• on Jun 1st, 2009 in Mail Processing & Transportation | 17 comments
    While the Postal Service leads the world in processing letter mail, private sector competitors have a higher market share for parcels. And while letter volumes are decreasing, parcel volumes are projected to increase. Although parcels represent less than 2 percent of mail volumes, the Postal Service parcel business makes up 13 percent of the market share in the U.S. The chart on the left depicts the market share for parcels. Just how do parcel industry giants keep their costs down and productivity up, even in today’s economic environment? And, is there anything that the Postal Service can learn from them? After visiting operations of the two parcel industry giants, the OIG learned that although the Postal Service has many things in common with the industry giants, it could also learn a few things. The benchmarked entities and the Postal Service process parcels both manually and use automation. However, the following best practices came to light:
    • Employees are predominantly part-time, often working four-hour shifts with staggered start times to accommodate volume loads.
    • Employees are moved among tasks quickly to meet the needs of changing volumes, including crossing-crafts between unloading, scanning, processing, and even facility maintenance.
    • Parcels move quickly through the facilities, generally on conveyor belts, and are not staged in transport equipment in waiting areas or moved around between pieces of processing equipment manually.

    Which of the best practices listed above do you think would most positively impact the cost of handling parcels in our processing centers if the Postal Service implemented them? This blog is hosted by the OIG's Network Optimization directorate.

  • on Apr 6th, 2009 in Mail Processing & Transportation | 14 comments

    Two families trade in their vehicles for more fuel-efficient ones. If both travel the same amount each year, which will save more fuel by making the change?

    • Family 1 decides to trade in their 4-wheel drive Jeep Patriot (25.5 avg. MPG) for a Civic Hybrid (42.5 avg. MPG).
    • Family 2 decides to trade in their 4-wheel drive Chevy Trailblazer (14 avg. MPG) for a 4-wheel drive Jeep Patriot (25.5 avg. MPG).

    Please vote before continuing if you don’t want to cheat.

    Did most of you think Family 1?

    Well . . . that is wrong by a long shot. In fact, Family 2 will save more than twice as much fuel as Family 1! The problem here, however, is not you – it is the poor metric of MPG (miles per gallon).

    If you don’t believe us, let’s do the math. Assume both families drive 10,000 miles per year.

    Family 1 goes from buying 392 gallons of gas per year (10,000 miles / 25.5 MPG) to buying 235 gallons of gas per year (10,000 miles / 42.5 MPG) — resulting in an annual fuel savings of 157 gallons.

    Family 2 goes from buying 714 gallons of gas per year (10,000 miles / 14 MPG) to buying 392 gallons of gas per year (10,000 miles / 25.5 MPG) — resulting in annual fuel savings of 322 gallons – or more than twice as many gallons as Family 1.

    What does this mean to the Postal Service? The best way the Postal Service (or any organization for that matter) can save fuel is to find the least efficient vehicles and replace them with modestly fuel efficient vehicles. Small changes can mean incredible savings. Use the math above to prove to yourself that raising a truck from 5 to 6 MPG will save more fuel than raising a car from 20 to 50 MPG! Also, prove to yourself that raising that truck from 5 to 10 MPG will save more than twice as much fuel as making a 20 MPG vehicle use no fuel whatsoever!!!

    Do you have any ideas about how the Postal Service can use fuel more efficiently?

  • on Dec 12th, 2008 in Mail Processing & Transportation | 21 comments

    In 1970, the Postal Service delivered fewer than 85 billion pieces of mail. Thirty years later, mail volume had more than doubled to nearly 208 billion pieces of mail — average growth of about 3 percent per year. The Postal Service relied upon this dependable growth in mail volume to finance the expansion of its network. The traditional business model worked.

    Then, mail volume entered the new century. Each year from 2000 through 2003, total mail volume decreased. In 2005, the volume of Standard Mail surpassed the volume of the Postal Service’s flagship product First-Class Mail for the first time, with First-Class Mail volume actually falling below its 1995 level. Total mail volume growth averaged an anemic 0.3 percent per year from 2000 through 2007, and when the Postal Service’s 2008 fiscal year ended on September 30, volume had declined in nearly all categories. The total decline in 2008 was 4.5 percent to 202.7 billion pieces.  The Postal Service is forecasting continued volume decline to 194.5 billion pieces in 2009.

    Mail Volume

    Do these recent trends portend a fundamental change to mail volumes? Or are they mostly a symptom of the current adverse economic conditions? What are the long-term consequences of electronic substitution? How have other factors such as value of competitors’ products, new technologies, and complementary services affected mail volumes?

    The Postal Service touches everyone, everywhere, nearly every day and is the cornerstone of the $1.2 trillion mailing industry. The Postal Service’s traditional business model is threatened. But, with every threat, comes opportunity. Which products and services may rebound and grow?

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