• on Jun 9th, 2014 in Ideas Worth Exploring | 4 comments

    Dim weight. Sounds like something you might call your not-so-smart cousin. It’s actually a way to price parcels based primarily on how much space they take up during transport and delivery.

    FedEx is the first major carrier to announce plans to charge prices based on the dimensional weight of all its ground shipments. Retailers and other shippers are bracing for a nasty hike in shipping costs come January 2015, when the FedEx changes take effect.

    Shipping costs are heavily influenced by how much cubic volume a parcel takes up in the back of a truck or plane. If parcels are roughly uniform in density (weight in relation to size), then charging by weight makes sense. But if parcels are light yet bulky, such as shoes, diapers, and many other goods ordered online, then weight-based pricing doesn’t reflect costs. Dim weight pricing will let FedEx charge more for these light yet bulky packages – for example up to 30 percent higher on a 32-pack of toilet paper – that take up more space in the truck.

    Analysts say FedEx’s change will result in the most dramatic rate spike the parcel shipping industry has seen in decades. And these increases will affect either online shoppers or retailers, or both. As the Wall Street Journal recently noted: “Someone will have to swallow the estimated hundreds of millions of dollars in extra shipping costs.” Could free shipping for consumers become a casualty of this pricing change?

    Analysts expect UPS to follow suit with a similar pricing strategy. If so, the Postal Service and small regional carriers could see an uptick in volume – albeit higher-cost and lower-yield volume – as shippers look for ways to reduce the expected sticker shock from dim weight pricing. The move also could accelerate Amazon’s reported plan to launch its own fleet of trucks and drivers for local deliveries.

    Do you think FedEx’s change in its pricing structure will benefit the Postal Service? Or is it likely to primarily shift less-profitable packages to the Postal Service? Should the Postal Service consider a move to dim weight pricing for its ground services as well? Or would it hurt the Postal Service’s standing as the lowest-priced competitor?

     

  • on May 18th, 2014 in Ideas Worth Exploring | 4 comments

    If you are even remotely digitally hip, you probably know that “big data” is a hot topic. But it is far from a mere fad. Big data — which refers to large, complex datasets combined with sophisticated, powerful analytics — has definitely been having a big impact on not just scientific research capabilities, but commercial activity as well. Amazon, Walmart, and eBay are just a few businesses using big data to better target products and services to consumers.

    Could big data help the postal industry? Earlier this year we jointly hosted a forum with the Universal Postal Union to discuss that and many related questions. Postal experts and big data experts from all over the world attended, and they agreed that, yes, big data can provide extraordinary opportunities for postal operators — including the U.S. Postal Service — to improve operations as well as current products and services, and even create new ones.

    It’s not a quick and easy process, though. The forum established that a clear and coherent big data strategy must first be articulated – one that answers questions like, “What will you use the data for?” and “How will you ensure privacy?” Some of the first steps in this strategy include buy-in from top leaders of the organization in addition to development of partnerships with other stakeholders to share data sources. Also, internal changes must be made, such as taking an interdisciplinary approach involving data experts and marketing whizzes to build a digital culture within the organization.

    All of this happens one step at a time, and our new paper, International Postal Big Data: Discussion Forum Recap, details each one of these steps. It also includes information on big data pilot-trials that some postal operators have launched and the particular operations and services their big data experiments have involved.

    What do you think? How does your company use big data? How do you see the Postal Service using big data? What concerns would you have about the Postal Service using data analytics to develop new products or services? Where do you see opportunities for the Postal Service to partner with the private sector?

  • on May 12th, 2014 in Ideas Worth Exploring | 1 comment

    Maybe you’ve seen the television commercial with a clueless couple sending their household items up in a hot air balloon to be stored “in the cloud.” It’s funny, but also holds more than a grain of truth. Many of us don’t fully understand the cloud. So we might not realize its promise or potential hazards.

    Cloud computing uses remote Internet servers to manage, store, and process data or content. If you use Facebook or Shutterfly, you are using cloud computing. These kinds of cloud computing applications are attractive because they help users free up computer space, keep better track of their photos or music, or organize their files.

    Businesses and federal agencies are also relying more on cloud computing because it reduces costs and increases efficiency of services. You just turn on the application as you need it, or “on demand.” Some people have compared cloud computing to a utility, such as an energy company. All you do is plug in and you are ready to go. The energy company handles the details of generating electricity at the power plant and the customer just turns on the switch and uses it.

    But cloud computing also comes with risks of data leaks and loss of public trust. This is especially vexing for government agencies, which have turned to the cloud to help them do more with less. The Council of Inspectors General on Integrity and Efficiency (CIGIE) has attempted to guide federal agencies in their cloud computing contracts with a memorandum that included areas of information accessibility, data security, and privacy concerns, among others. The U.S. Postal Service recently updated its handbook, Cloud Security, and established information on security policies and requirements to protect its information in a cloud computing environment.

    Recently we audited 13 Postal Service cloud computing contracts and found the contracts did not address information accessibility and data security for network access and server locations. Why? Because these contracts were established under the Postal Service’s older handbook and did not have the stronger controls of its newer Cloud Security handbook. They would have benefited from the Cloud Security guidelines on information accessibility and data security gaps, our report noted.

    If not implemented correctly, cloud computing runs potential security risks, such as the loss of customer information, and could hurt the Postal Service’s reputation as a trusted agency, which in turn would harm its brand. Yet cloud computing can streamline processes, reduce spending on technology infrastructure, and improve flexibility, among other benefits. The key will be employing the right security controls.

    Share your thoughts on cloud computing and what role the Postal Service might play. Do you have privacy or security concerns in maintaining information in the cloud? 

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