Friday, July 24, 2009

Could the USPS Turn a jobless recovery into a job full recovery?

With the Dow climbing above 9,000, it appears that investors believe that the financial panic that began with the Lehman bankruptcy is over. Much of the recovery in stock prices reflect 2nd quarter earnings reports that are coming in higher than analysts projected. Unfortunately for the general economy, and in particular the consumer-driven segments of the economy that the drives the Postal Service's business, the improvement in company earnings come from aggressive efforts to cut costs, capacity and employment to match lower demand levels and not from growth in sales and revenue. Similar stories exist about how small businesses are surving by cutting capacity and employment.

For both large and small businesses to grow out their current depressed demand levels, they need to find ways to attract new customers at a time that new customers are harder to find. The challenge of finding new customers is exasperated as companies large and small have increasingly restricted sales and marketing budgets due to declines in business profits.

With restricted sales and marketing budgets, businesses are turning to new technologies that appear to offer a nearly cost free means of marketing services. Unfortunately, the internet has not proven particularly effective for businesses trying to find new customers or launch new products. The problem is even greater for small business who find that using electronic alternatives to media such as yellow pages and local newspapers may be cheap but their technical skills may not be sufficient to effectively use the internet and the internet has found it most challenging to successfully serve the advertising needs of small businesses with limited geographic reach Furthermore, firms that create on-line advertising opportunities often find small business too expensive to serve for the money they have to spend.

Mail could now make a difference for businesses seeking the new customers necessary to start growing again but only if mail can improve its value proposition. Improving the value proposition means more than just lowering the price of postage. It means simplifying the service and the process of buying the service so that more customers can use it Right now the products toffered by the Postal Service and the private sector mailing industry do not fully address the needs of small business in terms of product, price, service, or convenience. Therefore, even though mail is the best means for small businesses to find new customers very few small businesses take full advantage of mail to grow their business.

For mail to become a driver of small business growth, the Postal Service needs to rethink its whole process of pricing, accepting, and setting standards for the type of mail that would provide small business access to potential customers. The Postal Regulatory Commission may have to rethink the process for creating new products that would allow for a roll out of a product from one geographic market until it offered nationwide through an experimental proceeding and not requiring an evaluation of the experiment until the roll out is complete.

For purposes of illustration, a product targeting small businesses could be called "Flat Rate Business Mail," and would be designed for infrequent mailers that find the whole process of going from conception to delivery too expensive or too complicated.

What would the new product have to have to both improve the prospects of small business and attract volume for the Postal Service from customers that have not used mail before?
  • Mailers would pay a single price for a tray of mail (1/2 or whole would be options) regardless of how many pieces are in the tray.
  • The standards for this mail have to be simple enough that any retail clerk or letter carrier can tell that they are met.
  • The Postal Service will provide all packaging which would include a tray and sleeve.
  • The product would not require a permit. Instead, postage will be paid using the same technology for click and ship and label would be placed on the tray or a retail clerk could apply postage on the tray at any retail outlet. The postage label would tell the Postal Service where in the system it should first be sorted.
  • Mailers would have two addressing options. 1) Mail pieces could have a typewritten address that is machine readable.The evaluation of machine readability has to be something that can be done visually by a nearly untrained observer. Address quality will not be checked but customers would be provided information as to how they can improve their list quality and why it is important.
  • Mailpieces could have a printed intelligent barcode in the address area that designates a geographic area as defined by a set of 5, 9 or 11 digit barcodes with the barcode designed in such a way that a machine would know that one piece is to be delivered to every address in the geographic area.
  • The mail can be tendered to either letter carriers or retail clerks who will make sure that every thing is copacetic.
  • Once inside the Postal Service, the tray skips facing and canceling and goes directly to the appropriate automation operation in its originating plant or if the tray is to be first handled elsewhere it is cross-docked without sortation.
  • In the plant the mail will be handled without delay. The service will be sold would be with the expectation of sortation at the same time as all collection mail received by the originating plant.
The key here is simplicity. Just like the flat-rate Priority Mail boxes work for small businesses because they are simple, so would this. For each new customer, the product allows a small business to find, it would give that business growth where it had none.

The challenge would be implementation. Given the potential for both new revenue and the need to get everything right, it would probably have to be rolled out from one geographic market to the next. At each stage in the roll out the product would be tweaked to make it simpler and less expensive for the customer to produce and purchase, the training of postal employees modified and eventually standardized and the operating issues would be dealt with until the lowest cost method of handling the mail in the system while meeting service are determined.

Such a roll out would require cooperation from a cross-functional team within the Post Office that would include labor representatives with advice provided by potential and existing small-business mailers. Labor should be a willing participant in this process as the product's success would result in more jobs throughout the system and their input, particularly in the early stages would help management develop the new operating processes and training required for each subsequent stage in the product roll out.

Given the challenges now facing the economy, the potential that mail has to jump-start business activity, and the risks that declining volumes from existing customers has to postal labor, management and the taxpayers it is time for all parties to think creatively. It may be time for all members of the postal community in the United States to take the words of George Barnard Shaw to heart, "Some men see things as they are and say why, I see things that never were and say why not."

7 comments:

Anonymous said...

Have you people ever seen how the Post Office really works? This idea is okay but we still need technology. We need to implement quicker processes.

Let me paint a picture. I am a carrier. I do not have access to any computers in the postal service. There are usually only 2 or three, not counting the ones the scanner is hooked up to. Only the managers and a couple of clerks are allowed to use them. When a customer makes a trasaction on the computer the letter carrier handed a sheet of paper from management telling me that a customer put in a hold order, moved, complained, etc. This is the way it is done and always has been. This idea that is being presented today does not advance our processes, it just keeps us where we are. In order for us to really make more revenue we need to keep up with the times. Doing the same thing (picking up a tray of mail and delivering it to a business)expecting a different result is simply insanity.

Anonymous said...

Gee, let me guess. The trays would be crammed full
of the thinnest letters that won't run on the machines.
The Post Office will wind up subsidizing the mass mailers who don't pay their way now. The mailers want to shift the costs of their business onto the Postal Service who will then cut costs and service to the
Public.

Karen said...

The biggest problem with the Post Office is that they are trying to save the Post Office from the bottom up. These trying times must be shared. If we were a tree we would fall over from being top heavy. Clear out the VP's of this and that. Then start clearing the layer upon layer of analyst who analyze our every move. They are sucking the very life out of our budget.

Anonymous said...

I am glad to see that someone out there sees the value in direct mail. This is a wonderful opportunity for the USPS to seek new customers and new products. However, I am afraid the USPS will not entertain this idea, because they are fixated on cutting costs through service reductions. ~~~~~~ I do agree with some of the other psoters who said the USPS need to reduce its bloated management staff. Craft employees have been reduced by over 100,000 since 2004, yet management positions have increased. I fear we will soon reach the point where there are more "chiefs" than there are "indians".

judy said...

As a small business owner we find that we get good results from direct mail. A dollar size ad in the yellow pages is now $600. That would buy a lot of postcards. We are talking about downsizing the ad and doing more direct mail.

Anonymous said...

If it comes to growing your business this way YOUR LOST.

Anonymous said...

This isn't a way of growing our business. This would cut costs for the mailer and double the cost of handling for the Post Office. If the mail isn't addressed properly and the barcode isn't readable by our machines, we have to handle at least 2 or 3 times, and for cheaper postage than business mailers get now?? We have procedures in place now to make sure the mail is accepted properly and that is only handled once, so we get cost effectiveness. This way only benefits the mailers.