• on Feb 10th, 2014 in Strategy & Public Policy | 31 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 Dec 18th, 2013 in Strategy & Public Policy | 2 comments

    Let’s talk intellectual property and the U.S. Postal Service for a moment. IP, as it’s commonly called, refers to intangible assets involving creativity and invention. Things like movies, books, computer software, engine design, and even the ZIP Code.

    The Postal Service introduced the ZIP Code in 1963, but never patented it. Too late now, but imagine if someone or a business other than the Postal Service had. Odds are you would be paying – directly or indirectly – a fee to the patent holder every time you put a ZIP Code onto a letter or package, in addition to the postage or shipping cost. Moreover, the Postal Service as well as private couriers and shippers would likely be paying, too, as would the many other businesses that use and benefit from ZIP Codes, such as real estate and insurance companies.

    In short, all stakeholders in the ZIP Code system, from everyday citizens to global logistics companies, would be at the mercy of a patent holder’s legal rights – and potential licensing fees.

    While the ZIP Code is safely in the public domain, the same can’t be said of other mailing-related IP. And as our recently released white paper shows, while the Postal Service has patented some technologies, the agency lacks a fully developed, organization-wide strategy for managing and protecting its substantial IP assets. Such a strategy would help secure Postal Service and postal stakeholder access to useful innovations.

    At the request of the OIG, experts at ipCapital evaluated the Postal Service’s current IP strategy. In addition to examining the Postal Service’s intellectual asset management processes, the experts performed a data-driven analysis of the agency’s patent portfolio and explored strategic models for IP development. The results led the OIG to outline the critical points and considerations of building a formal, scalable, and organization-wide IP strategy for the Postal Service.

    Towards A Postal Service Intellectual Property Strategy could not be more timely. Patent claimants have alleged infringement and for the past year been pursuing legal action against mailers and other businesses for using bar codes and QR codes. Bar codes are a central part of operations not just for the Postal Service but the industry at large. The outcome of the cases, which are still pending, could have profound impact. If claimants prevail, will bar code users have to pay fees? What about mailpieces enhanced with some type of augmented reality – would they be subject to fees, too?

    Tell us what you think: What is the right IP strategy for the Postal Service? Do you or does your business benefit from postal innovations? Would you be affected if access to them were blocked? 

  • on Nov 11th, 2013 in Strategy & Public Policy | 10 comments

    Innovation is a hallmark of the digital revolution yet for many companies innovation remains hard. The popular book The Innovator’s Dilemma notes that companies often either ignore a disruptive technology or if they recognize it, they try to manage it like their traditional business. The book says companies need to recognize the disruptive technology and then set up a separate unit to manage it.

    The U.S. Postal Service finds itself struggling to innovate in a rapidly changing communications market. Yet, stakeholders agree that innovation is necessary to transform the Postal Service into a 21st century provider. The Postal Service has indicated a willingness to try new things, as allowed under the current law, but the time it takes new ideas to become a product or service is often too long in this fast-changing market. Some stakeholders have suggested the creation of a small, dedicated innovation unit that would have the authority to make partnership decisions and the flexibility to bring innovative products and services to market quickly. The major postal reform legislation now before Congress includes a provision that could essentially lay the groundwork for such a unit.

    The Postal Service actually tried small, cross-functional business units in the late 1990s. It had an international business unit that was given considerable autonomy and an Expedited Package Services (EPS) group located completely outside of headquarters in Atlanta. The EPS group was given freedom to pursue new partnerships and parcel services. Insiders might argue over how much of the credit EPS deserves, but in its short life, a number of package services were revamped or unveiled, including Parcel Select, Carrier Pickup of residential packages, and the groundbreaking contract with FedEx to provide airlift for Priority Mail. These separate units probably had some flops too, but innovation means taking risks and being allowed to fail occasionally.

    Do you think a small, agile, cross-functional “innovation unit,” led by a chief innovation officer, would help the Postal Service launch new products and services? Or does a dedicated innovation czar create a bottleneck that is inconsistent with the spirit of having innovative thinking permeate the entire organization? Would an “incubator” or “innovation lab” approach be better? What institutional changes might be needed to promote innovation? Does the current regulatory environment allow the Postal Service enough latitude to innovate effectively?

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