Territory management in delivery operations
If you are involved in delivery route planning, logistics or route planning then you will be familiar with the power of territory management. In this guide we will show you what territory management is, what the benefits of using it are, and show you real-world examples of it that will help you to change your operations for the better.
What is territory management for delivery operations?
Territory management means taking geographical areas and assigning them to delivery drivers or to specific depots in order to break up delivery workloads. It makes far more sense for any delivery team with more than a handful of vehicles to begin to use territories to break up workloads. The alternative is to put all of your drivers and stops into one big pile and assign work based on what your routing algorithm says. This can be a poor experience for everybody as drivers might be asked to deliver to places far from their home and drivers will not become familiar with a subset area of the wider delivery catchment.
In practice, what territory management involves is a zone to be drawn on a map and that zone to be assigned either to a driver, a vehicle, or perhaps to a depot. Once this is done it means that all deliveries within this zone are now going to be managed by one person or team. In this way they can build up specific knowledge about the zone and get better and more efficient at working there. The common sense approach with territory management is to assign a territory to an individual based on their home address or warehouse location so they can minimise their commute to and from work thereby cutting out unnecessary hours behind the wheel and fuel costs. This also contributes to being an eco-friendly delivery service.
If you have ever wandered into a dispatch coordinators office you will probably have seen a map with zones drawn on it but the more modern version of this situation is territory management software systems. The same principle applies but now zones are drawn on an online map with a polygonal lasso tool. The beauty of software territory management is that zone can be adjusted easily based on the feedback from routes and drivers. Perhaps a driver wants a zone adjusted so he doesn’t have to cross an interstate to visit just one stop. Maybe that one stop would be better serviced by his colleague in the adjoining zone? Or, perhaps the driver in zone #1 is having to work longer hours than his colleagues as it is just a very busy area. Now we might want to decrease the size of that zone and hand parts of it to others so everyone is working the same number of hours? Territories are a very powerful way of analyzing work and making it function better for drivers and for customers.
SmartRoutes, in working with a major grocery delivery operation [no contact delivery], uncovered numerous outlier customers for a specific grocery store that were not within any of the normal zones of delivery. These customers were being serviced by the delivery team but at a significant extra cost in terms of time on the road because of the distance they were from most other customers. These outliers had not been spotted previously as a territory management lens or overlay had not been applied to the delivery team. What became clear very quickly was that these customers would be better serviced by a different grocery store in an adjoining district. This required a change to their online ordering system to ensure a better service for those customers and a more efficient operation that didn’t waste fuel driving long distances to lost-making customers. Operational insights were uncovered by the application of territory management principles in this case.
Benefits of territory management in delivery operations
Delivery drivers are happier
Strange to start with an emotional benefit but for delivery drivers, unnecessary miles driven can be very galling, especially when you are behind the wheel so long every day. Assigning a local territory to a driver means they can pick up their consignments faster, delivery to an area they know well, and get home in the evening faster to see their families or relax. These things matter. Drivers who are happier, stay longer with the company and usually do a better job. In a time of extreme driver shortages it is a fantastic opportunity to attract good staff.
Greater efficiency in delivery operations
Looking at the example above with the outlier customers for the grocery delivery team. It is clear immediately that fuel and driver wages can clock up very quickly if things are allowed to slip. Setting an intelligent territory management plan up can really help to create efficiency for the operation overall and get buy-in from the drivers who understand wastefulness is not going to be tolerated. Though the massive bulk of fuel and wage savings will come from implementing a route optimization solution, intelligent zoning of deliveries to particular drivers and depots can greatly reduce commuting times which can result in percentage decreases in fuel bills at the end of the month.
Better reporting and insights in delivery operations
Again using the example above, delivery operations can miss very obvious process improvements like not allowing a customer from too far away to order from Grocery story X. In fact, delivery operations are, by their nature, visual and zones help dispatch supervisors and transport managers to generate insights more readily. For some of our SmartRoutes customers we have set up territory reports that compare and contrast fuel efficiency, driving hours, and overall profitability from Zone #1 to Zone #2 and so on. Breaking the total delivery catchment up into territories can help managers to see the problems more clearly so deliveries can happen on time.
Working with a large newspaper distributor SmartRoutes used territories to automatically create delivery routes and assign them to drivers. Driver #1 was assigned to Zone #1 and all orders that came in during the week with an address in that zone were assembled automatically by the system and assigned to that driver. The manager responsible for route planning found that he went from 12 hours per week spent planning routes and communicating those to drivers, to all of a sudden being free to do other things! Process improvements are usually measured in increments of percentage points but this simply took the entire task away and made it automatic. Without zones this would not have been possible.
In an environment where customers are demanding faster and faster deliveries, territory management can help to do that. One of SmartRoutes’s customers uses territories to monitor the clusters of delivery locations. They can see on a map where the majority of customers are and they can then adjust their warehouse location to then be at the centre of each cluster. Because they deliver very small packages to homes they find the clusters’ centre first and then send a large van with all the packages to that territorial centre. There they meet with their delivery drivers [who happen to be on bicycles] and they collect their delivery loads from this mobile warehouse. This has created a process improvement for their delivery team but it has also allowed them to reduce their delivery wait-times by 100% bringing them into the category of next-day delivery.
Improved workload balancing
As described earlier zones can be used very effectively to balance workloads between drivers. Rather than using simplistic metrics like ‘every driver delivers 50 packages per day’, they can now see that a territory that is more densely populated can handle more deliveries in the same time. Certain territories might become the most profitable and, as a result, become the focus of efforts and a further investment in sales efforts to these areas. Workloads that are balanced mean that drivers do not feel aggrieved with their colleagues or managers.
List of top 5 providers of territory management in delivery operations
- Paragon Routing - Paragon Territory Optimizer enables logistics and field service companies to divide their delivery or service regions into compact zones with balanced workloads. This territory management capability is ideal if you service different areas on different days of the week, or favor the service benefits of giving your customers a regular driver. Territory Optimizer enables high levels of worker productivity and minimizes miles driven and overall transportation costs.
2. Onfleet - Though one of the larger vendors in the route management space, Onfleet has only recently released zone management functionality and it is still in Beta development according to their support documentation. That being said, it is a good quality product and the functionality appears to be fully realized.
3. Route4Me - Route4Me route optimization software has territory optimization capabilities that can help you make your outside sales, field service operation, or last-mile delivery business much more efficient. The Route4Me Territory Optimizer permits users to upload multiple driver locations and customer locations, and automatically match them up in terms of finding the nearest driver to each of the customers’ addresses.
4. Locus - A newer entrant to the market but attempting to provide a full functionality set. Locus provides a territory management system that, at minimum, allows you to assign work to individual drivers by territory and see results as they come through. Based in India Locus has a broad customer base with many large multinationals going with their offering.
5. SmartRoutes - SmartRoutes Zones is a territory management tool that overlays your mapped data and allows you to:
- Assign territories to drivers or vehicles
- Auto-create routes from API integration with ordering system
- Gain insights from territory comparisons
- Auto-complete deliveries or customer visits based on GPS location of driver
- Divide workloads based on zonal averages of stops and time taken
- Help drivers to complete their deliveries more efficiently
Territory management for field sales operations
We have spoken about a number of use cases but one of the main functions of territory management is in terms of managing field sales operations. SmartRoutes works with a national auto parts company with over 2000 customers who are themselves auto parts providers or vehicle services companies. As part of their business their field sales representatives visit each customer on a regular basis informing them of new products and managing the customer account. The field sales reps are divided into geographical territories and there are expectations that all customers within each territory will be visited within each month. Using territory management the senior management team can see clearly the performance of each rep and how far they are in achieving their visitation goals every month. They can auto-track if a customer has been visited by matching the GPS signal of the rep with the location of the customer. If a rep is within 20 meters of the customer location for more than 10 minutes the customer is then marked as having been visited.
If one territory is struggling to visit all customers every month and another territory is finished by the 20th of each month the question becomes, is this because of sales rep performance or are the territories unfairly distributed.
Territory management like this helps to see if there is an opportunity to search for new business in a territory. This might be because a sales rep is being under utilized or because it is clear that the product offering resonates well in that territory.