• on Aug 6th, 2012 in Finances: Cost & Revenue | 10 comments
    The Postal Service has built a strong brand name around service, trust, and security. Few other organizations can lay claim to such a strong brand, one with more than 200 years of history and cultivated by the Postal Service’s consistent fulfillment of its mission to securely deliver mail to every American, regardless of location, at a reasonable price. For 6 straight years, the Ponemon Institute has named the Postal Service the most trusted government agency and one of the top 10 most trusted businesses in the nation. Many postal observers have encouraged the Postal Service to leverage this “trusted brand” to expand its offerings in the digital market. But a steady drumbeat of bad news over the past few years around its financial situation, potential cuts in service, and uncertainty over its retail and network downsizing plans has unsettled stakeholders. The question many of them ask is whether the ongoing negative news coverage could be hurting the overall brand. Even the PMG noted earlier this year that the mailing industry is experiencing a “crisis in confidence.” Lingering uncertainty about the Postal Service’s future could further erode confidence. Further, competitors can use the turmoil to their advantage, touting their own services as easy and reliable in the face of uncertainty. What do you think? Have the ongoing news reports about the Postal Service’s finances and uncertain future affected your view of the organization? Do you think these reports hurt the Postal Service brand? Or is the Postal Service doing the best it can under the circumstances?
  • on Jul 30th, 2012 in Finances: Cost & Revenue | 2 comments
    The U.S. Postal Service is one of the largest real estate owners in the United States with more than 8,600 facilities and 950 million square feet of land. (The Postal Service leases another 24,600 facilities.) It also has about 357 unused land parcels with no structures on them, which have a book value of $128 million. The lands’ assessed values are likely to be significantly higher. The Postal Service has contracted with real estate company C.B. Richard Ellis to sell its surplus real estate, which includes both buildings and land. You can find the properties on the following website, http://www.uspspropertiesforsale.com/. The sale of properties would generate cash flow for the financially strapped organization. It would also contribute to streamlining its physical footprint as the Postal Service aligns itself to be a leaner, faster, and more market-responsive organization. However, the sale of real estate assets would not produce recurring revenues. Should the Postal Service consider leasing unused land parcels to developers so they can be used in a creative way to generate alternative sources of revenue? Or is this the right time for the Postal Service to sell its unused land parcels as it shapes itself into a leaner infrastructure? Or does it make sense for the Postal Service to hold these properties now and try selling them once the current real estate market regains some stability?
  • on Apr 30th, 2012 in Finances: Cost & Revenue | 9 comments
    As the Postal Service struggles to survive, it needs to take a good look at the financial health of its products. However, ascertaining the financial health of a product line requires an accurate estimate of the cost of providing that product. The Postal Service is moving into an increasingly data-driven future; thus, the timeliness and accuracy of cost measurement will continue to grow in importance. The Postal Service has not changed its cost system fundamentally in many years, though it updates significant inputs annually. There have been calls for an examination of the accuracy and relevance of the system and implementation of specific changes. In order to inform the dialogue and debate, the OIG published A Primer on Postal Costing Issues, a discussion of postal costing, including the most salient of the concerns the Postal Service and its customers have raised. As discussed in the paper, the main issues that have been raised are whether the Postal Service: 1. Should use fully-distributed costing to evaluate the financial performance of products? 2. Should adapt the system to reflect the excess capacity currently present in the postal network? If so, how? 3. Should measure bottom-up costs? 4. Should use the new postal data sources in the costing system to improve accuracy and reduce costs? 5. Can improve the timeliness of cost studies and, if so, how? As the postal market changes, the Postal Service will need new and/or different cost data to support its decisions, including pricing decisions. Many of the suggested changes and improvements would require a significant expenditure of resources at a time when the Postal Service is under substantial fiscal stress. But the Postal Service needs the right cost data to make the right decisions.. What do you think – should the Postal Service be spending money to improve its cost systems? If so, what do you think are the most important changes needed? This blog is sponsored by RARC.

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