It seems a simple equation: processing costs should decrease as mail volumes decline. Except that’s not happening. And it’s hurting the U.S. Postal Service’s bottom line.

The Postal Service has not been able to lower mail processing costs at its 285 plants to match decreasing mail volumes, our recent audit report found.

From fiscal years 2014 to 2018, processed mail volume decreased by 9 percent, but mail processing costs decreased only 2 percent when adjusted for inflation. Mail processing productivity over that period had declined in all categories – letters, flats, manual – except for parcels, which saw a huge jump in processing productivity.

Labor costs make up about 80 percent of USPS’s budget, so matching workhours (the number of hours worked by personnel) to the workload is essential to managing costs and improving productivity. This means getting the staffing levels at mail processing facilities right. Despite relying on various tools to do this, the Postal Service is falling short.

We found the Postal Service’s strategic initiatives to reduce costs and optimize the processing network have not achieved planned savings. For example, its tool to schedule staff at processing facilities didn’t always work properly and resulted in staffing levels not matching workload needs. In addition, its network optimization plan fell well short of its projected savings. As in prior audit reports, we recommended USPS develop and implement annual tracking methodologies for any significant projected operational costs or savings. We also recommended sensitivity analysis to account for impacts from changes in mail volume and labor and transportation costs.

Are there other ways for improving productivity and cost savings you think the Postal Service should consider?

Comments (12)

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  • anon

    Post Office has spent millions of dollars over the years on a variety of systems and programs at the upper levels. I worked at the lower level where I observed Floor Supervisor have difficulty in preparing a simple weekly schedule. The biggest problem is transportation between the plant and the offices. There are times the plant will send an empty truck out just to stay on schedule. It would seem Managers and Supervisors need to be trained on their position and be made responsible for the delays instead of the employees. The employees can only begin work when they receive the mail.

    Oct 27, 2019
  • anon

    More APCs (automated postal center). They are great. Can you really say mail volume has declined? I think your box volume has increased on the whole since everyone wants everything now from amazon, so you should count on needing more staffing.

    Oct 24, 2019
  • anon

    They always run the machines so under staffed that it takes them longer to get the mail out on a light night than a heavy one. The machines need two people on them for heavy or light mail. When they are only sticking one person on a DBCS it takes them forever to run mail. They have to continually stop the machine to to clear up the full bins. Machines are ran under staffed, maintenance is ran under staffed (Causes longer break down and maintenance response times). The only thing ran over staffed is supervisors and managers. Machines like the APBS and USS are also ran under staffed and that usually leads to more jams and maintenance down time during their runs.

    Oct 21, 2019
  • anon

    I posted a recent experience at the Inspector General's page, but maybe I should have posted it here. I am waiting for a parcel whose tracking info indicates the package spent an entire week getting sent to various USPS processing centers farther and farther away from my address north of Boston/ First NY, NY then Queens,NY, then South Jersey, then Delaware, then Philadelphia and is currently tracked as "on its way to next distribution center". So based on this experience, I'd have to guess that if your processing costs have not decreased, maybe it's because packages are being reduntantly processed through many distribution centers before they even get headed in the right direction. My package is one small parcel, but if you are typically using a "merry-go-round" approach with truckloads of heavy packages, that's a lot of extra ton-miles. (If extra mileage wrong direction routes are cost efficient somehow, I stand corrected, but what if gas prices soar again?) Anyway, one has to wonder if reprocessing packages at multiple distribution centers is intentional: internally encouraged by some as a way to provide more mail volumes at slow times. Basically beefing up the numbers/ job security through inefficiency, etc.. Think about it!

    Oct 13, 2019
  • anon

    It might prove to be a useful exercise for the OIG to be able to estimate the cost of an inefficient USPS International service. I'd love to buy lots of US-manufactured goods and have them shipped to me. In-the-past I used to buy custom guitar F/X pedals, particularly those made by small concerns in New York State. I happily took the hit in postage costs and import duty. That was in the 1990s and the first decade of our 'modern' era. In that time I would expect a package from the US to arrive in my hands after just a fortnight. In the last decade though, buying a US-manufactured item, and being sure it will turn-up, or that it will turn-up in any reasonable amount of time...is problematic. The ISC's are the main sticking point it seems. The huge delays and instances of even tracked items going missing (that is, stolen) or damaged has an impact both on the end-customer, but also the US-based sender. The consequence is that international purchasers become wary of buying US-manufactured goods, having little-or-no confidence that they will arrive, or arrive intact. The knock-on impact is that US manufacturers, particularly small and medium-sized concerns, find that direct sales to international customers reduce or disappear altogether, leaving them to either be limited to the domestic US market, or to enter into low-margin agreements with resellers abroad. Calculating the cost to US manufacturers would be a difficult task, but the OIG could take perhaps one sector and extrapolate. My experience is with three areas; guitar accessories, shooting accessories (not firearms or firearms parts) and painting accessories, particularly specialist airbrushes designed and manufactured in the US. Because of fears and doubts about USPS international deliveries, my US-derived purchases have reduced markedly over the last few years - but that is just my experience.

    Oct 10, 2019
  • anon

    Employee Engagement, as measured by the Postal Pulse Survey, has been in the bottom 1% for several years when the USPS is compared to other large companies. Employee Engagement is not a measure of fun at work. It directly effects productivity and innovation. When you are in the bottom 1% the effects are not good.

    Oct 04, 2019
  • anon

    The network optimization accomplished other benefits including the reduction of exposure from small operators operating outside the regulatory envelope. The fleet of trucks serving the DRO sights we operate have improved, this projecting a superior image, reducing down time, all while addressing environmental concerns and implementing the latest safety practices. The saving projections and targets short of finance goals may be due to the rapid increase cost to stay compliant, ELD, HOS, DOL, major insurance increases and many new non exempt state regulations. Much of the cost increases are skirted by under the radar smaller operators. A contractor with six DROs our goal was to keep as many of the small mom and pop contractors in place as possible. It has come to our attention the cost of exposure for non compliant subcontractors. We are now in the process of only keeping the smaller operators whom mostly self drive, with limited employees

    Oct 03, 2019
  • anon

    How can someone in Denver tell someone in Minneapolis how many people they need on the floor? The F1 Scheduler is worthless. If your local managers had the authority to staff the building according to how the mail actually IS, rather than someone in Denver telling them how many they need, the costs could be contained. The F1 Scheduler doesn’t know the SPBS needs two mail handlers for instance, and only allows for one, so you have the supervisor behind the machine doing the mail handler's work. Which costs the PO money for the grievance.

    Oct 03, 2019
  • anon

    This may seem extremely simple but effective, parcels are picking up the slack where letters and flats are lacking. 1- I personally have 3 to 4 different mail carriers which deliver to my house. To reduce labor costs it is imperative to reduce to workforce (labor) 2- increase the cost of parcels as people purchase more online than in stores. 3- reduce the size of labels applied to parcels 4- youth outreach initiative/advertisement. When I was in elementary school we set up a program to write to other classrooms and we had designated mail carriers who processed the mail. That developed over the years into a passion for writing and receiving letters. USPIS needs to remind people how good it feels to receive something in the mail 5- your biggest hit is email. Eventually there will need be a system where people are charged for email. You can jump out ahead and provide some type of service that no one offers yet, whether it be security or something innovative that will draw people in.

    Oct 03, 2019
  • anon

    Greetings. Just a note for advise. I would suggest about the motor vehicle division to consider turning the fleet operations into Electric vehicles. Many reasons for it : The use solar panels over every USPS facility would provide all needs for electricity, and could power the entire fleets of MVs. The new electric motors require virtually no maintenance and are very reliable. The biggest reason for this move is the fact that the competition is doing just that. They are exploring alternate modern high techs. I just read about the new fleets about to be purchased, under bid. That prompted me to pour my thoughts and share them with you , having seen a future forecast that would not be promising ( opinion) . Friendly, thank you for your wonderful work.

    Oct 03, 2019
  • anon

    Flatten the command structure. Far too many people on the payroll not moving mail.

    Oct 02, 2019
  • anon

    Easy. Stop the APWU and the mail handler's union from defending worthless deadwood -- those employees who constantly call in, the slackers, the incompetent. It's impossible to meet staffing requirements when clerks and mail handlers consistently miss work without consequences. (But if an employee is suspended without pay for two weeks, the unions seem to always win back pay -- making that person feel they've become bulletproof.) When new employees are hired, look at their past work history, contact references, check their social media accounts -- exercise due diligence. And most of all, bring back the 90 day probationary period for newly converted clerks AND in those two 90 day periods (first hired and then conversion) fire those who are worthless.

    Oct 02, 2019

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