Creating a profitable postal service

<!–Creating a profitable postal service–>It’s clear that what the postal industry desperately needs is a return to profitability. Plummeting mail volumes worldwide have led to talk of a ‘full-scale crisis’ in an industry that ‘nears collapse’. (The Economist)

Postal organizations looking for solutions may well have read a recent report by Accenture (Achieving high performance in the postal industry) and rated themselves against its high performer highlights. Among other things, high performers are said to:

  • Embrace the diversification of services
  • Maximize the opportunity in parcels and take full advantage of eCommerce trends
  • Have a consumer focus

These are excellent insights but I’d like to take them a step further. Given that postal organizations know what they should be doing, how should they set about doing it?

Any practical solution needs to acknowledge the fact that postal organizations face a dual challenge. They need to adjust to constantly declining mail volumes while still providing good value to their customers. And they need to rise to the challenge of exploiting high growth areas such as parcel delivery.

Let’s look at the first challenge: responding to a declining mail business.

Aligning cost structure with declining volumes shouldn’t be a one-off event. The kind of continuous alignment I’m thinking of (which also ensures that customers continue to receive good value) requires the support of an intelligent planning system. Such a system should allow strategists to explore a wide variety of what-if scenarios quickly and easily.

How many mail-processing centers are needed to maintain a certain level of service?

What would be the impact of re-negotiating working time directives with unions?

How many regional collection and delivery centers are required?

Taking declining volumes into account, how should sorting centers be consolidated?

How would regularly re-optimizing collection and delivery tours affect costs?

Answers to key questions such as these should be available immediately.

Then there are the operational challenges.

In the good old days, postal organizations could get away with fixed deliveries and collections. Today’s straitened circumstances require a much more flexible approach. Deliveries and collections should be constantly re-optimized (weekly or, perhaps, even daily) to maximize the utilization of personnel and resources.

An intelligent planning system would give postal organizations instant insight into how strategic plans translated into operational execution. For example, if scenarios at the strategic level suggested that certain mail-processing centers should be closed, the system would immediately adjust operational plans to ensure maximum efficiency.

And what about the challenge of seizing new opportunities in the parcel delivery business?

Once again, strategic and operational planning support from an intelligent system would enable postal organizations to respond rapidly and accurately to growing volumes in the parcel business.

More than that, it would enable them to combine their declining and growing businesses intelligently to maximize the utilization of expensive resources.

While the mail and parcel businesses are different, there are also significant opportunities to share resources. An intelligent planning system would provide insights into the best ways to:

  • Combine the collection and delivery of mail and parcels
  • Share the same workforce across the mail and parcel businesses, for example by handling mail and parcel processing in the same building
  • Use the same line hauls for mail and parcels

Our experience with postal organizations has demonstrated that it is indeed possible to create profitable postal services with the support of intelligent planning.  Call me an optimist but I expect to see many more postal organizations turn the corner as they rely on intelligent planning systems to add real value to both their declining and growing businesses.