It’s hard to argue with the rationale behind rightsizing the postal network. With mail volumes in decline, it made sense for the U.S. Postal Service to see if it could consolidate facilities and equipment.
That’s what USPS did from 2011 to 2015 as part of a two-phased network rationalization plan when it consolidated 223 facilities. As part of Phase II, the Postal Service also revised its First-Class Mail service standards, eliminating overnight delivery for single-piece FCM and shifting some FCM from the two-day service standard to three days.
These revisions enabled the Postal Service to expand its mail processing operational window to process mail on fewer machines, thus using less facility square footage. This part of the change is known as the Operating Window Change (OWC), and USPS projected the OWC would save a total of $1.6 billion in fiscal years 2016 and 2017.
But to quote the poet Robert Burns: “The best laid plans of mice and men, often go awry.”
The OWC changes did not deliver the expected savings, our recent audit report found. The Postal Service saved only about $91 million in fiscal years 2016 and 2017, not the $1.6 billion originally projected. In addition, we could not verify the Postal Service’s identified savings of $275 million in FY 2016 and $17 million in FY 2017.
Management disagreed with our findings on savings, among other things, stating that the changing business environment made it nearly impossible to isolate savings related to the OWC. The Postal Service also said it remains optimistic it will eventually achieve the full projected savings, but we concluded USPS will never likely achieve the projected annual $806 million OWC savings.
Finally, we noted that even though the Postal Service has not achieved its projected savings, reverting to the previous operational window would likely cause further service disruption and additional cost, primarily from having to re-open closed facilities, return employees back to night-shift work, and realign transportation networks.
Have you adjusted to the First-Class Mail service standard changes? How much First-Class Mail do you usually send or receive?