The Three Big Challenges of Fleet Territory Planning

Challenges of Fleet Territory Planning

By Claudio Mendez and Mike Mulqueen, JBF Consulting

Fleet territory planning or “Re-Routing” is a tactical modeling process used by shippers with pickup, delivery or service truck fleets. The process is “optimally” performed seasonally or annually with the objective of creating a transportation blueprint that becomes the basis for daily route execution and driver assignment. Unfortunately, for reasons described in this article, most organizations do not perform this function as frequently nor as well as they should.

Fleet Territory Planning Overview

Territory planning solutions form the operational blueprint for an enterprise by aligning service days of a shipper’s customers who are within proximity to one another and then building geographically clustered routes that minimize total travel time and distance. The resultant solution, which consists of days of service for each customer, the route that the customers are on and the stop sequence for each route are integrated into the routing module and ordering systems to facilitate day to day dispatch operations.

Re-routes become a necessity when the efficacy of the blueprint used in daily planning decays through organic changes, such as customer churn or through inorganic activities, such as mergers, acquisition or divestitures (see figure 1). 

Solution Quality Decay
Figure 1 – Solution decay over time

Solution decay occurs in all systems, but leading organizations define KPIs that measure routing inefficiencies and then take the appropriate action when the benefits of addressing those inefficiencies exceed the cost of fixing them. 

Value of Executing Re-Routes

The value of a well-executed re-route will vary based on the current state of the operational solution as well as the tools and processes that are used to derive the new solution. A well-maintained solution that has addressed the challenges laid out above will see modest incremental savings for re-routes, but those gains are necessary to keep operational efficiency at peak levels. 

However, most organizations have NOT fully addressed these needs, so the initial savings of an overdue re-route can be substantial. JBF recently completed an engagement across 5 branches for a client with a large service fleet. The exercise resulted in the number of driver territory and mileage reduced by 20%.

All branches saw benefits from the re-route, but the largest savings, both in raw numbers and percentages, were at the largest branches. We find this to consistently be the case across fleet types and industries.  

The Challenges

So, with significant savings on the table, why do organizations wait so long to perform re-routes? First, organizations may not have the necessary technology designed to perform this function. Territory planning solutions have been around for 30 years, yet many organizations that can benefit from this technology, have not made the investment, or if they have, it has become shelf-ware. 

Additionally, having experienced personnel capable of building and running models takes a significant commitment from management. Territory planners should be highly skilled people that understand data, model building, technology and the nuances of the business and transportation operations in order to perform this function well.   

However, let’s say you do have technology and personnel. The battle is not over. Below are the typical challenges we see that if left unaddressed, significantly reduce benefits, or in some cases, undermine the process to the point that the results are so dubious as to be unimplementable. 

1. Poor Data Quality

Problems with the completeness and accuracy of data are common at most organizations, especially those that have not invested in a master data management/data governance solution. Typical data issues we see when performing a re-route include:

  • Inaccurate latitude and longitude for each customer
  • Inaccurate time windows
  • Inaccurate time/distance calculations
  • Inaccurate service duration metrics
  • Invalid delivery frequencies
  • Inaccurate list of acceptable service patterns (i.e. what are the viable days I can service a customer)

Spending time and effort cleaning up these data as well as putting in place a data governance process to address data integrity should be done prior to performing a re-route. These models are highly sensitive to incomplete or inaccurate data and the value of a re-route is highly correlated to the accuracy of the information used. Poor data quality will result in a poor solution. 

2. Unclear Re-Route Objectives

It is incumbent upon the leadership of the organization to define and, where possible, quantify the attributes of a “Good” re-route. Territory planning software is highly customizable and seeks to minimize costs given a set of company-specified constraints. However, the quality of the model can be highly subjective based on the lens of the person reviewing the solution. Corporate may be looking to minimize overall cost, dispatch may be looking at balancing driver workload, while sales may be looking to enhance customer service. While there is no “right” strategy, a guaranteed way to get sub-optimal results is to NOT communicate the common set of metrics that are to be used when evaluating the model results. 

3. Change Management

A re-route is naturally disruptive as it introduces change to an inefficient but recognized system. Drivers, dispatchers, sales reps, customer service and most importantly, your customers, will be impacted and many of these stakeholders will not appreciate the changes. To gain acceptance to the re-route, we recommend the following steps be taken:

  • Communicate the objectives and schedule of the re-route to all internal stakeholders
  • Have one or two senior drivers review the model results prior to operationalization. Aside from their operational expertise, this will help get other drivers to buy-into the changes
  • Develop a system to communicate changes to your customer. They may be serviced on a new day by a different driver. Make sure they understand what necessitated this change
  • Once operationalized, develop a systematized feedback loop whereby various stakeholders can provide input to address any significant issues
  • Audit the results of a re-route, measuring expected versus actual savings and solution decay over time

Summary

A well-executed re-route holds the potential to drive significant fleet savings. Unfortunately for many organizations, the challenges are often seen as too big of a hurdle to overcome. 

Figure 2 – The Power of a Re-Route

However, developing a strategy to address the challenges described in this article will enable your organization to increase the overall utilization of both assets and labor, while simultaneously enhancing customer service.  


JBF Consulting specializes in helping large shippers select, implement and manage their Transportation & Fleet Management systems so they can get more out of their investment.

If you’d like to learn more about how JBF can help optimize your existing Re-Route process or simply begin a discussion, please contact us at (203) 807-5231 or JBFinfo@jbf-consulting.com

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