• on Feb 10th, 2014 in Strategy & Public Policy | 30 comments

    Hold everything, folks. That’s the recent message from the U.S. Postal Service on phase two of its network consolidation plan and associated changes to service standards. The Postal Service has delayed the second phase, which was set to take effect this month.

    The Postal Service launched its consolidation plan – the Mail Processing Network Rationalization Initiative – in 2011 as part of a larger $20 billion cost-reduction strategy that seeks to realign the size of the postal network and workforce with reduced mail volumes. In phase one, the Postal Service targeted 178 consolidations. It also adjusted service standards for certain types of mail. For example, the Postal Service significantly reduced the overnight delivery area for First-Class Mail and cut in half the geographic reach of 2-day delivery.

    Phase two planned to eliminate overnight delivery of First-Class Mail and consolidate another 89 facilities. Current processing operations were designed primarily around providing overnight delivery of First Class Mail, the product line that is in steepest decline. So at some times in the day, mail processing machines sit idle. Without the constraint of overnight standards, the Postal Service would have a more flexible operating schedule, allowing for higher efficiency and lower costs.     

    Customers have mixed feelings about network consolidation. On one hand, mailers support reducing costs and eliminating excess capacity. It makes no sense to pay for unused capacity. They also understand the need for the Postal Service to have greater operational flexibility. On the other hand, a reduction in service standards acts as something of a de facto price increase: Customers are paying the same for reduced service.

    Further, some mailers are suspicious that these kinds of efforts, such as the latest proposal to add a day of service to some drop-shipped Standard Mail and Periodicals, are merely shifting postal costs onto their backs. They support approaches that reduce total combined costs. Other stakeholders, such as the American Postal Workers Union, have raised outright objections to changes in service standards.

    We want your thoughts:

    •  Should the Postal Service continue with phase two as originally outlined or does it need to make adjustments?
    •  Are changes to service standards a reasonable trade-off for lowering overall postal costs?
    •  Can the Postal Service afford premium service standards in a time of declining volume and revenue?
    • How do the changes to service standards affect you or your business?
    • Have you seen an increase in mail delays or service problems due to network consolidation?
  • on Jul 23rd, 2012 in Ideas Worth Exploring | 2 comments
    Between Fiscal Years 2004 and 2011, the U.S. Postal Service implemented over 100 area mail processing (AMP) consolidations, reducing the number of mail processing facilities from 676 to 461. Following implementation of an AMP, the Postal Service completes a post-implementation review (PIR) — a two-step documented process that tells management whether or not an AMP achieved the anticipated results. The PIR compares pre- and post-consolidation data, including projected savings, costs, workhours, and levels of service. The first PIR is supposed to be completed approximately 6 months after the AMP consolidation and it usually indicates whether or not the AMP is going to achieve the projected savings. In addition, it alerts management of any action needed to ensure AMP goals are met. The second PIR is supposed to be completed after the first full year of implementation and it compares the proposed AMP results against the actual results to determine the success of the consolidation. Like the first PIR, it provides management an opportunity to take additional action as needed. Please share your ideas on the subject of PIRs and your responses to the questions below: • Do you think the PIR is an adequate success measurement tool for AMP consolidations? • Are there ways, other than a PIR, to measure the success or effectiveness of AMP consolidations? • Should PIR results be disclosed publicly? Why or why not? This blog is hosted by the OIG's Planning, Innovation, and Optimization directorate.
  • on Feb 13th, 2012 in Strategy & Public Policy | 12 comments

    According to the Postal Service, greater use of electronic communication continues to drive customers away from using First-Class Mail®. Instead of buying stamps, many customers pay bills online, send ‘e-invitations’ to friends and family, and simply press “Send” when they want to communicate. These shifting customer habits will continue to speed the migration away from traditional First-Class Mail. According to the Postal Service, First-Class Mail has dropped 25 percent and single-piece First-Class Mail – letters bearing postal stamps – has declined 36 percent in the past 5 years.

    Postal Service customers and others have complained that the planned consolidations and the elimination of overnight service standards will adversely affect them. On the other hand, the Postal Service claims that these consolidations are financially necessary and create a delivery network that more accurately reflects the current volume of mail.

    1. What are your thoughts on the consolidations? 2. How will the elimination of overnight service standards affect you? This topic is hosted by the OIG’s Planning, Innovation and Optimization Directorate. NOTE: An audit report, U.S. Postal Service Presents Network Optimization Initiative, shall be issued in tandem with this blog.

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