• on Jan 26th, 2015 in Pricing & Rates | 2 comments

    Steve Jobs was famous for the ingenious simplicity of his designs. And, of course, his single button iPhone, now the standard in smart phoning, is a great testament to the value of simplicity.

    As in design, simplicity in pricing, and a related simplicity of choices, are appealing to consumers. There is even empirical evidence that consumers will buy more when they aren’t overwhelmed with too much clutter and too many choices.

    The U.S. Postal Service has enjoyed some success with simple pricing. The best example is the Flat Rate Box. The combination of uncomplicated messaging – “If it fits, it ships” – and ease of use – a handful of shape offerings, each with a single price attached to it – have made the Flat Rate Box a critical piece of the Postal Service’s growing package business.

    And so far, the Postal Service is sticking primarily with weight-based pricing for packages, and not introducing any further dimensional (DIM) weight package rates. FedEx and UPS both just moved to the more-difficult-to-calculate DIM weight pricing scheme on ground shipments.

    Still, most Postal Service pricing is far from simple. There were 8,779 different package prices alone in fiscal year 2014, up 22 percent from two years earlier. Of that total, a quarter are retail prices and three-quarters are commercial prices. Furthermore, nearly 1,100 Parcel Select prices are not used, and 5,840 prices for packages weighing more than 20 pounds are never or rarely used. We recently looked at package pricing at the Postal Service and found its complexity might intimidate customers. We urged the organization to consider eliminating prices that are rarely or never used. We also suggested periodic evaluation of market demand to see if it makes sense to introduce other Flat Rate products.

    But, it’s also worth considering whether pricing can be too simple, at least for commercial customers. While individuals welcome pricing that’s easy to calculate, businesses that ship large volumes can benefit from a range of options, which gets them closer to customized pricing. It also helps them shave off every possible penny of shipping expenses. And, of course, some degree of complexity is necessary so prices appropriately reflect costs. Such is the case with zoned rates for Priority Mail, because packages traveling across regions or zones cost more to deliver than those moving within a zone.

    So, turns out pricing simplicity may not be quite that simple.

    Do the Postal Service’s pricing options meet your shipping needs? Do you find pricing too complex? Or, do you wish there were more options? Should the Postal Service introduce more Flat Rate Box or other specialty packaging items? 

  • on Jan 19th, 2015 in Finances: Cost & Revenue | 35 comments

    For the first time in years, the U.S. Postal Service has money to invest in its future. Postal officials have said they expect to spend about $2 billion on capital projects in 2015.

    There’s a good chance most of that investment will go toward revamping the 190,000-vehicle fleet – one of the Postal Service’s most pressing needs. Our audit work found that the Postal Service’s vehicle fleet is adequate for delivery needs only until about 2017.

    Another area overdue for investment is facility maintenance and improvements. An earlier audit report found that budget constraints have hindered the Postal Service’s ability to fund facility repairs and alterations. About half of its incomplete repairs in fiscal years 2011 and 2012 were potential safety and security problems, our report noted.

    While $2 billion is a nice chunk of change, it’s a relatively small capital investment for a $68 billion organization. Still, the Postal Service has had so little available money for capital projects over the past few years that $2 billion seems like a bonanza.

    So this week, we are asking you to weigh in with your suggestions on how the Postal Service should invest its $2 billion. Should vehicle fleet replacement be the number one priority? Or facilities? Where else is capital investment needed? What else would be on your wish list if extra funds were available? 

  • on Jan 12th, 2015 in Labor | 7 comments

    A business is only as good as its employees, which is why more and more organizations are offering flexible workforce policies to attract and retain the best workers. Among other things, flexible workforce policies help employees adjust their work schedules to the needs and circumstances of their personal lives, so they can have a healthier work-life balance. The idea is that happier employees are more committed and productive employees, and that leads to better customer service.

    We endorse the win-win idea behind workforce flexibility in our new white paper, Flexibility at Work: Human Resource Strategies to Help the Postal Service. We believe the U.S. Postal Service could do better at recruiting and retaining high-quality employees if it started offering flexible workforce policies. As it is, there’s relatively little flexibility in postal work schedules, making it very hard to accommodate an emergency or even a pressing situation facing a worker – for instance, kids that need to be picked up at a certain time every day or elderly parents that need to be driven to a regular medical appointment each week.

    Properly implemented policies offering things like job-sharing, compressed work weeks, shift-trades, and self-scheduling are proving effective in other industries, as numerous businesses are finding they have a stronger labor force as a result of the flexibility. We don’t say which specific policies the Postal Service should implement. Rather, we present four high-level principles to consider when developing flexible workforce policies: create a partnership for flexibility between labor and management; evaluate a portfolio of initiatives; develop more detailed information on the expected or anticipated daily workload; and seek continuous feedback from employees.

    What do you think? Are flexible workforce policies a good thing for any business? Are the suggested flexibilities realistic in a service-based business like the Postal Service? What flexibility policies would you like to see in your workplace? 

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