4 Common Pitfalls in Delivery Territory Management

Right now, there are a number of software solutions on the market devoted to planning territories that are balanced, efficient, and aligned with larger business goals—addressing the complex problems that arise from trying to manage the intricacies that come with making a robust sales plan. This makes sense, given that the complexity of these kinds of problems can be pretty severe.

So what do you think happens when you take all that complexity and add the complexities of delivery route management on top of it? If you’re a food and beverage distributor or any other B2B last mile specialist, you probably already know the answer: creating and updating sales territory plans that work for your drivers, your customers, and your profit and loss columns become Herculean tasks. After all, you’re taking a workflow that’s difficult to plan before you introduce delivery routes into the equation, and then you’re attempting to use that as a bedrock for ensuring on time delivery to clients of all shapes, sizes, and preferences. 

When you’re working with even a handful of distinct territories, the effects of small changes to who services which customers on which days can be hard to predict. You obviously don’t want to gamble with the quality of service that you’re offering to your customers—at the same time, if you aren’t able to ensure that you’re running the optimal territories, you may be servicing clients in a much less cost-effective manner than you’d like, all while setting your sellers up for potential disruptions or imbalanced workloads.  

All that being said, it is possible to solve this problem in the modern, AI-enabled supply chain. The trick is just to avoid the pitfalls that have historically hampered territory planning. 

1. Manual Territory Management

As it happens, the first pitfall also represents that default way of addressing this problem in the past: manual territory planning and management. Sure, there might be some degree of technological assistance baked into these processes (e.g. when it comes to actually determining point-to-point distances and drive time estimates), but most processes for territory planning that have been utilized historically are fundamentally manual. The process might involve poring over maps and spreadsheets, consulting SLAs with customers, checking previous driver performance, calculating cost and revenue per case or delivery for particular accounts—in short, a huge amount of calculation. 

The trouble with this manual method is twofold:

• Modeling which territories will work and which won’t is difficult with the assistance of software that can easily run scenarios for the daily routes that different territory options would imply. This means that you often can’t really be sure how well a territory plan will work in real life until you roll it out.
• Planning territories by hand is incredibly time consuming. Building a new plan from scratch can easily take months, even when it’s being done by experienced planners. Small adjustments to plans can also take significant periods of time—meaning that rolling out new sales territories or updating existing ones comes with a huge lead time. 

This results in a status quo where territory plans often lag behind business realities fairly significantly. As your customer roster grows and evolves, market forces change, prices increase or decrease, etc. your territory plans get further and further away from optimal. 

To avoid this pitfall, distributors, wholesalers, and other businesses that deal with delivery and sales territories of the kind we’re describing need a fast, automated way to generate territory plans and run what-if scenarios to compare possible plans within a matter of minutes, not hours. When you can do this, you can actually evolve your plans at the speed of business. 

2. Rigid Plans

We talked briefly about what-if scenarios above—but they really deserve their own section. When you can’t run what-if scenarios rapidly (i.e. in a matter of minutes), you run the risk that even plans that are optimized for your current workload and network will become difficult to adjust. Plans can go out of date quickly, and when they’re difficult to update it puts more pressure on planners to grapple with lengthy and cumbersome planning cycles or risk losing out on revenue. 

This is where lightning-fast what-if scenarios can be a game changer. For instance, you might see that one of your distribution centers is no longer in an obviously correct spot to handle business from new customers or accept shipments from new suppliers, and wonder whether it would be profitable to choose a new location for it. Without what-if scenarios, you're essentially making your decision based on guesswork. And even if you can run what-if scenarios manually, they’ll be so time-consuming as to make it incredibly difficult to test out all possible options. Again, this slows down updates to plans. When you can leverage AI to run these scenarios almost instantaneously, you can run as many scenarios as needed whenever you see any potential room for improvement—meaning that your plans are suddenly flexible, agile, and responsive to changing business needs. 

3. Disconnect Between Territory Planning and Route Planning

Getting your sales territories to be balanced, efficient, and responsive to the needs of your customers, drivers, and other stakeholders is no mean feat. And it’s even harder when you have to translate those territory plans into routes that will actually work. Unfortunately, when you’re not considering weekly and daily routing needs when you’re creating monthly or quarterly territory plans, you’re setting yourself up for potential route planning snafus when it comes time to actually deliver customer orders. 

That’s why it’s so crucial to account for the way that your daily route plans will actually be constructed as early as possible—i.e. during the territory planning phase. To make this possible, you’ll need to account for the days of the week and frequency with which particular customers are serviced. You’ll need to account for your actual truck and delivery driver capacity relative to customer needs within service areas. And you’ll have to ensure that your routes give you room to maneuver when order volumes change, off-day orders arise, or new customers get added to the roster. In short, when planning territories, you’ll need a system that is also planning routes in real time to ensure that the territory plans are feasible. When you can do that, you set your drivers up for success and ensure that you’re keeping customer satisfaction front and center. 

4. Lack of Cost Optimization 

The most valuable territories for your business aren’t just the ones that are feasible and balanced from a workload/revenue perspective for your drivers. Rather, they’re also the ones that offer the best cost-revenue upsides for your business. If a particular sales territory doesn’t offer you the ability to be efficient in your actual delivery runs, you’re potentially losing out on opportunities to move more product, service more customers, or service your existing customers more cost-efficiently.

That’s why, in addition to considering the real-life, day-in-day-out route optimization implications of your territory plans in real time, you also need to be able to consider their cost implications as you plan. To do this, you need software that’s powerful enough to calculate cost per case, delivery, and route as your planning and offer up direct cost comparisons between different planning options. 

But, if you can find a tool that actually empowers you to do that, you can provide impeccable customer service across a balanced mix of sales/delivery territories—all without breaking the bank. At the end of the day, that’s what all of the territory planning tools and best practices should be helping you work towards.