on Jul 6th, 2011 in Mail Processing & Transportation | 29 comments
 
The Postal Service has evolved with the needs of a growing country for more than 230 years. A vast and complex network of processing facilities and transportation links was created to meet its universal service obligation. Today, the Postal Service has 260 Processing and Distribution Centers located throughout the country. This highly automated processing technology network provides incentives for its customers to presort the mail and drop ship it deeper into the network. As the likelihood of stagnant or decreasing mail volumes grows, there is a mismatch between the existing network capacity and user needs. For several years, the Postal Service has introduced plans to consolidate its mail processing plants and reconfigure its transportation network. The Postal Service has made some progress, closing all but two Air Mail Centers (AMCs), initiating and implementing numerous AMP consolidations, and transforming the Bulk Mail Center (BMC) network in the Network Distribution Centers. Despite these efforts, the fundamental question still remains: what should the mail processing and transportation network look like to meet future demand? And how many plants will be needed? A former deputy postmaster general suggested that in order for the Postal Service to be fully efficient, its footprint must be much smaller, possibly comprising 150 plants, and 400,000 employees. Another stakeholder said the current network is twice the size it should be. Are these reasonable assessments? What do you think? To learn more, read our recently released white paper "A Strategy for a Future Mail Processing and Transportation Network."

This blog is hosted by the OIG’s Risk Analysis Research Center (RARC).

Comments

The biggest challenge is to get the strategic vision striaght. Right now the focus is on growing standard mail. With 4 pieces being required to make a profit for every piece of first class lost, the growth of standard required far exceeds its capabilities. The current strategy is like walking backwards thinking that everything will be fine. It won't be. Several things need to occur to right the ship. First, the number of employees have to be right sized quickly. The only way to do that is to offer an incentive which was larger than the last. If you don't recude the workforce in a sizable and quick manner, you cannot take real advantage of the PSE negotiated in the APWU contract. Second, mangement has to accept the fact that the quality of management up and down the line is far less than in any other organization. (If you don't believe me, look up the numbers for the percent of managers/supervisors that have bachelors and masters degrees, and compare them to ICA's percentage for City Managers, or compare them with any other federal or state agencies.) You have a stupid supervisory staff. The consequences of which is bad decision making and loss of productivity and effeciency. Reinstitute the Management Intern program for the next 10 years, with a goal of getting at least 15% of the new superviory staff from the Intern program. The third thing is to reognize the the ability for USPS to be viable means it must do what retail companies have been doing for years, to for nitches. It will no longer be an organization which is dominated by one or two classes of mail. It will have to provide electronic services, and seek out nitches to expand or glom on to. Utlitmately the organizational vision has to be one of providing communication services with an emphasis on the movement of physical prodcuts.

I like your comment as follows: You have a stupid supervisory staff. - - Although, I don't think they need to have degrees nor to be college grads perse - they at least need to be more intelligent than they are....which means to stop hiring for race, etc. Empty heads bring empty pockets!

Personally, I'm sick of seeing stupid people getting all the breaks because of the color of their skin.... And you are now seeing the damage of that way of thinking and of hiring. America used to hire the best, (the most talented), and that is what we got in return... why did we change that and decide to hire for race only? Educate the stupid - THEN hire them....

There has always been tension between cost and delivery standards. Consolidating mail processing into central hubs restrained costs but increased the amount of time it took to deliver the mail. If one were to compare the overnight delivery arc of 1985 to that of today, the difference would be startling.

It doesn't take a genius to realize that requiring a parcel that is mailed in RI to go up to Springfield, MA only to be returned to a town that is a few miles away from the point where it was mailed, will delay it's delivery. Further consolidation of the network will only add to the delay of mail and cause more people to look elsewhere for better service.

Most, if not all of the people who comment on the USPS ignore the fact that the USPS has taken in and delivered enough mail to make a profit over the last several years. It hasn't because of the role that Congress plays in it's operation and costs.

The solution is not to further destroy service to the public but to seek ways to improve it. The solutions put forth thus far do not do that.

I see the govt doesn't run the day to day operations of USPS anymore. the PMG got a pay raise while laying off workers. What is that all about? Wouldn't be surprised if competitors are lobbying congress to get rid of USPS. How can USPS be making less money? The past few years I've gotten tons of junk mail. That's money for USPS. How did they survive in the past when I used to get a couple of pieces of mail once every few days??

Instead of closing hundreds of Post Office locations around the country, why not discontinue Saturday delivery at every location. This will Dramatically reduce costs in labor and fuel but will help keep thousands of jobs. And I believe the change will be easier to receive since UPS and FEDEX already do the same.

Current legislation and the lethargic response from Congress is a more pressing issue than the size of the network. Here is a paper by the OIG that addresses the real problem: http://www.uspsoig.gov/foia_files/FT-MA-10-002.pdf

142 Billion vs 2 Billion – I think we should fight the battles worth fighting first.

This paper does not address the processing needs of Hawaii or Alaska.

Reducing the size of the network has the potential to negatively impact service.
Competitors are already taking advantage of our network by having the USPS deliver the last mile for their product. Our competitors profit from our subsidized network – This is another issue that doesn’t seem to be addressed often enough.

The postal service is unique, the service network is not going away ever, has become a bit outdated in a number of services, but never completely wiped out. It is absolutely necessary.

White pages, interesting read on this . . . but should not be the sole source to make a decision. If we are losing business due to internet usage then we should evaluate trends of our customers.
Rural, low income areas, along with areas populated with a higher degree of older customers do not utilize internet as much and will not for another estimated 20 years.
Along with growth patterns in the country. Are we moving more to the south? are there locations where growth is notably growing more.
The maps on the this report is a good start, but honestly, you can't grow a business by just equally distributing the plants this amount of miles apart (further or closer).

Its obvious to me in our area our growth pattern in the south is all along the coastline. I am sure there are notable growth patterns in new cities or even older cities.
Utilizing the information the government already has in studies. They have studies on computer usage, demographics, growth patterns. Did this study consider the location of airports???

As one anonymous post made already. Reducing the size of the network has the potential to negatively impact service.

And I will have to add to another post. It makes absolutely NO sense to send "local" mail out to a plant to have it turned around and returned to us the next day. Why did we stop having local drops? was it to count that mail piece to keep the plant alive? what happened to the service?
Our 1-30 pieces of local mail multiplied by the other numerous offices that are sending their local mail to the plant add up. That is that much more mail the plant does not have to process and it is that much more freed up so they can process something else.

re:fewer mail processing facilities- I think personally it would be ridiculous like to reduce the amount of mail processing facilities throughout the entire USA if there are only 260. I live in Nyc ny and know you have like in my area alone like garden city, triborough processing, brooklyn, and so many others. I never knew you had only 260 throughout the entire usa, I was thinking about maybe 900 or something. I got many by me here in NYC. I think it would be ridiculous like to reduce this. Yes, the mail could risk getting lost.

Yes, here in NYc ny, you see a new mail processing facility the moment you go around the block or something. I mean like NYC NY has like so many, i thought the central facility along with my dad was in manhattan, NY at the Farley Post office. yes. I thought that but like all five of the boroughs almost have one here. please do not reduce 260.

it's hard to compare NYC to the rest of America. In 2010 census the whole state of Texas reached the same population of NYC in 1930...

In theory, it would be great to reduce the number of processing plants. The reality is far different however. My plant is on the list to be closed. The only thing holding it up is transportation. Our transportation network cannot figure out how to get the mail from another plant to the AO’s early in the morning with the DPS. Think about the logistics required to move mail from Springfield MA to Fort Kent Me within six hours. That’s not happening. But, that idea is what the OIG is proposing.

Why not requisition a clue. You guys are so incredibly incompetent and inefficient. Save the taxpayers billions by shutting down. Let the private sector take over. You know, the guys that actually give a d@mn about operating logically, because they don't have a huge government teat with which they can constantly and massively drain the citizens.

http://www.uspsoig.gov/foia_files/FT-MA-10-002.pdf
Check the facts - The USPS is entity providing $ to the Government. USPS profits are being siphoned off. The USPS uses zero taxpayer dollars to operate. Your comments shows your ignorance of the over legislation problem the USPS faces.

Do your homework....the USPS is not funded by taxpayers.

Do your homework.....the USPS is not funded by taxpayers money!!!!!

Regarding the potential closings of Post Offices nationwide:

Instead of closing hundreds of Post Office locations around the country, why not discontinue Saturday delivery at every location. This will dramatically reduce costs for labor and fuel and will help keep thousands of jobs. And I believe the change will be easier to receive since UPS and FEDEX already do the same.

Read with interest that US mail was originally only post office to post office and only expanded to home delivery based on a congressional approval that required it be cost effective. Go back to that... issue a suit for specific performance. If you wait for a fratured congress to issue an approval you've acccomplished nothing...

Not sure if anyone in authority will read this BUT..There is a real possibility based on the massive bleeding of revenues in the last quarter that the USPS will go under ,,,who will pick up the service then,,,the logical extention to this would be for the USPS to become an internet provider to the public at A REASONABLE COST TO THE PUBLIC....The idea the the internet should be a private sector system has become absurd,,,It is an idea worth considering ,,,

I enjoyed reading this write-up; I just wanted to know do you trade featured posts? I am constantly in need of somebody to make trades with and merely thought I might ask.

? Did I read that the USPS has Stockholders ? WHY? That, right there, is the problem (imo). Stockholders are for private companies with deep pockets....This sounds like a capitalists' idea.... The USPS did just great for many many years before they had Stockholders! Some things NEVER should be privitized (because that means For-Profit!)..... Mail, Fuel, Food, etc., NEVER should be privitized or subject at all - to the demands of the Stock Market and those dangerous Hedge Funders....(imo)

What about switching the Mail Vehicles from gas to Electric or Hybrids? This would drastically reduce fuel costs and save the post office from having to cut jobs/services.

The fact is, it takes a certain amount of energy to move a vehicle. And electricity isn't free. We could do much better on fuel efficiency. But our current LLV's and our last several LDV purchases are anything but fuel efficient. The LLV's had the most reliable pwertrain of their era, and were reasonably fuel efficient circa 1987. The latest purchases were not very fuel efficient. But that's why they got the low bid.

Management is a start you need leaders that will teach,train and motivate a team that gives horrible service, that can help a customer who is willing to spend money but won't because nobody wants to help them or just don't care enough about that person that needs it a team will sell more to every customer. USPS needs to get into the selling and customer service side so that people will buy and use its services and buy product. Hire managers that have experience in those areas that will hold teams accountable and reward those who deserve recognition.

I suggest expanding the USPS services to avoid thousands of postal workers lay-offs. For instance, distributing fresh produce from local farmers directly to their communities, delivering dairy products or meat to customers from dairy & meat producers, in other words, becoming the logistics company of any small enterprise or local manufacturing outfit, etc. Nowadays there is a new global commerce trend paradigm where people are buying retail directly from small manufacturers located in South East Asia, bypassing large corporations such as Walmart. I wonder if the same operations can be implemented locally but for farmers, ranchers and small manufacturing companies using the USPS as their main logistics supplier. The USPS has a huge infrastructure capable of delivering millions of goods efficiently to customers, which at the present time is being underutilized.

I am not getting some of my mails delivered to me. My wife's email(not same last name) are not delivered but returned to sender. The last names are added in my mailbox. Also when I go to post office(Eagan, Lexignton ave USPS office) they said they don't have any of my mails. I am really confused on the issue here.

thanks
Ajeet

You wanna know our problem? It's right in this last post. We have a customer with a problem, and no one can help him. 2 weeks now, and no one has offered a solution. If we did, it would be "call 1-800-ASK-USPS" But we all know how much that would help.
That is the "efficient" monster we have created. But we are "on rails" there is no flexibility whatsoever. NOTHING CAN GO WRONG! And if it does, your only solution is to pretend it isn't happening.
This is a real customer, with a real problem, and no one can / will help him. I'm sure he has given up by now.
And we wonder why our mail volume is down?

Is there any kind of accuracy to the map in above? One location in Louisiana is located almost in the Gulf of Mexico in a marsh. It"s far away from any major highways. Another looks like it is located on the Canadian border. I'm afraid it looks like someone threw darts at a map. If you had a real map showing your plan in relations to major roads, rails, and cities I could give a more educated opinion.

It's ridiculous to expect that USPS could compete with the Internet. It's
an unfair competition with parcel services because those are not obliged
to conduct unprofitable mail service. What's so bad about a letter arriving
after 5 days instead of 3 ? What's so bad about shipping M-bags by ships
instead of keeping their weight in 10000 feet height for hours ?
Slow down, go rail and accept that paper mail keeps its share despite all
e-mail traffic.
And reform your software for address change forms. The USPS computer
stubbornly refuses funny foreign zip codes like British or Canadian.

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