• on Apr 3rd, 2015 in Strategy & Public Policy | 0 comments

    In the sage words of Yogi Berra, “If you don’t know where you’re going, you will wind up somewhere else.” So, where does the U.S. Postal Service want to go? Well, by 2016 it hopes to end up a lot closer to solvency. And to get there, it developed the Delivering Results, Innovation, Value and Efficiency (DRIVE) management process.

    DRIVE is a portfolio of strategic initiatives the Postal Service is implementing to meet ambitious performance goals and close its $20 billion financial gap. Each initiative is made of specific projects, goals, and milestones all leading toward a broad, overarching goal. The Postal Service began its DRIVE initiatives in 2011.

    So, how are the DRIVE initiatives working out? Well, the 19 initiatives are in various stages of development, funding, and implementation, and the Postal Service has about $2 billion in available capital to support all of them. The Postal Service said it generated $4.9 billion in new sales opportunities and cut $868 million in costs through DRIVE. It also reported that it has revitalized its Priority Mail package service and reduced its facilities footprint by more than 3 million feet.

    We’ve been keeping an eye on this process and have completed three DRIVE audits. Our reports looked at overall management of DRIVE (DP-AR-13-008), Initiative 6 (DP-AR-14-001), which aims to improve employee availability, and Initiative 42 (DP-AR-14-005), which focused on marketing new and existing services.

    Our first audit found DRIVE program management compares favorably to best-in-class program management practices – but there are opportunities for improvement. The other two reports reviewed specific initiatives and urged improvements, such as setting more aggressive goals, promoting accountability, and accurately measuring achievement. For example, one of the goals of Initiative 42 was to increase shipping and mail revenue by $5.2 billion in fiscal year 2014. As of May 2014, the Postal Service reported reaching $3.4 billion of that goal; however, we found the Postal Service does not have the capability to measure goals against recorded sales. A separate DRIVE initiative is intended to improve this ability to accurately measure goals.

    We are looking at other DRIVE initiatives, as well. But we would like to hear your thoughts on the value of this management tool.

    Do you believe the initiatives discussed here are improving the Postal Service?

    What DRIVE initiatives would you like to see the Postal Service pursue?

    Do you think these initiatives are the best way for the Postal Service to reach solvency? If not, what should it do instead? 

  • 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.

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