With mail volume declining and the mail mix changing, the U.S. Postal Service is adjusting processing capacity and the size of the network to better match the current workload. But getting to the end game has been painful, with plenty of bumps and bruises. Service, in particular, has taken a hit.
In 2011, the Postal Service began its Network Rationalization Initiative to align its network processing capacity with its declining mail volume through equipment and plant consolidations and operational changes. As part of the plan, the Postal Service revised its First-Class Mail standards in January 2015, effectively eliminating single-piece overnight First-Class Mail service and shifting mail from a 2-day to a 3-day service standard. These changes allowed the Postal Service to process mail on fewer machines and thus reduce the facility space it needed. This change is known as the operational window change (OWC).
But shortly after the service standard changes, mail service deteriorated – in a very public way. Individual customers, commercial mailers, and members of Congress all complained. We were asked to review nationwide delayed mail and analyze mail processing efficiency, as well as service performance for all classes of mail. We also conducted cost analyses of projected savings as a result of service standard revisions, and we reviewed management controls over mail processing operations.
Our report found that, for the period of January through September 2015 (first 9 months after the OWC):
- Delayed mail processing increased nationwide by 51 percent compared to the same period in 2014;
- 2-day and 3-day First-Class Mail weekly scores in that period declined by as much as 7 percent and 34 percent, respectively, compared to the same period in 2014 (before the OWC).
- In addition to the service issues, the Postal Service did not save as much as it expected to from the OWC. Management could demonstrate that it achieved only 10 percent of the projected annual OWC savings of over $805 million. (The USPS has since claimed additional savings, which amounted to $231 million according to our validation.)
Our own independent test identified a few reasons for the increase in delayed mail and decrease in service scores: 1) the significant network and operational changes around the OWC and consolidations; 2) insufficient air transportation capacity; 3) mail arriving late at processing plants; 4) outdated operating plans. Adverse weather was also a factor.
We made a number of recommendations, including that the Postal Service implement a nationwide strategy to improve mail processing productivity before it makes more nationwide operational changes or consolidations. We also think USPS should increase its capacity to move mail by air and create a nationwide system to specifically identify mail that arrives after its critical entry time.
Share your experience. How could the Postal Service improve the process before it makes any further consolidations or network changes?