McKinsey- India Post- Mail Network Optimization Project

Mail Network Optimisation Project

Introduction of the project to the UnionsJuly 15, 2010

|India Post 2

Agenda for today's meeting

Background of the Mail Network Optimisation Project 11:00 - 11:30

11:30 - 12:15Explaining the Project details: Strategy, Work plan, Process re-design, expected outcome

12:15 - 13:00Suggestions and view points of the staff side on the project and its status

Lunch 13:00 – 14:00

|India Post

India Post: Mail Traffic

3 3 3

-5% p.a.

2008 - 09

654.00

07 - 08

639.00

06 - 07

667.71

05 - 06

670.06

04 - 05

736.03

2003 - 04

863.53

10.86

2008 - 09

21.00

07 - 08

17.70

06 - 07

12.86

05 - 0604 - 05

9.59

2003 - 04

+20% p.a.

8.27

Constant decline in ordinary mail traffic, while Speed Post has witnessed positive growth

Mail volume (unregd. and regd.)

Crores

Speed Post Traffic

Crores

SOURCE: India Post

|India Post

Need for Network Review as a basis for significant increase in volumes, revenues, and market share

4 4 4

External Drivers▪ Declining mail volumes

▪ Competition from Domestic and Inter-national players

▪ Absence of regulation

▪ Change in mail profile

▪ Customer Demands(e.g. Track & Trace)

Internal Drivers▪ Difficulties of existing

mail network vis-à-vis changed mail profile

▪ Low level of IT induction in mail processing

▪ Low productivity

▪ Delivery inconsistencies and visibility

▪ Lack of customer focus

Impact

▪ Inconsistent quality of service

▪ High operational costs

▪ Eroding customer base

SOURCE: India Post

|India Post

Recent Initiatives in Mail Operations

5 5 5

▪ Setting up of Automated Mail processing Systems

▪ Induction of freighter aircraft for carriage of mail for NE

▪ Setting up of Mail Business Centres

▪ National Address database management system

▪ Popularization of PIN Codes▪ RFID in Mail Processing▪ GPS tracking in MMS vehicles▪ Mechanization of Delivery

Plan Projects

▪ Part of Plan Scheme for Setting up of MBCs

▪ Seeks to undertake restructuring of the existing mail network

▪ McKinsey & Co. appointed as the Project Consultant

▪ 36 month long project

Mail Network Optimization

SOURCE: India Post

|India Post 6 6

Why do we need a Consultant on board?

▪ Give focused attention to Mail Operations with a fully dedicated team in project mode

▪ Have external and objective perspective

▪ Learn from best practices in postal services world-wide

Why a consultant

SOURCE: India Post

|India Post 7 7

Deliverables & Time lines contained in the RFP

Sl. No. Description of deliverables Completion target month no.

Completion of the analysis of current network structure, products and performance, review of customer requirements

1 0 - 3

Finalization of the optimal scenario, optimization objectives, evaluation and prioritization of design options and definition of the target network, implementation planning

2 0 - 6

Identification of appropriate technology, costing exercise for the preferred technology options, assistance in selection of technology service provider, migration planning

3 3 - 9

Finalization of process specification and blue print, definition of Key Performance Indicators (KPIs) and measurement systems, description of roles and responsibilities along the mail business managerial set up, development of training modules, sequencing of implementation of defined processes, systems and structures

4 0 - 12

Roll out / implementation, pilots5 12 - 18

Full implementation 6 18 - 36

SOURCE: RfP issued by India Post

|India Post 8 8

Objectives of the Project: getting the core right and improving look and feel of mail offices

"Get the core right"

"Modernise the look and feel"

SOURCE: Mail Network Optimisation Project

▪ End-to-end network optimisation: Optimise India Post's mail network from collection to delivery

▪ Significant quality improvement: Standardise and improve processes and reduce network complexity

▪ Rigorous performance management: Establish an effective performance management structure using KPIs and regular reviews

▪ Customers: Improve India Post's appearance to make it more trustworthy and reliable for customers

▪ Employees: Improve working conditions to make staff proud of being associated with India Post

▪ Management: Significantly improve the management's ability to steer a huge organisation

|India Post 9 9

Getting everybody on board


Customers ▪ India Post as trustworthy organisation with high-quality

reliable service ▪ Value for money

Employees ▪ Improved working conditions as key benefit ▪ Pride in being part of an efficient and widely respected

organization

Unions ▪ Improved working conditions leading to greater

employee confidence▪ Constructive role in decision making

Management ▪ Improved ability to steer a huge organisation and pride

in being a part of a successful organization▪ Usage of state-of the art management principles and

tools (e.g., Key Performance Indicators)

|India Post 10 10

Project Strategy


PRO

JECT

APP

ROAC

HStart with a few products for big cities

Add more products for the same cities

Expand to all products across India

▪ Early and broad involvement of Circles and Staff side

▪ Constant Monitoring by the Directorate

|India Post 11

Geo

grap

hica

l rea

ch

Speed Post and International mail

Ist class IInd class

Product range

Prioritycities

All India

2011

2012

Scenario-based designand pilots

Scenario-based design

Roll-out

"Wave 1"

2010

The Project Roadmap for mail operations revamp

Approach particularly reflects strong need for immediate tangible impact

Approach particularly reflects strong need for immediate tangible impact


|India Post 12 12 12

Why begin with Speed Post and International Mail ?

▪ Attractive market– Speed Post grows 20% every year– Quality is very important for SpeedPost customers

▪ Important for India Post revenue and volume– ~10% of total volume – ~20% of postal revenue

▪ Easiest product for monitoring success– SpeedNet has very helpful data for the project– Track & trace is the much needed customer demand

▪ International Mail is India Post's face to the world– Very important to meet international service standards– Payments increasingly linked to service standards


|India Post 13 13

The approach to "get the core right"



▪ Customers: Improve India Post's appearance to make it more trustworthy and reliable for customers







Focus now

|India Post 14 14

Optimisation of delivery in wave 2 (1st class mail) as SpeedPost only accounts for ~10% of delivery volume

Work Plan for Revamp of Speed Post operations (collection to delivery): Wave 1


Proof of concept

▪ What are the right processes within the facility?– How to ensure standardisation?– How to maximise throughput and quality?

▪ What is the right network schedule? – Which cut-off times and processing windows per processing step across the value chain allow the best possible next-day delivery?

▪ How to measure India Post's performance?– What is the share of next day delivery

(D+1)?– Track & trace: Are 100% scans ensured

across the network?– Which are supporting KPIs to ensure people

do not seek workarounds/shortcuts?

▪ What is the right network design?– How should the optimal network of sorting

hubs look like to ensure maximum D+1 quality?

City 1

SPC 1

PO 1

PO 3PO 2

SPC 2

City 3

SPC

City 2

SPC

PO 1

PO 3

PO 2

TMO

TMO

|India Post 15 15

The Project assigns high importance to the "look and feel" aspect as well







▪ Customers: Improve India Post's appearance to make it more trustworthy & reliable for customers



Focus now

|India Post 16 16

The "look and feel" Component


Identify new tools and technologies and also upgrade exiting ones to ensure faster, better services

Develop scheme for recognising star circles/performersEnsure 100% trained staff on field

Look and feel

Branding Infrastructure Technology Recognition and training

Ensure uniform branding as well as consistency across locations

Develop standardised and consistent interiors and exteriors of buildings and give clean and supportive infrastructure to the line team

|India Post

We have worked together in the

6 metros (mainly SPCs) over the

last months

`

17

Impact of the Project Pilot


|India Post

The project has brought some significant improvements over the last monthsDays (average delivery time)

SOURCE: Postal Tech Centre NSPC SpeedNet data, Mail Network Optimization Project

. . . to

From . . .

Mumbai

New Delhi

Chennai

Kolkata Airport

Bangalore

Hyderabad

Mum

bai

2.7

4.1

2.5

2.9

2.5

2.5

New

Del

hi

2.6

2.2

2.6

2.4

2.8

2.4

Chen

nai

2.0

3.1

2.2

2.0

2.5

1.9

Kolk

ata

Airp

ort

2.4

4.1

2.7

2.1

3.2

2.2

Bang

alor

e

2.3

3.8

1.7

2.1

2.1

2.2

Hyd

erab

ad

2.2

3.5

2.4

2.0

2.5

1.9

During project – June 7 - 12

. . . to

From . . .

Mumbai

New Delhi

Chennai

Kolkata Airport

Bangalore

Hyderabad

Mum

bai

2.9

3.7

3.5

5.0

3.1

3.0

New

Del

hi

3.4

2.8

3.5

4.1

3.4

3.1

Chen

nai

3.5

3.1

2.9

3.1

2.2

2.1

Kolk

ata

Airp

ort

3.5

4.1

4.1

2.6

3.6

4.2

Bang

alor

e4.3

3.8

3.2

3.6

2.3

3.0

Hyd

erab

ad

3.9

4.6

5.0

4.9

3.5

2.8

Before project - December

|India Post 19

Bangalore SPC example: Throughput doubled by standardization

0

50

100

150

Date

07-Jun-2010 21-Jun-201024-May-201010-May-201026-Apr-2010

Items handled by shiftItems per manhour Average (Day & Night)Set 1 (Day) Set 3 (Night)

SOURCE: Bangalore SPC, Mail Network Optimization Project

|India Post 20

The project team seeks involvement of all levels in the Circle

Very high focus and involvement of leadership …

▪ Secretary, CGM visit to Kolkata SPC

▪ Member (O) visit to Bangalore SPC

▪ Regular visits by Director (Mail &SP) & CPMGs to SPCs

Visits by leadership

Consultative approach

▪ Regular meetings to understand & resolve ground team concerns (staff and unions)

▪ Joint work and discussion of changes on ground (staff and unions)

Attendance of ~50 group C & D staff across shifts 1, 2, 3A, 3B

Circle director and SPC manager answered questions and clarified doubts

Layout map handed to all; new role cards discussed and distributed

… as well as regular interaction with staff side – Chennai example


|India Post 21





Lunch 13:00 – 14:00

|India Post 22

Initial Impact of the Project in terms of Operational Improvement

Easier sorting – Ensure minimum multiple handling

Less workload – reduce no. of bags & missorts between different locations

Better equipment – Ease of working for staff at SPCs with new equipments

Higher throughput – Ensure higher processing with improved process design

Streamlined workflow – by having optimised inflow of mails in the processing centersPrioritized processing – Ensure processing prioritisation based on the time of the day for maximum connectivity

Keep everyone informed – Regular interaction and display of SPC's daily performance, suggestions and feedback encouragedTraining & Incentives – Incentivise high performers and help all staff with newly developed trainings


|India Post 23 SOURCE: Mail Network Optimisation Project

Reduce sorter distress by ensuring minimum multiple handling

Example – Hyderabad

1.16

… toFrom …

2.00

From …

… to

▪ Pre-sorting for all items before final sorting

▪ All sorting done with the same priority

▪ Ensure maximum sorting with only one handling

▪ TD/NTD mails to come separately to enable prioritised sorting

Large multiple handling

Minimum multiple handling

Number of handlings per item

|India Post 24

Reduce number of bags and missorts between different locations within 1 city


▪ We are trying to reduce sorting complexity in the city through streamlining of operations subject to other constraints like distance, connectivity etc.

▪ This should lead to less confusion, less missorts and less bag closing

▪ Volume throughput and productivity at Mumbai SPC increased after merging of GPO volumes into SPC

From sorting complexity…… to streamlined operations

250 (12%)

GPO

Around GPO

3,072 (78%)Other areas

283 (10%)

Overallarticles 3,605 (100%)

Feb 04, 20101

1 Analysis down for several days with same results

Mumbai GPO, Speed Post section in Feb 2010

Volumes now get processed at SPC

|India Post 25

Ease staff work by giving better equipments


Bag cutters instead of razor knifes prevent from injuries

Economic sorting cages and chairs allow for productive and yet relaxed working

Economic sorting cages and chairs allow for productive and yet relaxed working

Roller trays ease movement of heavy trays and allow for back-friendly work

|India Post 26

Ensure faster and higher processing in improved process design


▪ Ensure 100% scan compliance, both for receipt and delivery

▪ No article can enter or leave sorting area unless scanned

Ensure improved sorting productivity by▪ Optimizing sorting cages▪ Reducing multi-level sorting ▪ Revising sorting logic (where

necessary)

Key

feat

ures

Open bag Receipt scanSorting

1st

level2nd

level

Dispatch scan Close bag

Scan

ning

de

skSc

anni

ng

desk

Scan

ning

de

skSc

anni

ng

desk

▪ Ensure 100% scan compliance, both for receipt and delivery

▪ No article can enter or leave sorting area unless scannedClearly defined job de-

scription helps in faster and higher processing

Assembly line like processes where one task is given to a person

… to

From …All people doing all tasks together

Lack of role clarity can lead to lack of ownership and can cause confusion

|India Post

Some pictures of Bangalore SPC where this process has been put in place successfully

SOURCE: Mail network optimisation project

Mumbai Delhi Chennai Hyderabad Bangalore Kolkata

What are the right processes within the facility?

2

What is the right network schedule?

3

How to measure India Post's performance?

4

What is the right network topology?

1

Activities Completed▪ Implementation of assembly line layout in the SPC hall

▪ Training of staff in every shift on the revised processes

SPC hall – nowSPC hall – before

Category

LayoutLayout

Neat and Tidy

|India Post 28

Reduce work pressure by having optimised inflow of mails in processing centers

… to

From …

▪ All mail coming to the SPC late evening

▪ Sudden mail volume to be processed in very short time window…

▪ …resulting in bag transfer despite maximum efforts

… to


Uniform volume inflow leads to ▪ Less pressure for staff on ground▪ Better connectivity and therefore better quality

Remaining volume collec-ted at 7 p.m.

Good share of daily volume collected at 2 p.m.

|India Post 29

… to

Ensure processing prioritisation based on the time of the day for maximum connectivity

TD, NTD all being processed at the same time

Same amount of effort will lead to better quality and speed for next day delivery


Sort rest of India volumes before outgoing flight

Sort TD from own P.O.s while "waiting" for flight receipts

Sort TD from rest of India after receipt from incoming flightRa

tiona

le

Non-TD1 sorting

TD sorting(from own P.O.s)

TD sorting (from rest of India)

Receiptfrom P.O.s

Cut-off to ensureflight connectivity

Receipt of itemsfrom other cities

Cut-offfor P.O.s

Demarcated shift (set) planning to optimize D+X quality

From …

|India Post 30

Providing information to each employee at SPC on how their center is performing


… to

▪ Opportunity to identify 'STARS'▪ Opportunity for knowledge

sharing across sets/SPCs

Web based performance mapping both for speed and quality

D+X KPI for Speed Mis-Sort KPI for quality

No visibility of individual, set, SPC per-formance

From …

|India Post

Overall, we have developed a set of 18 KPIs to create transparency

Inter-national reports

SOURCE: Mail Network Optimisation Team

Scan com-pliance reports

1a Transit analysis within city

1b Transit analysis across city

1c Time per leg of transit within city

1d Time per leg of transit across city

2a Scans compliance in the entire network

2b Scan analysis per leg of transit within city

2c Scan analysis per leg of transit across city

3a Percent of F-scans in SpeedNet vs. F-scans in IPS1

3c Share of SpeedNet Delivery scans vs. IPS F-scans (TBD)

4a Articles processed per hour per FTE

4b Staff absenteeism

4c Share of bags without bag labels

4d Share of articles not processed in SpeedNet

4e Share of articles closed after cut-off time

4f Share of missorted articles

4g Share of articles with missing pin codes

4h Share of articles not dispatched same set

3b Percent of F-scans in IPS vs. D-scans in IPS

D+X reports

KPI What does it do?

Measures for international inbound article the efficiency of movement at every step before merger with Speed Post

Support-ing KPIs

Measures for each processing step whether articles got scanned as prescribed

Measures speed and reliability of processing of Speed Post articles from booking to delivery

Supports achieving better D+x and scan performance

|India Post 32

Proposed Incentive for good performers and motivate less performing staff through training


… to

No clear and fully objective performance monitoring

Recognition of star performers

Opportunity for them to teach/motivate others

Find out need for training

Train people to help them to also become star performers

and training

Recognition

From …

|India Post

General

IT

Role

Overview of some trainings currently being developed by Training division


Training Content

Introductory training for new recruits

Train the Trainer Training

Basic procedures and operations explanation

KPI and quality Training

"Basic" Computer Training

“Enhanced" Computer Training

Speednet Training

System administration Training

Supervisor Training

Customer Service Training

Ensure that everybody understands India Post and its procedures not just one's own job

1

2

3

4

5

6

7

8

9

10

Support staff in com-puter-related tasks

Help people to become even more successful in their roles – includ-ing awareness of role and soft skills

33

|India Post 34

Activities

How does the project proceed?


SpeedPost

First class mail

Team has already worked on ground in the 6 metros

Now we are developing a SpeedPost manual for further rollout

8 directors will then lead implementation in the next 15 cities

Jun 15 Jul 15 Aug 15 Sep 15

2010

Project team to start working on 1st class mail

Next 15 cities1 – led by 8 directors (Mail & SpeedPost)

Monitoring Top 6 cities

1 Next cities in scope are Noida, Gurgaon, Chandigarh, Pune, Goa, Mysore, Ahmedabad, Howrah, Patna, Nagpur, Bhopal, Trivandrum, Kochi, Lucknow, Vashi (preliminary selection subject to change)

|India Post 35





Lunch 13:00 – 14:00

|India Post 36

Any questions, comments or suggestions from your side?

|India Post 37





Lunch 13:00 – 14:00

|India Post 38

THANK YOU

Documents

McKinsey- India Post- Mail Network Optimization Project