• 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 Jan 23rd, 2012 in Ideas Worth Exploring | 7 comments

    A leading book on business strategy and innovation claims, “through innovation, business organizations can change the world.”

    A 2010 study on global postal innovation by Capgemini states “there is a general tendency among all postal operators to diversify by investments outside their core business (mail, parcel),” especially into the logistics and financial services areas. Among European operators, Poste Italiane, Swiss Post, Deutsche Post DHL (Germany), and Austrian Post, in particular, have increased their share of non-core business.

    Poste Italiane introduced the Postepay prepaid card at the end of 2003. Over 5.6 million customers in Italy have used this reloadable card, which allows them to make purchases and withdraw cash from ATMs. There is a one-time fee of €5 ($6.44) for opening the account and adding funds to the card or withdrawing money costs €1 ($1.29) at an Italian Poste.

    A number of other posts have made their own innovative marks. Canada Post in partnership with BackCheck, now offers ID verification at their locations. Post Denmark, working with financial partners, signed almost 3.5 million users for its eBoks digital mail service, almost 2/3 of the population. Austrian Post operates a banking network called PSK BANK, which has trained financial advisors at every postal branch and offers services including:

    • Free bank accounts.
    • High-yield insurance products such as retirement planning products.
    • Eastern European stocks.

    Share your thoughts in the comment section below.

    This blog is hosted by the Information Systems directorate.
  • on Jul 4th, 2011 in Strategy & Public Policy | 4 comments
    In response to a Government Accountability Office report and a Congressional request, the Postal Service introduced its Transformation Plan in 2002. Since then, the Postal Service has seen many changes, including a new postmaster general (PMG) and senior management team. Mail volume has declined due to electronic diversion and the recession. In addition, the Postal Accountability and Enhancement Act of 2006 changed how the Postal Service operates and conducts business. The Postal Service released its plan, Ensuring a Viable Postal Service for America: An Action Plan for the Future, in March 2010. The plan outlined cost-cutting, increased productivity, and legislative and regulatory changes necessary to maintain a viable Postal Service. In December 2010, the new PMG announced his four core strategies for the Postal Service: 1.Strengthening the business-to-consumer channel. 2.Improving the customer experience. 3.Competing for package business. 4.Becoming a leaner, faster, and smarter organization. It is a daunting task for any organization to implement new strategies. We have established an Audit Project Page to provide another opportunity for our stakeholders to comment on this issue. Click here to review – Postal Service Core Strategy Linkage. We are interested in hearing your views on the four core strategies. What is needed to ensure the success of these strategies and what outcomes do you believe the core strategies are intended to achieve? This topic is hosted by the OIG’s Planning and Strategic Studies Directorate.