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Amazon’s Clever Machines Are Moving From the Warehouse to Headquarters

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<a href="http://Amazon.com" rel="nofollow">Amazon.com</a> Inc. has long used robots to help humans move merchandise around its warehouses. Now automation is transforming Amazon’s white-collar workforce, too. 

The people who command six-figure salaries to negotiate multimillion-dollar deals with major brands are being replaced by software that predicts what shoppers want and how much to charge for it.

Machines are beating people at the critical inventory decisions that separate the winners and losers in retail. For the staffers deciding how many books, games or plastic pool toys to peddle, the tradeoff can be stark: Order too little and you miss out. Order too much and you’re forced into costly clearance sales. Amazon’s algorithms, refined through years of monitoring customer behavior, are getting the Seattle-based company out of the guessing game.

<a href="http://Amazon.com" rel="nofollow">Amazon.com</a> Inc. offices in Seattle, Washington.

Photographer: Daniel Berman/Bloomberg

It also appears that a winner has emerged in a long-running competition between the two teams most responsible for the company’s retail success. Former and current employees say the retail group that used industry connections to lure brands to Amazon and helped create an e-commerce colossus is now being merged with the team that runs the marketplace, an automated platform that lets anyone with an internet connection price, market and sell their wares on Amazon without interacting with a single person. In recent months, several high-ranking executives have left for other jobs or been reassigned, but few express much surprise that a company with a cloud services division and prowess in artificial intelligence would put machines to work wherever it makes sense.

Going forward, Amazon will need fewer people to manage its retail operations, a decided advantage over rivals like Walmart Inc. and Target Corp., which are both spending heavily just to catch up. “This is why Amazon is the 800-pound gorilla,” says Joel Sutherland, a supply-chain management professor at the University of San Diego. “Nobody else has the resources and expertise to pull all of these emerging technologies together to remove humans from the process as much as possible while making things more reliable and accurate.”

Amazon said it’s creating jobs and adding automation across the company to better serve customers. “We’ve been working for some time on standardizing the products, tools and services we offer to the brands and resellers that sell on Amazon, and have made some organizational changes as a result,” the web retailer said in a statement, adding that it has more than 16,000 corporate jobs open worldwide and created 130,000 jobs last year.

Amazon began automating retail team jobs several years ago. Under an initiative called “hands off the wheel,” the company shifted tasks like forecasting demand, ordering inventory and negotiating prices to algorithms, people familiar with the matter say. At first, humans could easily override the machine’s decisions. For instance, if a brand notified Amazon about an upcoming marketing blitz for a product, an Amazon manager could increase the order in anticipation of demand the algorithm didn’t expect. But such tinkering was increasingly discouraged as the machines proved their precision, the people say. Anyone overriding the machines had to justify their decision, and the push to automate made them reluctant.

“Amazon realized a lot of expensive employees were spending a lot of time working on things that should really be automated,” recalls Elaine Kwon, who worked as a vendor manager at Amazon from 2014 to 2016.

Faith in the technology grew as it improved. Workers were happy to see tedious tasks like managing inventory spreadsheets delegated to machines that did the work more quickly and accurately. “The numbers don’t lie,” Kwon says. “It’s a better model.”

This is a major shift from Amazon’s early days, when the company was pushing beyond books into electronics, toys and more. The upstart needed to persuade brands to sell their products on its website. So Amazon recruited graduates from top schools and veterans from traditional retailers who already had relationships with suppliers. Before long, major brands had overcome their initial reluctance to sell their wares on Amazon, and eventually the site carried millions of products. 

<a href="http://An Amazon.com" rel="nofollow">An Amazon.com</a> Inc. fulfillment center in Robbinsville, New Jersey.

Photographer: Bess Adler/Bloomberg

Meanwhile, Amazon was also developing a new way of doing business that required fewer middlemen and removed the risk of buying inventory. Launched in 2000, the marketplace took more than a decade to take off. But growth in Prime subscribers and Fulfillment By Amazon, which lets independent merchants use Amazon’s warehouse and distribution network, made the self-service platform a magnet for products without any help from its retail team. The center of gravity in retail shifted, and most major brands wanted to be seen on Amazon where so many people were shopping.

A key turning point came in 2015 when the value of goods sold through the marketplace exceeded those sold by the retail team, the people say. The retail team, which had far more employees, watched its importance fade and money funneled into projects like Amazon Web Services and Alexa. It didn’t help that the marketplace generated twice the operating profit margin of the retail business—10 percent versus 5 percent, according to a person familiar with the company’s finances. In many international markets, the retail team has never turned a profit, the person says.

In annual sales meetings, a team of 15 people overseeing a retail category would see their growth outperformed by one person from the marketplace team, the people say.  The lines between the teams began blurring. Amazon retail vendors had once enjoyed such advantages as video and banner advertising and access to daily deals that get millions of hits a day; now marketplace merchants got the same perks. Many brands became more interested in selling on the marketplace, where they—not the Amazon retail team—controlled prices, images and product descriptions. 

About two years ago the retail team lost another key task: negotiating with major brands and manufacturers the terms of popular sales on the site called “Lightning Deals.” Common during the holidays as well as Mother’s Day and Father’s Day, they help move lots of inventory in a short period.

Now, instead of calling their vendor manager at Amazon, the makers of handbags, smartphone accessories and other products simply logged into an Amazon portal that would determine if Amazon liked the deal being offered and the quantity it was willing to buy. No small talk. No give and take. Thousands of Amazon man hours spent forecasting demand, planning marketing strategies and negotiating deals was now handled by software, a major leap in efficiency.

“Computers know what to buy and when to buy, when to offer a deal and when not to,” says Neil Ackerman, a former Amazon executive who manages the supply chain at Johnson & Johnson. “These algorithms that take in thousands of inputs and are always running smarter than any human.”

<a href="http://Amazon.com" rel="nofollow">Amazon.com</a> Inc. employees shop at the Amazon Go store in Seattle.

Photographer: Mike Kane/Bloomberg

Inevitably, the creeping automation has made Amazon’s oldest business less interesting for the people who work there. The team that created exciting new initiatives like the two-hour delivery service Prime Now and the cashierless AmazonGo convenience store now have fewer things to work on. There was a rare round of layoffs earlier this year and a retrenching of the grocery delivery service Amazon Fresh in November. Amazon’s most recent retail moves have been far more traditional than groundbreaking. The company acquired Whole Foods Market last year and partnered with Kohl’s Corp. to accept returns in its stores and Best Buy Co. to sell smart TVs.

That helps explain the string of recent departures and reassignments that includes executives who’ve been with the company for years. The consolidation of the retail and marketplace teams accelerated earlier this year after Sebastian Gunningham, a senior executive who ran the marketplace and played a key role in Amazon’s artificial intelligence initiatives, departed for a new job at WeWork, creating an opportunity to reorganize.

Some former retail team members are finding work or consulting gigs with manufacturers and brands hungry for people who can help their products stand out on Amazon’s cluttered site. Kwon, the former vendor manager, started her own e-commerce management and software company. Kwontified helps fashion and beauty merchants sell on major platforms, including that of her former employer.

“Amazon is so cutthroat and crowded,” she says. “Brands need to have strategies.”

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4 days ago
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Seniors Are More Conservative Because the Poor Don’t Survive to Become Seniors

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One of the abiding realities of our political era is a major generational split anchored on the right by disproportionately conservative seniors and on the left by disproportionately progressive millennials and post-millennials. This is often thought of as a perfectly natural, even inevitable, phenomenon: Young people are adventurous, open to new ways of thinking, and not terribly invested in the status quo, while old folks have time-tested views, assets they want to protect, and a growing fear of the unknown and unfamiliar.

There is some truth in those stereotypes, though different cohorts of young people in the past have been far more conservative than today’s, and on non-cultural matters, seniors have sometimes been as or even more progressive than their children or grandchildren (e.g., the so-called Greatest Generation, which mostly came of age during the Great Depression, was persistently Democratic-leaning politically).

But it is important to note that some generational disjunctions in political behavior are driven by demography. It’s well understood that millennials are significantly more diverse than prior generations. But there is something else driving the relative homogeneity of seniors: Poorer people are often hobbled by chronic illness, and succumb to premature death. A new academic study featured at the Washington Post’s Monkey Cage blog explains:

Political participation of the poor is overall lower because of poverty, bad health and many other factors, but millions of impoverished Americans across the country also die prematurely. For instance, in 2015, research funded by the National Institutes of Health and the Social Security Administration revealed that, since 1990, among the bottom quarter of Americans with the least education, life expectancy has either stagnated or decreased. That’s for well over 40 million people.

Add to this negative trend the fact that mortality among the poor increases during middle age — which is when citizens generally get more involved in politics. The premature disappearance of the poor, then, occurs precisely at the moment when they would be expected to reach their “participatory peak” in society. But they don’t live long enough to achieve that milestone.

Since white people suffer proportionately less from poverty than nonwhite people, they do tend to live longer, and in better health, which is conducive to political and other civic activism. The most politically left-bent demographic racial group, African-Americans, has made progress recently in reducing the gap in life expectancy with white peers, but still lags in both lifespans and health, as a 2017 CDC study showed:

For blacks 18 to 64, the data showed that they were at a higher risk of early death than whites.

“These findings are generally consistent with previous reports that use the term ’weathering,’ which suggests that blacks experience premature aging and earlier health decline than whites and that this decline in health accumulates across the entire lifespan and potentially across generations. This happens as a consequence of psychosocial, economic and environmental stressors,” said Leandris Liburd, director of the CDC’s Office of Minority Health and Health Equity.

And as the authors of the new study discussed at the Monkey Cage note, age and lifespan disparities can become self-perpetuating:

Inequality in the U.S., in other words, is not solely the result of economic difference. Health, too, has considerable potential to stack the deck against the poor. Socioeconomics, longevity and political participation mutually reinforce each other, making it especially difficult for poor Americans to gain political clout.

So it’s not just a matter of people naturally growing more conservative as they grow older. It’s also a matter of the wealthier — and more conservative — people surviving more often, and for longer.

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11 days ago
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Butt-kicking Super Cruise coming to all MY2020 Cadillacs, more GMs later

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Enlarge (credit: Cadillac)

The Cadillac CT6 was one of the more memorable vehicles I've tested this year. That's because it came equipped with Super Cruise, the latest advanced driver assistance system to come out of General Motors' R&D. In my review, I said that GM should do what it takes to make Super Cruise available on every model year 2020 vehicle it makes. Although the automaker hasn't quite gone that far, on Tuesday it announced that Super Cruise will be available on every MY2020 Cadillac. A year later we should see it show up as an option in other GM brands.

Super Cruise is an evolution of the adaptive cruise control and lane keeping you may have in your own car, but adds a couple of important new features that even Tesla's very capable Autopilot lacks. First, its geofenced, and will only work on the 130,000+ miles of highways in the US and Canada that GM has lidar mapped. Restricting its operational domain like this means the system will encounter many fewer of the complicated edge cases that keep autonomous driving engineers up late at night. And you'll be glad to know that the mapping is a constant process; anecdotally I'm hearing that Super Cruise drives better now than it did several months ago in places like California.

Second, it comes with a proper driver-monitoring system. That's important, because Super Cruise is not a fully autonomous system; it's not even at level 3 of the increasingly unhelpful SAE levels of self-driving. So the human behind the wheel is always responsible for situational awareness. To this end, Super Cruise only works if it sees you're paying attention to the road ahead. An infrared camera on the steering column tracks your head position and gaze. Look away from the road for more than a few seconds and the warnings start. Ignore the audio, visual, and haptic feedback for 15 seconds, and Super Cruise disengages.

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zipcube
15 days ago
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Some F-35s gathering dust waiting for repair parts

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Enlarge / An F-35B Lightning II aircraft piloted by Maj. Jesse Peppers taxis toward the runway aboard Marine Corps Air Station Beaufort, April 11. Keeping the F-35B flying, just as with the Air Force and Navy's F-35 fighters, is shaping up to be a waiting game because of a slow channel for repair parts. (credit: US Marine Corps)

The Marine Corps' F-35B fighters are among the oldest operating aircraft to come out of the Joint Strike Fighter program, and they're beginning to run into some maintenance issues. While many of the repairs being made to the aircraft are upgrades to bring them in line with the latest software releases and accompanying hardware upgrades, a fair share is for typical aircraft maintenance issues—and those issues are leading to an increasing number of aircraft left grounded waiting for parts.

As Defense News' Valerie Insinna reports, that's often because the wait time for delivery on some parts is a month or longer. And according to a GAO report, the lead time for some F-35 replacement parts could be two years or longer. Between waiting for parts and time spent offline for upgrades, F-35s worldwide were unable to fly 22 percent of the time between January and August of 2017. The GAO report, published last October, warned of "sustainment challenges" faced by the F-35 program—many of them because of poor planning and delays in bringing repair parts suppliers and depots onboard.

If anything major goes wrong with an F-35, it could spend a lot more time waiting to be repaired. "DOD does not have enough capacity to repair F-35 aircraft parts because the establishment of repair capabilities at the military depots is six years behind schedule," the GAO report stated. "Repair capabilities at the military depots were originally planned to be completed by 2016, but program officials told us that some capabilities have now been delayed until 2022."

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17 days ago
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10 new hybrid and electric Jeeps by 2022 in Fiat Chrysler’s five-year plan

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Enlarge / FCA boss Sergio Marchionne stands next to one of our favorite four-wheelers, the Alfa Romeo Giulia. (credit: Stefano Montesi/Corbis via Getty Images)

On Friday, at its test track in Balocco, Italy, Fiat Chrysler Automobiles revealed its bold new plan for the future. The past few weeks have seen plenty of speculation about the automaker's future and whether or not it was going to kill off storied brands like Dodge or Fiat. But as expected, the announcements mainly focused on four of the names in FCA's portfolio: Jeep, Ram, Maserati, and Alfa Romeo, each of which has big things in store. CEO Sergio Marchionne also revealed that the company is going to invest $10.5 billion (€9 billion) on electrification between now and 2022, phasing out all of its passenger vehicle diesel engines along the way.

Jeep is arguably FCA's crown jewel now that it has spun off Ferrari, and the company wants to launch a bevy of new models in the next few years. These will hit each of the different size segments in the SUV and crossover classes, from a crossover smaller than the soon-to-be-revised Renegade all the way up to a new Wagoneer or Grand Wagoneer. By 2022, Jeep should also have ten plug-in hybrid EVs (PHEVs) and four battery EVs (BEVs) on sale. Some of these will be focused more on life in an urban environment, but, from the sounds of it, Jeep is not prepared to compromise its off-road chops just because it's adding some electric motors.

Next up is Ram, the vehicles formerly known as Dodge trucks. FCA wants Ram to occupy the number-two position for commercial vehicles in North America by 2022, which might just happen given the brand's growth in the past few years. The five-year plan calls for a new midsize truck to fit in between the light and heavy-duty versions, as well as replacements for the Promaster City and Promaster vans. Expect a hybrid powertrain option for the light-duty truck but probably no BEV truck. Oh, and that Ram TRX concept I liked so much has been greenlit for production. A performance truck to rival the Ford Raptor, it hits the streets (and dunes) in 2022.

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zipcube
19 days ago
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Google reportedly won’t renew controversial drone imaging program

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Enlarge / Orion is a military drone that can fly for five days with 1,000 pounds of payload. Aurora says it can perform surveillance missions 3,000 miles from home base. (credit: Aurora)

It looks like the drama surrounding Google's controversial involvement in Project Maven is coming to an end. Yet another report from Gizmodo on the subject says that Google won't be renewing the project once its current contract runs out.

Project Maven is an initiative from the Department of Defense, which aims to “accelerate DoD’s integration of big data and machine learning.” The DoD has millions of hours of drone footage that pour in from around the world, and having humans comb through it for "objects of interest" isn't a scalable proposition. So Maven recruited several tech firms for image recognition technology that could be used to identify objects of interest in the footage. As one of the leading AI firms, Google signed on to the project with a contract that reportedly lasts until 2019.

Maven was Google's first military contract, and the move was immediately met with resistance by Google's employees. Despite Google's assurances that the project was "specifically scoped to be for non-offensive purposes," an internal petition signed by over 4,000 employees demanded that Google leave the project. "The technology is being built for the military," the letter read. "Once it's delivered, it could easily be used to assist in [lethal] tasks." The petition didn't immediately result in a change in Google's plan, which led to a dozen employees reportedly quitting the company in protest.

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19 days ago
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