• on Oct 10th, 2011 in Finances: Cost & Revenue | 57 comments
    Much emphasis has been placed on reducing the Postal Service’s costs in response to its financial crisis. Yet financial viability could come in the form of a balanced approach that both reduces costs and increases revenue. How would a smart business respond to declines in its major products? Would it raise prices where possible in stagnant areas and invest the proceeds into existing or new growth areas? Would it selectively discount products to grow volume in price sensitive segments? Disruptive innovation, such as that underway in the communications sphere, requires change to ensure the Postal Service has what it needs to move beyond the critical crossroad it faces today. The Office of Inspector General Risk Analysis Research Center’s new paper Postal Service Revenue: Structures, Facts, and Future Possibilities (Report Number RARC-WP-12-002) addresses the major components of the Postal Service’s revenue structure in Fiscal Year (FY) 2010, assesses existing opportunities permissible under the current framework, and discusses future options and policy considerations in a new era. Click here to read the Postal Service Revenue: Structures, Facts, and Future Possibilities white paper. How would you approach the revenue issue to make sure the Postal Service continues to provide self-funded universal service to the American people? This blog is hosted by the OIG’s Risk Analysis Research Center.
  • on Oct 3rd, 2011 in Finances: Cost & Revenue | 18 comments

    When you buy your groceries, how do you pay for them? What about when you go to the gas station or neighborhood restaurant? How do you buy items online? Cash may still be king, but in everyday life, it is being eclipsed by newer digital payment methods such as credit cards, debit cards, and electronic transfers. These payment methods are often more convenient than carrying around lots of cash, but they are not equally available to everyone. People who don't have bank accounts or credit cards cannot access the full-range of digital currency products. One option that is available is prepaid payment cards. Prepaid cards are preloaded with funds and then can be used like a credit or debit card. They are the fastest growing form of digital currency. More and more people are receiving their pay through prepaid cards. Unfortunately, customers sometimes must pay predatory fees to redeem the cards for cash or reload them. Is this an opportunity for the Postal Service? The Postal Service has the trusted brand and a vast retail network to ensure national coverage. It has experience helping the unbanked and the underbanked. It has sold postal money orders for about 150 years. In certain areas, the Postal Service offers wire transfer service. Should the Postal Service look into upgrading its payment offerings for the digital age? A new OIG white paper Digital Currency: Opportunity for the Postal Service examines whether there is a role for the Postal Service in the world of digital payments. The paper finds that the Postal Service is well positioned to expand into new digital currency products such as prepaid cards because of its widespread network, trustworthy reputation, and longstanding experience in providing payment services. The paper also provides some suggestions for an implementation strategy. Click here to read the Digital Currency: Opportunity for the Postal Service white paper. What do you think? Are prepaid cards a good opportunity for the Postal Service? This blog is hosted by the OIG’s Risk Analysis Research Center.

  • on Sep 26th, 2011 in Ideas Worth Exploring | 9 comments
    The Postal Service has “coupled” its retail and delivery operations, both managerially and physically, since delivery services were first established almost 150 years ago. Historical patterns, or the needs for delivery service efficiencies, primarily determined the location of physical facilities, which typically house both delivery and retail operations. Demands for postal retail services are changing both geographically and demographically as consumers age and population centers shift. Our Risk Analysis Research Center studied the strategic concept of “decoupling” the Postal Service’s delivery and retail operations, examining both the physical and managerial functions. The results appear in the recently released whitepaper titled Retail and Delivery: Decoupling Could Improve Service and Lower Costs. The white paper draws upon the insights of key stakeholders, private sector delivery companies within the United States, foreign postal operators, and expert business consultants. The study found that selective decoupling of retail and delivery operations, mostly outside of rural areas, could result in lower costs, increased revenue, and better service that is more responsive to changing market conditions and diverse customer needs. The paper’s key findings include:
    • A decoupling strategy affords the Postal Service more flexibility to respond to changing customer needs for retail service.
    • The Postal Service too often ignores retail functions, which receive secondary managerial attention when competing with delivery for resources and clerk time.
    • Decoupling could help transform both retail and delivery into separate best-practices driven, strategic business units.
    • Major private-sector delivery companies in the United States as well as foreign posts previously separated their retail and delivery functions with each having its own distinct skills, training, and performance measures.
    Tell us your thoughts in the comment section below. This blog is hosted by the OIG’s Risk Analysis Research Center.

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