1
Welcome to our Postal Webinar Series
Use the chat window to ask questions during the presentation. We will answer them at the end. We will start in a few moments…
The Adaptable Post Concept
February 28, 2013
Webinar outline
� Variability in the postal network
� Five concrete operational initiatives
� Moving forward
3
2011 2012
Total mail volume delivered168,297,000,00
0159,859,000,000
Drop in mail volume with respect to prior year (2,562,000,000) (8,438,000,000)
Decline with respect to prior year (1.0%) (5.0%)
Average mail volume delivered daily 557,275,000 529,334,000
Delivery points to residential and business addresses 151,492,000 152,146,550
Increase in delivery addresses w respect to prior year
+636,530 +654,560
Average mail volume delivered per address per day 3.7 3.5
Longer Term Trends(USPS illustration)
4
Sources of Postal Traffic Variability
� Long-term trends
� Substitution
� Economic situation
� Seasonal variability
� Holidays
� Others
� Day-of-the week
� Customer preferences
� Operation cycles
� Mailings
� Large customer mailings
� Random failures
� Transport delays
� Equipment failure
� Other
5
Capacity versus Variability
Typically, postal operators run a network that is seldom adjusted, why?
� Complex network: impacts are
difficult to anticipate
� Data not always available
� More often: No culture of
“production planning & control”
(PP&C) or analytics.
What causes excessive costs in a “static” network?
� Equipment: Often sized for peak
capacity
� Transport: Low utilization and/or
inadequate timing
� Labour: Utilization not aligned to
workload
� Sort plans: Bins, trays, containers
are under-utilized
� Too many delivery routes, poorly
defined.
6
Interdependent functions across customers, resources, and partners
Adapting the
Network
Mailers Processing
Delivery Transportation
Volume, Mix,
Schedules
Vo
lum
e,
Mix
,
Sc
he
du
le
Mo
de
, C
ap
ac
ity,
Sc
he
du
le
Mo
de
, C
ap
ac
ity,
Sc
he
du
le
7
Feed ForwardInfo
How can we adapt to cut costs?
Variability Type What can be done?
Long-term • Facilities, equipment sizing & configuration
• Network, distribution, delivery, labour agreements
Seasonal • Distribution, transport, labour, delivery
• Manage peaks, yield mgmt., 3rd parties
• Forecasting, skills & training
Day-of-the-Week • Yield mgmt., distribution, delivery
• Decision support, skills & training
Mailings • Yield mgmt., distribution
• Manage peaks, yield mgmt.,
• Decision support, skills & training
Random Failures • Distribution, decision-support
8
The adaptable post spans many areas
9
Long Term RandomSeasonal Day of Week Mailings
Network
Modeling Yield Mgmt Planning
Distribution Planning
Business Analytics
Capacity Planning
Contingency Planning
Network
Rationalization
Asset Leasing
3rd Party
Collaboration
Sort and HoldMaintain
Situational
AwarenessDynamic
Route MgmtDelivery Pt Economics
Labour Planning and Scheduling
Skills and Training
Yield Management
Labour Scheduling
Five concrete initiatives to increase adaptability
� Hold and sort
� Dynamic routing
� Delivery point economics
� Yield management
� Labour scheduling
10
Policies
Initiatives
Tools
Plan
Schedule
Execute
Measure
Demand – capacity imbalance
� Postal networks operate in a environment
with significant variability where demand for
processing and delivery may not always be
aligned to the current capacity.
� This creates an imbalance that may result in
overtime labour, congestion or under-
utilisation, or unmet service standards.
11
Demand
Capacity
Processing/Deliver
1. Hold and Sort
� “Hold and Sort” deliberately takes advantage of
time
available to manage this imbalance
� Leverage service standards to hold mail for as
many
hours or days necessary to:
� Increase transport effectiveness
� Optimise sort centre machine utilisation
� Increase the density of mail delivered to a group
of addresses
12
Demand
Time available ?
Cost-savingalternatives?
Hold Process
1. Hold and Sort (continued)
� The consequence of this initiative may be to
introduce new products, tools, and technologies
� Establish an information-rich identification scheme that
represents critical mail piece, as well as advance ship
notices of large mailings
� Introduce products with flexible service commitments to
increase the density of mail delivered to a group of
addresses (or block-face)
� Implement distribution management tools to perform the
hold versus process decisions
� Introduce mail staging technologies that
enables storage and retrieval
13
2. Dynamic Routing
� Mail and parcel routing decisions can also be made
dynamically, to mitigate seasonality, day-of-the-week
fluctuations, or the variability due to large mailings.
� Routing is performed network-wide, or within specific
regions
� Distribution programs can be adapted, driving mail
through one facility or another
� Transport can be adjusted accordingly – perhaps
capacity is already there
� Why?
� Leverage under-utilised capacity, service time allowing
� Close a facility temporarily (day or shift, for
maintenance)
� Consolidate mail streams to reduce costs and
improve efficiency
14
2. Dynamic Routing (Continued)
� Needs good routing tools
� Network models to balance workload
� Quickly invoke or construct and put in place
alternative sort plans
� Ability to evaluate transport needs
� Adaptability is achieved gradually, e.g., start
with seasonal, weekly plan changes and
gradually evolve to daily plan changes
� Key success factors are:
� An information-rich environment, and
� A highly flexible organizational structure
15
3. Delivery Point Economics
16
� Delivery routes can be adapted to
optimize the density of mail delivered per address
� Hold mail for delivery when
economically attractive
� Develop specific mail products to
support delivery point economic
� Shift the focus to ‘any-day delivery’ vs.
‘five or six day delivery’.
� Skip some delivery points while meeting
service requirements
3. Delivery Point Economics (Continued)
17
� Information requirements
> medium/high
� Item level identification
� Smart network and delivery planning tools
� High degree of operational flexibility
� Flexible staging of mail
� Crew-based delivery workforce
� Introduces a strong information
management discipline and improves the
operational flexibility
4. Yield Management
� Yield management is the process of
understanding, anticipating, and influencing
customer behavior to maximize yield or
profits from the processing and delivery
capacity
� Daily processing and delivery capacity are
perishable resources to be optimized.
� Commonly used in airlines and hotels
� Pricing policies for large mailings would
take into account available network
capacity based on day-of-the-week or
seasonality.
18
4. Yield Management (Continued)
� Requires:
� Good costing & yield management models
� Mailing reservation/e-manifest system
with accurate production plans
(coupled with dynamic routing)
� Mail pickup program
� Pricing flexibility outside of USO
� Information requirements > medium
� Good historical averages can be used
� Capacity and network impacts must be
easily evaluated
� Pricing must be offered beforehand
19
5. Advanced Labour Management
� Advanced labour management initiatives
will help posts be more adaptable and
transition from fixed to variable-cost
operations
� Methods to aligned labour to the
variability in demand:
� Crew scheduling
� Bids of qualified workers to specific
operations/shifts
� Variable labor assignment
� Fully utilize the flexibility that exists in the
labour force
20
5. Advanced Labor Management (Continued)
� Requires
� Ability to affect work assignments
� Part-time workers
� Scattered shifts
� Integrated labour & operations planning system,
and other advanced modeling techniques
� Information requirements > medium to high
� Understanding
� Work rules
� Labour costs for each task
� Labour productivity functions by work center
� Projecting short to medium term volumes
21
In Summary
� The commercial sector is driving cost out by being increasingly agile and
adaptable
� Complexity of postal network and operations has kept them static
� Significant opportunities to adapt
� Infrastructure (Long-term changes in volume/mix)
� Distribution (Medium & short term)
� Delivery (Medium & short term)
� Information
� Historical: forecasting & simulation tools, business analytics
� Mailer data: advanced planning, distribution & routing tools
� Real time: Situational awareness, operations control
� Mailpiece identification: real-time decision support, business analytics
22
Next Steps
Diagnostic
� Do you know how variable your demand and operations are?
� How adaptable is your operation?
� How often do you adapt your infrastructure?
� How often do you revise your distribution plans?
� Do you have the proper tools & methods for each type of variability?
Roadmap
� Improve understanding of levels/impacts of variability in the enterprise
� Identify and prioritise initiatives to increase adaptability
� Acquire data and tools, develop skills
23
24
> insight > action > transformation