Our objective was to evaluate the U.S. Postal Service’s strategy to improve First-Class Mail (FCM) service performance scores in the Northeast Area.
The Postal Service has service standards (timeliness goals) for delivering FCM after receiving it from a customer. A service standard represents the level of service the Postal Service attempts to provide to its customers.
The service standard is determined by which geographic location mail originates from (comes from) and to which geographic location mail is destined (goes to). A mailpiece’s combined origin and destination is known as a service pair and examining these pairs allows the Postal Service to evaluate service performance based on the mail’s origin, destination and a combination of both.
The Postal Service measures six FCM service performance goals: External First-Class Mail (EXFC) measurement system, 2-Day and 3-5 Day mail delivery, Commercial Mail overnight, 2-Day and 3-5 Day mail delivery, and First-Class Package Service - Retail delivery. Each performance goal is measured as a percentage score out of 100 percent.
EXFC measures the service performance of single piece FCM letters, flats, and postcards from the time a test piece is deposited into a collection box or post office lobby chute until it is delivered to a home or business. The Postal Service measures performance for First-Class Package Service - Retail delivery using an internal system that measures the transit time from mailing to delivery and measures service performance for Commercial FCM (business mailings with a minimum of 500 pieces) from the date the Postal Service takes possession until a barcode scan to document delivery.
Northeast Area management said they use the annual and quarterly Hoshin planning process to align headquarters, area, and district objectives and goals to improve service and operational performance. Northeast Area management described Hoshin plans as the master set of overarching strategies used to conduct continuous improvement projects.
The fiscal year (FY) 2018 Hoshin plans for the Northeast Area and the 10 districts included 151 objectives with over 380 continuous improvement projects, such as improving service for FCM Letters and Flats, 3-5 Day First-Class Commercial Letters, and First-Class Parcels.
We chose the Northeast Area because it had the lowest performance by a Postal Service area for both 2-Day and 3-5 Day EXFC service scores from FY 2015 to 2017.
In September and October 2017, we conducted site observations at six Northeast Area Processing and Distribution Centers (P&DC). We selected three facilities with the highest EXFC service performance scores and three facilities with the lowest scores. EXFC service performance scores at the three higher scoring facilities averaged about 93 percent on-time, while scores averaged 89 percent on-time at the lower scoring facilities.
What the OIG Found
Overall the Northeast Area Hoshin plans for FY 2018 align headquarters, area, and district goals and objectives for improving service and operational performance.
During the audit, we identified that the Hoshin plans for the Northeast Area and the ten districts were incomplete. Specifically, fields were blank or not current for one or more of the following:
- Project owner;
- Project type;
- Planned dates;
- Project status; and
- Project impact.
The Postal Service’s Hoshin plan guidance requires completion of the fields listed above. We told management about the blank and not current fields on April 2, 2018. In response management attributed the missing or incomplete field information to inadequate training of the owners and/or person assigned to update the plan. Additionally, management said the fields are completed at the individual project level in the Postal Service’s Project Knowledge System (PKS). Despite Postal Service guidance, management said they did not believe there was a need to complete all the fields in Hoshin plans because the information was in the PKS. Subsequently on April 13, 2018, management sent the OIG updated Hoshin plans that were now complete.
When employees do not follow Hoshin guidance and plans are incomplete, project accountability can be lost, desired outcomes may not be measured or realized, and management decisions or actions concerning achievement of overarching strategies from continuous improvement projects could be inconsistent.
As of Quarter 4, FY 2017, Northeast Area EXFC service performance scores were about 94 percent on-time for 2-Day service and almost 86 percent on-time for 3-5 Day service. These scores were below the national goals of 96.5 and 95.25 on-time service by over 2 and 9.5 percentage points, respectively.
Northeast Area Commercial FCM service performance scores were about 94 percent on-time for overnight service, almost 95 percent on-time for 2-Day service, and almost 92 percent on-time for 3-5 Day service. These scores were below the national goals of 96.8, 96.5, and 95.25 on-time service, respectively, by about 2 to 3 percentage points. In addition, the First-Class Package Service - Retail service performance score was over 90 percent on-time service, but was more than 4 percentage points below the national goal of 94.8.
When the Northeast Area does not meet mail service standards, customers in the area and across the nation are negatively impacted.
We analyzed EXFC service performance scores for over 4,000 service pairs that sent FCM from the Northeast Area to other areas and from other areas to the Northeast Area from January 2015 to September 2017. We determined that almost 93 percent of the service pairs were below the Postal Service’s performance goals.
Specifically, we found that 2-Day mail service pairs met the on-time service performance goal of 96.5 percent only 14 percent of the time. The 3-5 Day mail service pairs met the on-time service performance goal of 95.25 percent only 1.6 percent of the time. As a result, customers cannot use service standards to determine how long it will take for mail to reach its destination.
Northeast Area FCM service performance goals were not achieved because of failures in collection, processing, transportation, and delivery. Northeast Area management said the service performance failures were due to:
- Missed mail collection box pickups;
- Delivery unit mail arriving late at processing facilities;
- Mail not processed timely and missed transportation deadlines;
- Mail processing machine maintenance issues; and
- Weather-related delivery and transportation delays.
Overall, Northeast Area management said failures can happen anywhere and achieving service performance goals would require near perfect conditions in terms of weather, traffic, and machine performance.
Finally, during our Northeast Area P&DC site observations, we generally identified that all six P&DCs were using similar best practices, including the use of data to track machine, transportation, and service performance. We also found that management shared performance, staffing, transportation, and operational challenges during shift change and weekly area meetings.
What the OIG Recommended
We recommended management:
- Establish an ongoing process to ensure all Hoshin plans are complete and current;
- Assess and implement Hoshin training to ensure that employees involved with Hoshin plans fully understand their responsibilities; and
- Evaluate and determine the relevance of current FCM service performance goals considering the service pairs that do not meet goals.