• 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 Mar 30th, 2015 in Strategy & Public Policy | 1 comment

    The conventional wisdom on the future of print, if print has a future at all, is that old-fashioned books, magazines, and newspapers will still be around only as long as the generations that grew up with them are still around. But as older readers fade away, so will print because younger generations are all about digital communications. Or are they?

    Consider some interesting recent developments and facts:

    • The Pew Research Center found the current highest print readership rates are among those ages 18 to 29, and the same age group is still using public libraries in large numbers.
    • A new academic study showed that, despite the availability of free e-texts, today’s university students prefer dead-tree-based books because they don’t constantly distract you with a noisy alert to a new email or text message.
    • Focus groups of Digital Natives, a.k.a. Millennials, convened by our office showed the participants still value physical mail, especially if it includes some kind of interactive feature.

    Put all of this in the context of some recent European studies on the impact of digitization on reading, and maybe print isn’t going away anytime soon: People retain more details when reading a book than reading an e-book. Researchers said the early results suggest the tactile nature of paper and having words affixed to a page seem to help the reader process the text and better remember the story.

    A small Norwegian study of high school students came to a similar conclusion, having found that students who read textbooks in print scored significantly better on reading comprehension tests than those students who read digital texts.

    So maybe younger readers aren’t so different from older readers. It wouldn’t be the first time conventional wisdom was wrong. In fact, some of the same arguments are made about mail and other paper-based communications. Yet a study done by the UK’s Royal Mail showed physical media generated greater activity in certain parts of the brain and a stronger overall response than digital media. The study supported the concept that touch and tangibility matter to recipients.

    What things do you still like to read in print? Which do you prefer to read digitally? Are there other things you still prefer having in hard copy? Do you find you retain information better when reading from hard copy or a digital device? 

  • on Mar 23rd, 2015 in Post Offices & Retail Network | 58 comments

    Reshaping a postal network doesn’t happen overnight. Especially one built to handle mainly letters and flats and not the tremendous anticipated growth in parcels. The Postal Service is attempting to tackle realignment in two phases, playing out over 4 years.

    Phase one was completed in 2013 and resulted in 141 consolidations for an expected cost savings of about $865 million. To achieve full cost savings, however, the Postal Service also had to reduce service standards for First-Class Mail. Phase two, which started in January and will run through late summer, calls for consolidating 82 mail processing facilities and eliminating most overnight delivery of First-Class Mail. It will also change service standards for Periodicals Mail. All other products will stay the same.

    The Postal Service launched its overall consolidation plan in 2012 to adjust the size of the network and workforce to the reduced demand. The plan calls for fewer processing facilities and for machinery to operate longer and more efficiently. Total mail volume has declined 27 percent since its peak in 2006, and single-piece First-Class Mail – primarily correspondence, bill payments, and greeting cards – has been hit even harder. It has declined by more than half in the past decade.

    Speaking at the February Mailers’ Technical Advisory Committee meeting, postal officials said they are confident consumers will not notice the service standard changes. Surveys suggest most people don’t know what the service standards are, but they do care when their mail arrives in their mailbox. So the Postal Service is working to ensure consumers receive their mail at the same time each day. They also reminded people that consolidation doesn’t necessarily mean closing. Some facilities could be repurposed for other services.

    Business mailers have generally supported efforts to eliminate excess capacity and reduce costs, with the exception of those whose business model depends on overnight service. But mailers also worry that some costs could be shifted to them. Unions have opposed the consolidation plan, arguing it downgrades service and delays mail at a time when the Postal Service should be stepping up its efforts to compete with digital communications. As for consumers, the Postal Service may be right that they won’t really care – unless they notice a change in delivery performance. It’s also worth noting that service standards are not changing for Priority Mail or Package Services, so the Postal Service should be able to satisfy customers’ growing demand for packages.

    Are you concerned that network consolidation has resulted or could result in mail delays? Or do you think network rationalization is necessary to reduce costs? If you oppose consolidation, how do you recommend the Postal Service better match its capacity to demand?

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