really good about making a ton more real progress and powering a lot more outcomes based on the wonderful work both of you and your respective organizations and all the sectors out there that Olivier was talking about earlier. The need is too great and the ability, frankly, to commercialize it and to create revenue is tremendous as well. So, hopefully, that powerful intersection power a lot of progress years ahead. So, back to demand then, Prashant, yeah, your thoughts.

Prashant Yadav (40:10):

If you look at end customer demand, a simple way of separating two categories of demand, one is demand that cares a lot about efficiency and doesn’t care about responsiveness. The other is a type of demand that cares intrinsically a lot more about responsiveness. So, I think we will have to start our journey by first aggregating the demand, which cares more about responsiveness. Olivier brought up the example of spare parts. If I need a 1Z, 2Z of something and I need it quickly, even if it’s 5%, 10% more expensive than my current mode of transport, I’ll go for it because I have reliability of lead time and I have quick responsibility. There are many, many applications where responsiveness matters and I’m not talking about because of responsiveness, pricing something extremely high, but I’m talking a small premium for a new technology coming in which may come at a 15% or some price like that. That we can aggregate quickly and that will bring us both economies of scale and scope together.

Prashant Yadav (41:07):

Then, it’ll set us on a pathway to start addressing the efficiency side of the demand, people and end customers who care mostly about getting the lowest price on their transport cost. As we increase on their responsiveness demand aggregation, we will then equip ourselves to be able to address the efficiency side. And that’s a trajectory which I get excited about. I chat with Olivier and say, “Can we do something to accelerate that?” It’ll happen organically over time, but our job is can we accelerate that? Can we use new models of risk sharing, of bringing global capital, of convincing people who are on the demand side of the supply side to think about this differently so that we can go faster on this curve?

Scott Luton (41:49):

I love how you both think. And to that end, before we make sure our audience knows how to connect with both of you and your respective organizations, I want to bring in a bonus question. One of my favorite parts of our conversation here today is going back to what Prashant was talking about. He held his hand and said, yes, I was a former skeptic, and I love leaders that can be transparent about that because we all can’t get a hundred percent of the things right all the time. And, Prashant, that’s a very powerful thing to share and communicate with folks. So, the last question beyond getting our audience connected with y’all, I want to get both of you to speak to, is Prashant and Olivier, if y’all think about some of the skeptics that are out there that may be are listening or watching this conversation and if you had one thing to share with them or challenge them on, just one simple thing, not to poke people in the eye, but just maybe to get them thinking a little bit differently, getting them to change that mental model or their assumptions they may have, what would that one thing be? And, Prashant, let’s start with you.

Prashant Yadav (42:45):

I would ask people to exercise some empathy and put yourself in the shoes of the frontline health worker in a clinic, not what happens in between, not all the technicalities of 3PL company, logistics company, how it works. Just put yourself in the shoes of a frontline health worker and ask the question, is their life and their ability to treat patients getting better if they can get their supplies timely, reliable, fastly time and just reliability of this transport model? And then with that as a starting point, ask the question if it does, how can I make it happen so that it’s also sustainable versus asking the question, is it sustainable? So, I think starting from the bottom up is my plea to people.

Scott Luton (43:28):

Yeah, well said, Prashant. And it may sound simple to some people out there, but the power of empathy can truly move mountains. Olivier, same question, if you had to challenge the skeptics out there with just one thing, what would that be?

Olivier Defawe (43:39):

I would say do your research. Get up to date on where the drone transport technology is at. I’ve been doing a lot of interviews and a lot of investigation across the various sector because we are trying to push the agenda across various sector and one realization is like people are still thinking drone transport is something of the future. The mindset is still like what it was 10 years ago, even in the country where you have ongoing drone transport operation. Like in the DRC, you have stakeholders, very high stakeholders from various ministries who have no idea that the largest bidirectional drone transport network in the world is in the DRC. So, my call is that wake up, be curious, catch up, and get on the train because we are moving.

Scott Luton (44:37):

I love it. I love it, Olivier. That is awesome. I’m so glad we got both of y’all to speak to those skeptics out there. And, folks, hey, I’m going to add to the challenge that you heard so well from Prashant and Olivier here. To our audience out there, no matter where you are, hey, if you’re in position to contribute resources to the critical mission that Village Reach is on, we invite you to do just that. As we mentioned on the front end, man, their efforts enable access to quality healthcare to over 70 million people, and there is a lot more work to be done. So, join in the mission — whatever that means to you, join in the mission in some way, shape or form, and you can learn more at villagereach.org.

Scott Luton (45:11):

Okay, Prashant, Olivier, you are quite the one-two punch. You’re going to have to have a roadshow. Maybe the Rolling Stones can open for y’all because, I mean, I really appreciated the different ways and the similar ways y’all approach today’s conversation and the need for real action. So, let’s make sure folks know how to connect with you both. Prashant Yadav with INSEAD Africa Initiative, really have enjoyed meeting you here today. I’ve seen y’all both out there getting interviewed and speaking and doing keynotes about the things that we need to do together and challenging leadership to take that critical action because it’s all about deeds, not words. Prashant, how can folks connect with you and your organization?

Prashant Yadav (45:47):

Email, LinkedIn, X or what used to be called Twitter, all of those channels. Feel free to reach out.

Scott Luton (45:54):

Well, we appreciate that. We’re going to drop many of those links in the episode notes, so hopefully folks are one click away from connecting with you. Thanks for being here. Olivier Defawe, so nice to reconnect with you, really enjoyed our time together months ago. Hopefully, we can do it again here maybe in December 2024. But regardless, really appreciate your action and results-driven work. How can folks connect with you and Village Reach?

Olivier Defawe (46:17):

It’s a team effort. There is a lot of people at Village Reach who’s spending a lot of time doing this work and making it work. So, I would say just go on our website at villagerich.org. There is a page specifically on the outsource drone transport, or you can find me on LinkedIn. Thank you, Scott.

Scott Luton (46:36):

Thank you both. Thank you both for what you’re doing. The world needs a lot more Prashant and Olivier and your respective teams. So, I really appreciate y’all’s noble mission. Okay. To our listeners out there, to our viewers out there, to our audience tuned in from around the globe, hey, I’m challenging you, just take one thing, at least one thing that Prashant and Olivier said here today. Put it into action. Share it with your teams. It’s not about lip service leadership. It’s about deeds, not words. So, with that in mind, be sure to check out villagereach.org. Jump into their mission if you can. But whatever you do, Scott Luton, challenging you to do good, to give forward, and to be the change that’s needed. And with that in mind, we’ll see next time right back here at Supply Chain Now. Thanks, everybody.

Intro/Outro (47:18):

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