June 17, 2014. Value of the Area Mailer Industry Focus Groups: Immediate Issue Resolution Provides...
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Transcript of June 17, 2014. Value of the Area Mailer Industry Focus Groups: Immediate Issue Resolution Provides...
DREW ALIPERTOWESTERN AREA VICE PRESIDENT
ERICA BRIXWESTERN AREA MANAGER, OPERATIONS SUPPORT
WESTERN AREA FOCUS GROUP
June 17, 2014
THANK YOU FOR YOUR PARTICIPATIONIN THIS VALUABLE PROCESS
Value of the Area Mailer Industry Focus Groups:
Immediate Issue Resolution
Provides a Forum for Crucial Feedback / Suggestions / Ideas
Builds Critical Relationships at All Levels of the Organization
Forum to Communicate Operational Changes
2
Western Area Focus Group
3
Volume
Price Labor Costs
Universal Service Obligation
Limited pricing flexibility
Postal network driven by: Delivery points Retail locations Sortation facilities Six-day delivery
~80% of total costs COLA increases Benefits: pensions, retiree
health, health insurance Limited flexibility Retiree prefunding
obligation, rising workers’ compensation costs
These trends will continue to put
pressure on USPS ability to provide
affordable universal service
Decliningsteadily Transactional volume
declining due to e-diversion Advertising mail is subject
to more substitution options
Mail volume highly sensitive to economic changes Mail mix changes –
lost profit contributions
Fixed cost base
Rising but capped
Rising cost per hour
Business Imperative for Change
800
696
'06
685
'07
663
'08
623
'09
584
'10
557
'11
528
'12
491
13
DESPITE SIGNIFICANT COST
REDUCTIONS LOSSES REMAIN
AT UNSUSTAINABLE LEVELS
$15.8
$1.2
$3.2
$9.3
$12.3$13.7
$14.8
1,074
1,1491,183
1,258
1,122
1,459
1,110
1,373
1,423
1,000
1,100
1,200
1,300
1,400
1,500
2006 2007 2008 2009 2010 2011 2012 2013 2014IFP
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
Career Employees – Reduced by 205K since 2006, without layoffs
Postal Service is More Efficient Than Ever
$16 Billion of Annualized Savings in the past seven fiscal years with workhours reduced by 24%
Tota
l Wo
rkh
ou
rs (M
illio
ns)
Sav
ing
s (B
illio
ns)
Annual Growth 1.2% [2000 – 2013]
0
5
10
15
20
25
30T
FP
Cu
mu
lati
ve T
ren
d
24.2
1972 1980 1990 2000 2013
Annual Growth 0.3% [1972 – 1999]
4
Continuous Efficiency Improvements HaveHelped Mitigate the Impact of Business Threats
5
A Deep Financial Hole
Unrestricted Cash
Buildings & Equipment, net of depreciation
Other assets
Total Assets
$ 2.3B
$ 17.5B
$ 1.8B
$21.6B
Retiree Health Benefits
Workers’ Compensation
Debt
Accrued Compensation, benefits and leave
Deferred Revenue*
Other
Total Liabilities**
$16.8B
$17.2B
$15.0B
$ 3.5B
$ 3.6B
$ 5.4B
$61.5B
ASSETS LIABILITIES
• Liabilities exceed assets by approx. $40 billion
• The USPS has only 35 cents of assets to cover each dollar of its liabilities
* Newly available data on forever stamp usage resulted in a $1.3B reduction in Deferred Revenue – Prepaid Postage** Under multi-employer accounting rules, there are approximately $51B in obligations not shown on the balance sheet.
Significant profits over years and legislation are needed to recover.
CLOSING THE GAP
6
LEGISLATIVE INITIATIVES
2016 SAVINGS
OPERATIONAL INITIATIVES TRANSFORMING INFRASTRUCTURE
CONTINUOUS IMPROVEMENT
$6.0
WORKFORCE REDUCE THE UNIT COST OF LABOR INCREASED FLEXIBILITY
$2.6B
$11.1B
USPS Business Plan
7
Key Legislative Goals
Require USPS Health Care Plan
Resolves RHB Prefunding Issue
Refund FERS Overpayment
Adjust Delivery Frequency (6-Day Packages, 5-Day Mail)
Streamline Governance Model
Authority to Expand Products and Services
Require Defined Contribution System for Future Postal Employees
Instructions to Arbitrator
Reform Workers’ Compensation
Right to Appeal EEOC Class Action Decisions
TRANSFORMING INFRASTRUCTURE
8
Western Area Focus Group
Facilities
Delivery and Post Office Operations
Network Operations
Ret
ail O
ps
DELIVERY OPTIMIZATION
Major Optimization Initiative
TRANSFORMING INFRASTRUCTURE
Units 2,513 Delivery Unit Consolidated
Routes 24,000 City Routes Reduced
Deliveries Efficient Mode of Delivery
10
Delivery Mode Conversions
USPS DELIVERY MODES
TOTAL STREET DELIVERIES – 133.3M 11
CURBLINE
DOOR CENTRAL
37.8M 40.5M
31%28%
55.0M
41.0%
FY 2013 GROWTH BY MODE
Door
Curbline
(61.2K)
490.9K
(6%)
47%
Centralized 607.6K 59%
Current Policy/Strategies are Driving Migration to More Efficient Delivery Mode
FY 2013 Growth % Total
Total Growth 1.04M - -
Fiscal Year 2013
Grow Revenue
Reduce the Cost to Serve
Transform Customer Experience in High Traffic Post Offices
Enhance Customer Convenience Through Expanded
Retail Partnerships
Preserve Retail Services in Rural America 50% of Post Offices realigned to match community needs
Retail Strategy
RETAIL CHANNEL STRATEGY FOCUS
14
16
OWNED 8,596
LEASED 23,763
Facilities Optimization
USPS FACILITIES
New Jersey Network Distribution Center – 1.4M Sq Ft
Ochopee FL Post Office – 62 Sq Ft
17
Generate Revenue and Reduce Expenses by:
Selling owned buildings
Terminating leases
Re-purposing space
OBJECTIVE
Facilities Optimization
Over 6.7M Sq. Ft. Eliminated
18
Advantages of a Transformed Infrastructure
Fewer Facilities Denser Bundles/Trays and Pallets Increased Equipment Utilization Increased Productivities
Maximized Transportation Better Utilization of Air/Surface Trips Gain Economies of Scale
Right-sized Workforce Employee Flexibility Revised Pay Structure
Complement
19
MAJOR FY 2014 INITIATIVEDSCF STANDARD MAIL LOAD LEVELING
Western Area Focus Group
Erica BrixManager, Operations Support
Western Area
20
Imbalance of Mail Delivered by DOW
Postal Quarter 1 FY 13
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Disproportionate amount of Standard Mail is scheduled for delivery on Monday resulting in:
Service Variability Operational Inefficiencies Increased Cost
SAT MON TUE WED THU FRI
21
Prior to April 10 Current
Thursday Friday, Saturday, Monday Friday, Saturday, Monday
Friday Saturday, Monday Saturday, Monday, Tuesday
Saturday Monday, Tuesday Monday, Tuesday, Wednesday
Sunday Monday, Tuesday, Wednesday Monday, Tuesday, Wednesday
*The current Critical Entry Time (CET) for Standard mail is 4 pm
**For delivery in the continental United States
DSCF Standard Mail**Dropped Before 4pm* on
DELIVERY DAYS MEETING SERVICE STANDARD
Expected Days of Delivery
SCOPE OF LIMITED CHANGE
22
Expected Days of Delivery
WHAT HASN’T CHANGED
Standard mail dropped at a DDU does not change
Standard mail dropped at a NDC does not change
EDDM Retail does not change
Periodical/Newspaper processing does not change
First-Class does not change
Priority does not change
Delivered Volume
23
% OF TOTAL DELIVERED VOLUME BY DAY
BASELINE PERIOD DSCF LOAD LEVELING TO DATE *
* 4/19 through 6/6
Monday Tuesday Wednesday Thursday Friday Saturday14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
19.3%
16.7%16.0%
16.3%15.9% 15.7%
Service Performance
24
DSCF STANDARD LETTERS
DSCF STANDARD FLATS
4/12 – 5/23
4/12 – 5/23
UCL / LCL TargetStandard SCF Letters SPLY
UCL / LCL TargetStandard SCF Flats SPLY
25
Standard DSCF Flats
April 11 – May 30
Friday Start-the-Clock
% of Total 23.82% 53.99% 19.00% 2.19% 0.58% 0.21% 0.21%
Cumulative 23.82% 77.81% 96.81% 99.00% 99.58% 99.79% 100.00%
Sat Mon Tue Wed Thu Fri Sat0%
10%
20%
30%
40%
50%
60%
Perc
ent o
f Tot
al
Service Variance
Day 1 – Saturday 23.82%Day 2 – Monday 53.99%Day 3 – Tuesday 19.00%
DSCF Standard Mail Load Leveling
Results are Promising Mail Processing working to capacity Reducing average hours per route Balanced workload with consistent service performance
Controls and Monitoring Facility Audits New data driven diagnostic reports Address the Vital Few Opportunities Operational Tiger Teams for site visits and improvement
recommendations
26
27
Benefits
Consistent Delivery Times by Day of the Week
Cost Containment – Maintain Affordable Prices
Predictable and Reliable Service
Less Competition in the Mailbox
Benefit to Mailers and Customers
Increase Visibility
100% PRODUCT VISIBILITY
PROVIDES THE ABILITY TO TRACK MAIL PIECES AND CONTAINERS THROUGH THE POSTAL NETWORK AND PROVIDE BUSINESS INTELLIGENCE TO ENHANCE OPERATIONAL PERFORMANCE AND PROVIDE CUSTOMER VALUE
28
100% Visibility
29
Attributes of 100% Product Visibility
Unique barcodes on letters, flats, packages, trays and containers
Access to analytical capabilities for forecasting and predictive workloads
Real-timeData & Intelligence
30
Next Generation Equipment
C007
Nov 2012-Sept 2013
Delivery Sortation System
Scanning Units
800
Dec 2012- March 2014Feb-May 2013
Scanning Units
1,030
PASS Real-Time Scanners
Jan–Dec 2014 Deployment
Scanning Units
11,700
Scanning Units
3,137
Scanning Units
210,608
May-Nov 2014 Deployment
Total – 12,500 Total – 4,167
Jul 2014-Dec 2014
Mobile Delivery Device(Replaces Real-Time Scanners)
Scanning Units
75,000
Scanning Units
150,000
Jan 2015 – Aug 2015
Total – 225,000
31
Delivery Management System (DMS)
Evaluates Carrier Route Status to plan and color-coded route status
Estimates Delivery Time for all packages in unit Currently being tested in limited ZIP Codes
32
Predictable and Measureable
Does USPShave the
mail?
Where is it in the process?
When will itbe
delivered?
How did the overall mailing
perform?
An optimized plan for:
Consistent, predictable
delivery
Avoidingbottle necks
Response Rates & ROI
Balance resources & reduce costs
Business Intelligence Enhances the Performance
& Value of Your Mailings
HOW?
Full ServiceIntelligent MailStrategies
34
VOLUME REALITIESMail Volume Shifting to a Less Profitable Mix
Volume in Billions of Pieces
PHASE 2 NETWORK RATIONALIZATION
36
FIRST-CLASS MAIL SERVICE AFTER IMPLEMENTATION
Overnight – 20.05%2 Day – 35.6%3 Day – 44.1%
PHASE 2 NETWORK RATIONALIZATION
The time it takes First-Class Mail to reach its destination will increase from an overall average of 2.14 days to 2.25 days
Plant Consolidations
200
300
400
500
600
700
800
Phase 1
673
623 614599
528
461
417
487
320
PROCESSING PLANT CONSOLIDATIONS
38
• Over 350 Facilities Eliminated• Reduced over 75M miles
39
EMPLOYEE IMPACT
Approximately 15,000 employees affected
Will work within negotiated employee agreements, laws, and regulations to place employees in other vacant positions available through normal attrition
PHASE 2 NETWORK RATIONALIZATION
Continue to Optimize the Value of the Infrastructure
41
Enhance the value of Direct Mail and Catalogs
Increase Market Share of Packages
Innovate across USPS Business Platforms
Growth Opportunities
12%.....the share of total American marketing spend on mail. It’s been consistently about 12 percent for the past 30 years.
Four Key Ideas:
1. Personally Relevant – Interest
2. Actionable – Speed to purchase
3. Functional – Imbed technology in paper
4. Creative – Color, construction, size
Mail is Relevant – Most Direct Way to Communicate
42
43
Using direct mail and email in integrated campaigns creates synergies that boost response more than using either medium alone.
The Impact of Direct Mail is Significant
Growing Direct Mail
Source: Marketing Sherpa Study
44
Mobile Commerce
Mobile Technology Helping Drive Long-Term Value with Direct Mail and Catalogs.
• Smartphones and tablets interact with the printed page
• Direct Mail or Catalog becomes “catalyst” for mobile commerce
• Direct Mail and Catalog integration with technology increases:• Relevance• Effectiveness• Convenience• Responsiveness• Engagement
NFCMobile Barcode Image Recognition Augmented Reality
Committed to Mail
We remain committed to growing mail
Will collaborate with the industry to grow and enhance direct mail and catalogs
Embrace technology to attract consumers to new possibilities
Continue to seek promotional ideas from customers
45
The power of mail enhances package delivery & returns.
48
Elements to Building a World Class Platform
• Integrated Package Network Plan
• Product Development Plan
• Package Delivery Optimization Plan
• Next Generation Equipment
• International Package Processing Plan
• Improve Customer Pick-up Experience
• 100% Product Visibility
Package Growth Opportunity
SEVEN KEY ELEMENTS
Create a simpler returns product line• Consolidate disparate offerings to
Network and First Mile
Eliminate obstacles to onboarding• Fees• Separate permits
Make products easier for users• Roundtrip label• Print and Deliver label• Expand customer base for Scan-based
Payment
Align Our Returns Portfolio with the Needs of Ecommerce Shippers
Growth Opportunity
50
Sunday Delivery• Leveraging Sunday delivery to grow our
overall package business
Parcel Select Next-Day• Next-day delivery for SCF-dropped packages
(last mile and a half)
MetroPost• Same-day, competitive-priced delivery • Talking with larger retailers with NYC
introduction
Customized Products to Meet the Needs of Large Ecommerce Shippers
Customized Shipping
51
53
Growing Consumer
Expectations
Consumers’ busy lifestyles demand more delivery convenience
New businesses take notice of these demands and offer more expedient deliveries
Existing players improve their offerings
to meet demand
These changes set new
consumer expectations
54
Emerging Trends
Directional patterns that may generate market, customer, or organizational needs or opportunities.
TechnologyThe application of scientific knowledge
and engineering in the digital age
SocialPatterns of human interaction,
movement, and preference
IndustryDevelopments shaping how businesses are organized and how transactions take place
E-Commerce
Same-Day Delivery
Public-Private Partnerships
Do-It-Yourself Consumer
Simplicity
Collaborative ConsumptionBig Data 3D Printing Automation
Innovate Across Business Platforms
55
Physical NetworkFirst Mile Last Mile Digital
Leverage market-leading physical assets
Incorporate
evolving logistics solutions
Develop a
structure that fosters agility and innovation
Boost the demand for mail and packages
Expand and simplify induction points
Integrate emerging digital, big data, and consumer trends to grow
Expand delivery solutions
Capitalize on the expansion of E-commerce and technology
Optimize route flexibility and productivity
Leverage USPS’s brand, trust, and reputation to drive profit
Optimizing the Value of the Infrastructure
58
USPS – Industry
USPS – INDUSTRY COLLABORATION & OUTREACH
Commitment to Communicate
SUCCESS REQUIRES COLLECTIVE EFFORT
Continue to collaborate through: MTAC Assn. Meetings NPF Trade shows and other events
Leverage PCC’s & Area Focus Groups to Work With Local Leadership to Resolve Issues
Area Mailing Industry Focus Groups – Calendar by Area at https://ribbs.usps.gov/index.cfm?page=periodicalsfocus