• on Jun 8th, 2009 in Delivery & Collection | 78 comments

    It’s 7:30 am and you’re a letter carrier . . . so take a moment and imagine the following as a typical workday. First, you walk into the office, clock in, and check in with the boss. Then, you load up the vehicle with the mail that is already prepared for your route. Finally, at 7:45 am, you jump into the vehicle, drive off and begin delivering the mail. At no point are you required to manually sort mail. Is that day far off in the future . . . or, is it just around the corner?

    Currently, Delivery Point Sequence (DPS) letters are automated to the delivery point so that the carrier can take it directly to the street. DPS mail is picked up by the carrier on the way to the vehicle and does not need additional manual sorting. The purpose of the DPS program is to reduce the amount of time carriers spend in the office manually sorting letters, thereby reducing cost and improving accuracy and speed of delivery. Since 1993, when DPS was introduced, the share of city delivery routes receiving DPS letters has grown to more than 99 percent and the share of rural routes has grown to 86 percent. On average, these routes receive 88 percent of their letters in DPS order. The Postal Service’s goal is to raise the DPS percentage to 95 percent by 2010. The chart below depicts how the share of DPS letters and manually sorted (cased) letters on city delivery routes has changed over time.

    Delivery is the Postal Service’s largest cost center accounting for more than 40 percent of expenses, and having carriers manually sort mail takes time and money. Carrier routes are configured to take eight hours to complete, and those eight hours include time spent in the office . . . primarily manually sorting mail, as well as time spent on the street. According to the Postal Service, over the last 15 years, it has recognized over $5 billion in savings due to DPS.

    Now, the Postal Service wants to replicate for flats — large envelopes, magazines, and catalogs — what is done for letters by implementing the Flat Sequencing System (FSS). The FSS will sort flats into delivery point sequence. In FY 2007, the Postal Service processed 52 billion flats and 80 percent needed to be sorted manually in the office by the carrier. The plan is for FSS to reduce the amount of time carriers spend in the office manually sorting flat mail. Although FSS is not quite ready for primetime, the Postal Service is currently piloting it at the Dulles Processing and Distribution Center in Virginia.

    If the majority of the mail is sorted in delivery point sequence using automation, it will dramatically change how a carrier spends his or her workday. Remember, you are the carrier and now you have automated sorted bundles of DPS letters and FSS mail. There was no need to manually sort any of this mail in the office. You only had to pick up the mail and maybe a few parcels before you headed out on your route. What does this mean? Well, for starters, because carriers begin delivering mail earlier, carriers have a longer day out on the street. In addition, more time dedicated to delivering the mail will likely result in carriers being back in the office within their allotted 8-hour tour, thereby reducing overtime and late deliveries. Further, avoiding the evening rush hour traffic may result in decreased auto accidents. Finally, because the mail is delivered more quickly, customer service may be improved.

    What do you think? Do you think that the days of manually sorting mail in the office are coming to an end? It took 15 years to realize the impact of DPS; will it take longer for FSS? Will increased delivery points and decreased mail volume have an impact? Can you think of some other challenges and benefits that may be presented because of DPS and FSS?

    This blog is hosted by the OIG's Delivery directorate.

  • 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 May 22nd, 2009 in Pricing & Rates | 3 comments
    Sale is not a word usually associated with the Postal Service, but there is a first time for everything. Mail volume has dropped significantly this year, and the Postal Service is proposing a “Summer Sale” to encourage mailers to send more Standard Mail. The Postal Service believes it can use its excess capacity to deliver the additional mail volume at a relatively low cost.

    How will the proposed Summer Sale work? Qualifying mailers will receive a 30 percent rebate on any Standard Mail letters and flats sent from July 1 through September 30 this year above their individual threshold. Only mailers that sent at least 1 million Standard Mail letters and flats between October 1, 2007, and March 31, 2008 can participate, and mail service providers — companies that consolidate mail for others — are not eligible for the program. The threshold for each mailer will be based on the mailer’s previous summer volume and current volume trend. The Postal Service will also double check each participating mailer’s October 2009 volume against its trend. If it appears as though mailers shifted volume to the summer and mailed less in October, the Postal Service will reduce the rebates to account for the lost October volume.

    The Summer Sale is designed to increase mail volume and help the Postal Service gain some knowledge about how to improve its data systems and become more efficient at developing and implementing new offerings in the future. The Postal Service believes the program will provide an incentive for profitable new mail and boost a key customer segment, while enhancing its financial position.

    However, the Summer Sale is not without risks. If mailers simply shift volume to the summer months or switch advertising pieces they used to send as First-Class Mail to Standard Mail, the Postal Service will be giving discounts for mail volume that would have been sent anyway. Another potential risk is the administrative costs of the sale. The Postal Service expects these to be less than $1 million compared to potential revenue gains of $38 to $95 million; however, if its estimates prove inaccurate, it is possible the costs of the program could exceed the benefits.

    The Postal Service notified the Postal Regulatory Commission about the program on May 1, 2009, and the case (Docket No. R2009-3) is currently pending. What do you think about the proposed Summer Sale? Will it succeed? Do you foresee any difficulties in administering the program?

    This topic is hosted by the OIG's Cost, Revenue and Rates directorate.

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