What is Territory & Workforce Optimization & How It Saves Last-Mile Delivery Costs

With delivery margins and turnaround time shrinking, traditional route optimization techniques by themselves are falling short of generating the desired cost and operational efficiencies. Why? An inherent limitation of route optimization is that it primarily focuses on optimizing individual routes for riders rather than taking into account the overall workload distribution throughout a larger area and then optimizing the appropriate number of hubs, workforce, and vehicles accordingly. Logistics service providers need to think out of the box and embrace a Territory and Workforce Optimization Solution.

What is Territory and Workforce Optimization in Logistics?

It is the process of improving workforce utilization and maximizing deliveries by scientifically dividing large regions into smaller, well-balanced areas to ensure equitable workload distribution among courier partners. This is done by taking into account historical and real-time data, such as geographical locations, demand patterns, and delivery constraints, to achieve a clear and effective allocation of resources.

How is a Territory Optimized?

To optimize a territory, Shipsy’s Territory Optimization Solution first leverages a given territory’s historical delivery data and delivery constraints.

The approach to territory and manpower optimization is simple. The optimizer considers all input data like historical consignment information, service, and human constraints, dispatch locations, etc. (mentioned on the left) and verifies location-based constraints with street databases. Within seconds of analyzing the input data, it gives three critical outputs ensuring optimal resource utilization, equitable distribution of workload, and optimal mix of full-time and freelance couriers needed.

Historical data can include:

• Historical delivery data of a particular territory
• Costs of fixed and freelance driver-partners
• Dispatch locations for warehouses and fulfillment centers
• Pincode level demarcations

Constraints can include:

• Working hours for riders with a break.
• A zone shall not cross highways and preferably not cross primary streets unless it’s required to extend the area.
• Rider utilization on the desired zone
• Time windows between which deliveries will be (Eg. 8 am to 6 pm) 
• Latitude and longitude-based dispatch locations

Then, using the historical data, Shipsy’s algorithms mathematically create optimal sub-areas  in a given territory while meeting all the constraints entered.

It also tells the user the exact number of fixed and freelance driver-partners required in an individual sector to meet service demands efficiently.

What is Route Optimization’s Role?

Once territory optimization is completed, Shipsy’s advanced route optimization capabilities take over. Route optimization creates the most efficient routes for riders from the hub, a dark store, or a warehouse to their last-mile destinations considering multiple real-time constraints. These constraints include traffic congestion, road network restrictions, product type, vehicle make, delivery costs, number of deliveries, and more. 

How Does Territory & Workforce Optimization Help Logistics Service Providers?

Scientifically Planning Manpower 

Territory optimization engine leverages demand patterns to generate the optimal mix of fixed and freelance drivers. This significantly reduces manpower planning costs.

Identifying the Right Zones for Couriers

It accurately and intelligently redraws existing delivery territories  to drastically increase the total shipment deliveries done each day in a city.

Ensuring the Right mix of Full-Time vs Freelance Feet

The optimizer remaps zones/clusters in a way to generate the right mix of full-time drivers and freelancers needed.

Reducing Workload Deviations
Territory optimization empowers businesses to easily adapt to seasonal and volatile parcel volumes without compromising service quality.

Driving Drastic Last Mile Cost Savings

With traditional route optimization, businesses can save fuel costs which is 15% of overall last-mile expenses. Territory optimization helps optimize workforce and vehicle costs, which is almost 75% of last mile costs. Shipsy’s Territory and Workforce Optimization Engine is already demonstrating an additional 25% cost savings on average.

Other Key Business Value Generated

• Based on previous simulations, we have seen a 10% to 25% savings in operation costs due to workforce optimization.
• Improved driver productivity by 12-16%
• Increased organizational agility to adapt to demand seasonality

Get in touch with us if you want us to learn more about Shipsy Territory and Workforce Optimization Solution or run a simulation for your business.