1. Developing Postal PlatformsWorking with the private sector BERNARD MARKOWICZ AND PIERRE KACHA decision/analysis partners LLCThe concept of platformT he International Postal Corporation (IPC) and the USPS’ Office of InspectorGeneral (OIG) have bothrecently shown interest in theconcept of digital platforms andtheir applicability to the postalworld. Professor Marshall VanAlstyne, Associate Professor ofinformation economics atBoston University/MIT, providedboth organizations with over-views of his research in thisarea. Typical examples of digitalplatforms include desktop oper-ating systems such as UNIX,Mac and Windows; PDAs such as Users, the demand side. These are point for the developers and thePalm, Psion or Newton; game the target consumers of the platform users.consoles; payment systems; and solutions and services.mobile devices such as iPhone, Sponsors. Sponsors are usuallyAndroid, Symbian or Blackberry. Solution developers, the supply responsible for providing the over-The success of these platforms has side. They provide services that at- all organizing structure for a plat-relied on the presence of networks tract users to the platform. form, its rules and governance.of users and providers, and This may include the original de-common components that create Providers. The Microsoft Windows sign of the platform and control ofsustainable eco-systems. operating system was mainly pro- its underlying technology and the vided to users by PC manufacturers overall intellectual property rights.Fig. 1 on the next page shows the when they acquired their comput- A sponsor’s objective is to makefour key stakeholders of a platform ers, not direct by Microsoft. other participants see how they areand its supporting eco-system1. Providers are typically the contact better off by being part of the1 Eisenmann, T, Parker, G. & Van Alstyne, M (2009) "Opening Platforms: How, When & Why" Ch 6 in Platforms, markets and innovation, A. Gawer (editor) Edward Elgar Publishing pp 131-162. Reprinted from the February 2012 Edition of the Mail & Express Review, Post & Parcel.
2. system rather than outside of it. formed within the company. Face- opening the postal infrastructure to What renders a platform suc- book, on the other hand, made the privately sponsored and operatedcessful is the network effect. Users decision to open itself to outside ap- solutions would represent a moreare attracted to the platform because plications and developers. A com- significant opportunity for posts,of the innovative solutions it makes parison between the two platforms introducing the private sector to shows that Facebook’s number support a strategy that will be lessFigure 1 of users shot up considerably risky, more innovative, and more compared to MySpace once successful. Solution they decided to do this. Users Developers Less risky. By opening up the postal Private participation in platform to the private sector, posts postal solutions will limit the amount of capital re- Providers Posts around the world quired to develop new solutions and are confronted with significant new services that may sometimes Sponsor challenges caused by the de- bring disappointing results. This cline in traditional mail vol- frees them to use their capital and umes and competition from resources for critical network infra- private operators. Posts need to structure and platform investments.available to them. Entrepreneurs and develop strategies that create newsolution developers are attracted to sources of revenue, yet maintain More innovative. Private participa-the platform because of the poten- the essential role of the post in tion will bring more innovation andtially lucrative number of users look- society. experimentation. Control of the plat-ing for solutions and value. These Of course posts already oper- form by postal operators will ensuredesirable network effects do not hap- ate platforms, mainly physical dis- a public sector orientation, whilepen by chance. They are the result of tribution platforms, sometimes cou- opening it to the private sector willwell engineered, well designed rules pled with banking services. The bring in innovation and drive. Thisupon which these platforms are built, challenge is to gain access to new will bring new thinking, new domainand which encourage solution devel- platforms and to new sources of expertise (for instance, in depthopers to bring their innovative ideas revenue. Several posts have in- knowledge of specific growing mar-and energy to a platform. These deed developed solutions. A good kets such as health care) and newrules basically open the platform to example is Swiss Post, as its CEO experiences and qualifications.outside private investors by sharing explains elsewhere in this issue ofrevenue and intellectual property, the Review. Such solutions areand by providing the right amount of offered and managed by thecentral development and strategic post itself, and integrate with itsguidance. distribution network and plat- Research shows that the level of form. Development of such solu-openness in governance rules plays tions represents an importantan important role in the success of and positive step for posts, withthe platform. For instance, the My- the promise of new customers,Space social network was a closed and increased revenues fromplatform where management existing ones.required all development to be per- We believe, however, thatReprinted from the February 2012 Edition of the Mail & Express Review, Post & Parcel.
3. More successful. This strategy,which reduces risk and increasesinnovation, will ultimately result innew value added services that com-plement the primary mission of thepost, and, ideally, create networkeffects that bring more users andsolution providers to the platform,thus increasing revenue.Strategy for the introduction ofnew solutions The success of the strategy toopen the infrastructure to private so-lutions will depend, in part, on thetypes of services and solutions tar- the same time, claiming the utmost scenarios, however, revenues couldgeted by the post and its private respect for privacy on the one hand, be generated by third parties payingpartners. These solutions can but monetizing it on the other. for information, or gathered from therange from services that exploit the Posts will need to take an ag- receiver, especially if the servicesofficial, universal nature of postal gressive approach to the adoption provide information or value theservices, to those that leverage the of new services in order to allow for receivers are requesting and arecommercial value of the information the creation of network effects. This willing to pay for.that can be collected about cus- would include offering depth andtomers and users. breadth of services from the outset. Sample solutions The official, universal nature of For instance, if offering government Below is a list of possible solu-the postal service evokes services support services, these should tions that would open up the postalsuch as digital alternatives or com- cover a wide range of popular platform to private participation.plements to mail distribution. Oth- needs spreading over many gov-ers include electronic government ernment agencies. If nascent or e-Gov/e-Gov Lite. Posts can lever-services, and serving as an official partial solutions already exist, they age their privileged relationships withinterface between government and should be integrated into the new public agencies and with citizens toits citizens. Maintaining information platform offering. offer support with administrativeprivacy is critical to these types of Another tactic is to work with high formalities, helping citizens interfacesolutions. At the other end of the brand groups of users and solution with government agencies, request-spectrum are applications that try to developers to gain instant approval ing, gathering and submitting recordsleverage information about cus- and traction, and, again, generate and forms to the right place on theirtomers that would enable discovery network effects. Co-opting high behalf. This is sometimes referred toof their preferences by analyzing brands is also a way to prevent them as e-Gov Lite because it does notthe nature and content of mail and from offering competitive services. require significant governmentalpackages and thereby exploiting As Professor Van Alstyne points process redesign. These servicesthe so-called “Big Data”. It would be out, postal pricing relies almost al- can be developed and managed bydifficult for a postal operator to sup- ways on the sender paying for ship- a private entity within the postal net-ply these two types of solutions at ping services. Under new solution work, as is the case in Lebanon. The Reprinted from the February 2012 Edition of the Mail & Express Review, Post & Parcel.
4. solution leverages existing retail out- gian and Finnish posts have devel- and their preferences, focus on spe-lets, the postal network, and payment oped such services, with varying cific customer segments, mergesystems already in place. A software degrees of customer acceptance. transactional and advertising mail, orapplication can be used to automate Canada Post has developed e-Post, take advantage of available space.and track requests, and break down in part, for users to receive bank These solution providers could helpeach type of service to its workflow statements, utility and credit card design campaigns, mailing, mail pro-components to track progress, and bills, and similar transactional corre- duction, and multichannel marketingmake it easier to perform. spondence. Our approach would for large as well as small businesses. solicit the private sector to come up Postal operator data could help theseE-commerce. Some posts, such as with solutions already developed or solution providers identify and targetSaudi Arabia, have developed partly developed, and jointly market their customers, manage addresse-commerce platforms, or, like them; and require the postal operator lists, and create mailings, which, inCanada Post with BorderFree, to provide infrastructural services turn, would generate traffic andintegrated e-commerce more such as user authentication, informa- additional revenues.closely with their core business. tion privacy and data security.In a private sector based approach, Next stepsposts enable private companies to Custom logistics. Posts can offer Posts interested in pursuing aintegrate more fully not only by custom logistics services to com- platform approach need to planexchanging information, but also plement their regular distribution their strategy carefully. They mustthrough opening up the postal mission. In our approach, operators develop the vision, define the solu-physical distribution network in such open their distribution platforms with tion focus areas, and specify theareas as integrated returns process- on and off ramps at various points business rules that will set the foun-ing; determination of fully landed in the postal distribution process. dation for content, revenue andcosts for dutiable shipments; track, Private companies can process re- intellectual property sharing. Focustrace and hold; online invoicing and placement parts through the postal areas for solutions should be care-payments; customer service; and infrastructure, or store kits within fully evaluated, based on individualbusiness services such as storage, large postal plants, then assemble and business needs, the competi-kitting, labeling and environmental them, repack them or re-label them tive situation, and the legislativedisposal of spoiled items. within the network. Solutions could environment. Posts should then leverage all elements of the distribu- engage in a campaign to identifye-Mailbox/e-Lockbox. Posts have tion infrastructure, and address the potential private players, and put intalked about providing digital services specific needs of selected industrial place a replicable process to evalu-such as secure email for the purpose sectors such as drug distribution, ate their proposed solutions.of converting physical mail to digital, luxury items, perishable goods, etc. Finally, strict performance measuresintegrating personalized multimedia in should be established to determinemarketing campaigns, providing AdMail/TransPromo. The post if and when failing solutions shouldsecure storage and archival of high encourages private innovators to be eliminated.value documents, and supporting develop advertising solutions thate-government services. The Norwe- leverage information about customersdecision/analysis partners headed a workshop for OIG on digital platforms with Professor van Alstyne in November 2011, as part of a study on the digital divide. Bernard Markowicz firstname.lastname@example.org I Pierre Kacha email@example.com Please reach out to the authors with comments and questions: decision/analysis partners, LLC 10400 Eaton Place, Suite 315 Fairfax, Virginia 22030 USA I 1.703.691.0380 I www.decisionanalysis.net
9. Modeling & Simulation for Decision-SupportAT A GLANCE: decision/analysis partners offers deep technical competence in modeling andD/AP’S MODELING EXPERTISE simulation in support of complex postal, mailing and shipping projects,HELPS EXECUTIVES MITIGATERISKS ASSOCIATED WITH including network and process modeling for posts and larger distributionCOMPLEX BUSINESS DECISIONS. organizations involving complex material handling, business processes and/orTHIS INCLUDES: distribution rules. RATIONALIZATION AND SIMPLIFICATION OF Modeling & Simulation to Mitigate Risk in Decision- DISTRIBUTION NETWORK Making CAPITAL BUDGETING FOR The proper evaluation of alternatives and their consequences is a necessary ACQUISITION OF MAJOR TECHNOLOGY SOLUTIONS step in the mitigation of risks associated with any major operational decision. Modeling and simulation leverage robust analytical techniques that bring EVALUATION OF ALTERNATIVE TECHNOLOGY managers insights pertaining to each option. Modeling and simulation reduce DESIGNS the cost and time associated with the evaluation of alternatives and with overall decision making. decision/analysis partners brings strong expertise in the OPTIMAL STAFFING FOR MISSION CRITICAL modeling of complex business situations in the postal, mailing and shipping PROCESSES domain under rapid turnaround. IMPACTS OF VARIABLE LEVELS OF SERVICE ON Broad Range of Applications LABOR, PROCESSING AND TRANSPORTATION COSTS The following are example of the application of modeling & simulation in decision/analysis partners projects: OPERATING COSTS REDUCTION THROUGH 1. A complex mail distribution network model to simulate processing network DYNAMIC OPERATIONS alternatives, and evaluate alternative distribution scenarios, SCHEDULING 2. A capacity requirement analysis model to justify the procurement of mail processing equipment for mail and parcels processing centers, 3. An operational model to determine staffing requirements in a mail processing center during mission-critical mail dispatch operations, 4. A material handling model to evaluate design alternatives for tray handling systems in a new lettermail processing center,
10. 5. A model to dynamically schedule mail processing operations to optimize resources requirements. 6. An enterprise-wide model to evaluate levels of service impacts on operational costs – labor, processing, transportation, 7. A model to optimize bundling specifications for publications and flats to reduce processing and labor costs, 8. A model to evaluate the adequacy of a processing center parking lot prior to the processing center expansion. decision/analysis partners has also supported executive decision-making by designing and developing simulation models for other industries, including minerals mining, airport baggage systems, batch and job shop manufacturing, and health care. Building on the deep talent of decision/analysis partners, end users are provided with tools to support "what if" experimentation, and evaluate the risks associated with each outcome using dashboard summaries and, when needed, full 3D visualization. About decision/analysis partners decision/analysis partners is an independent technical and management advisory services firm offering operations management, business strategy, market analysis and technology consulting services in the postal, shipping and mailing industry.OUR EXPERIENCE: Our approach uses sound and proven analytical methodologies to develop,DECISION/ANALYSIS PARTNERS evaluate, and help implement viable business solutions. Our team includesHAS SIGNIFICANT EXPERIENCE technical and management consultants, systems engineers, business architects,ASSISTING AND TRANSFORMING postal technologists, and postal operations managers. We have led major postalPOSTAL ORGANIZATIONS AND and logistics enterprise transformation initiatives.SUPPLIERS OF POSTAL Our company is based in Fairfax, Virginia, outside Washington, DC, and inSOLUTIONS & TECHNOLOGIES Brussels, Belgium. We deliver advisory services worldwide.WORLDWIDE.
11. Postal Network ManagementAT A GLANCE: decision/analysis partners offers practical network management advice and assistance to postal organizations, ranging from smaller posts with one centralD/AP OFFERS A COMPLETE sort center to large organizations requiring sophisticated automation andRANGE OF POSTAL, SHIPPING mechanization.AND MAILING NETWORKMANAGEMENT ADVISORYSERVICES, INCLUDING: Distribution Strategy decision/analysis partners (d/ap) helps postal operators devise an effective• DISTRIBUTION STRATEGY TO EVALUATE NETWORK distribution strategy by optimizing the number of sorting centers, balancing CONFIGURATIONS, time and transport versus economies of scale and scope. d/ap maintains a mid-• NETWORK OPTIMIZATION TO size post comprehensive simulation model (ModelPost) and has developed BALANCE SORT & complex models for large posts to evaluate the right distribution structure. TRANSPORT Network Optimization• SORT SCHEMES THAT MAXIMIZE ASSET UTILIZATION Using mail volumes projections, trends in weights and shapes, demographic• SURFACE TRANSPORTATION changes, costs of labor and transportation, we build and evaluate alternative CENTERS TO OPTIMIZE network distribution scenarios to optimize current network configurations, SURFACE TRANSPORT minimize operating costs while respecting service standards. We review these• TRANSPORTATION MODE scenarios with our client organizations and help them operationalize them. ANALYSIS TO ENSURE LOWEST COST TRANSPORT Sorting and Delivery Sequencing d/ap helps design sort schemes that leverage the entire distribution strategy while optimizing destination-point density, tray/container utilization, and transport utilization. Sort-strategies adapt to existing sorting equipment in order to reduce machine hours and associated labor hours, meet tie-out times, and maintain high asset utilization. Surface Transportation Centers Surface transport hub and spokes (HASPs) transshipment centers can play an important distribution role as part of an operator’s network strategy. Our approach integrates HASPs as part of the postal operator or shipper’s transport and network strategy to increase asset utilization and surface performance.
12. OUR EXPERIENCE: Transportation Mode AnalysisDECISION/ANALYSIS PARTNERSHAS SIGNIFICANT EXPERIENCE d/ap takes a principled approach to the design of a postal operator network,ASSISTING AND TRANSFORMING and the determination of transportation modes (air – road – rail) to shape the network, locate plants, minimize costs, and ensure service performance. ThePOSTAL ORGANIZATIONS AND processing and transportation components of the network are adjustedSUPPLIERS OF POSTAL together to reflect relative changes in labor, fuel costs, or improvements inSOLUTIONS & TECHNOLOGIES processing productivity to maintain the proper economic balance.WORLDWIDE. About decision/analysis partners decision/analysis partners is an independent technical and management advisory services firm offering operations management, business strategy, market analysis and technology consulting services in the postal, shipping and mailing industry. Our approach uses sound and proven analytical methodologies to develop, evaluate, and help implement viable business solutions. Our team includes technical and management consultants, systems engineers, business architects, postal technologists, and postal operations managers. We have led major postal and logistics enterprise transformation initiatives. Our company is based in Fairfax, Virginia, outside Washington, DC, and in Brussels, Belgium. We deliver advisory services worldwide.
13. Operations Management decision/analysis partners offers practical operations management advice and assistance to postal organizations, ranging from posts with few sort center toAT A GLANCE: large organizations requiring sophisticated automation and mechanization.D/AP OFFERS COMPREHENSIVE Operations Management StrategyPOSTAL, SHIPPING AND MAILINGOPERATIONS MANAGEMENT Achieving operational excellence requires a strong operations managementADVISORY SERVICES, INCLUDING: environment, disciplined, but also adaptable under changing conditions.• OPERATIONS MANAGEMENT decision/analysis partners has the expertise to implement such strong STRATEGY TO ENFORCE operational environments, starting with the creation of a strategy, and the DISCIPLINE AND ENABLE ADAPTABILITY. development of documents such as concept of operations (ConOps), Required Operational Capability (ROC), and Projected Operational Environment (POE).• PLANT MANAGEMENT AUDITS TO IMPLEMENT SHORT TERM These charter documents become the foundation for an integrated technology SERVICE IMPROVEMENTS AND and operations planning approach. LABOR-SAVING ACTIONS. Sortation Center & Mail Plant Management• NETWORK OPERATIONS CENTERS TO IMPROVE d/ap process specialists and industrial engineers conduct structured audits of AGILITY AND REAL-TIME RESPONSE. current plant operations, focusing on the root causes of service failures and costs buildups. We perform failure-modes and effects analysis (FMEA), and• OPTIMIZING 24-HOUR TIMELINES TO IMPROVE empirical analysis of key performance indicators (KPIs) to identify and SERVICE AND REDUCE COSTS. recommend short-term and long-term improvements, balancing service performance, and labor and machine utilization.D/AP HAS DEVELOPED A NUMBEROF PRACTICAL TOOLS TO HELPPOSTAL OPERATORS IMPROVE Network Operations CentersOPERATIONS: Network operations centers help postal organization become agile, balance• CAPACITY PLANNING asset utilization and manage network-wide emergencies. d/ap has designed• ALTERNATIVE SORT and developed network operations centers (NOC) for large postal organizations STRATEGIES from conceptualization to implementation. NOC support real-time decisions to• WORKFORCE PLANNING manage distribution flows, modulate large customer inductions, and coordinate• TIME-PHASED OPERATING transportation operations. SCHEDULES 24-hour Operating Timeline Analysis• MAIL-FLOW MODELS We review and optimize existing sorting plant operating plans, testing alternative operating scenarios by varying the distribution rules, sort-scheme combinations, critical entry times and/or clear times, etc. Labor requirements
14. are optimized for average and peak-volume days, and the plant’s 24-hour timeline is optimized and re-integrated into the overall network operating plan. Tools for Operations ManagementOUR EXPERIENCE: decision/analysis partners has developed a number of operations management and decision-support tools:DECISION/ANALYSIS PARTNERSHAS SIGNIFICANT EXPERIENCE • We have conducted capacity planning analyses to help a large operator plan its procurement budgets for letters and flats processingASSISTING AND TRANSFORMING equipment.POSTAL ORGANIZATIONS ANDSUPPLIERS OF POSTAL • We have tested alternative sort strategies to produce optimal 24-hourSOLUTIONS & TECHNOLOGIES operating plans under varying production scenarios (peak day, average day, day after holiday, etc.)WORLDWIDE. • We have developed workforce planning tools to align budgetary goals, set by headquarters, with operating requirements, defined by mail processing centers. • We have designed and developed simulation-based models to produce time-phased operating schedules based on actual demand and labor availability, to optimize machine- and labor-usage. • We have developed detailed mail-flow models to calculate staging and space requirements, by shift, for each work center within a plant. About decision/analysis partners decision/analysis partners is an independent technical and management advisory services firm offering operations management, business strategy, market analysis and technology consulting services in the postal, shipping and mailing industry. Our approach uses sound and proven analytical methodologies to develop, evaluate, and help implement viable business solutions. Our team includes technical and management consultants, systems engineers, business architects, postal technologists, and postal operations managers. We have led major postal and logistics enterprise transformation initiatives. Our company is based in Fairfax, Virginia, outside Washington, DC, and in Brussels, Belgium. We deliver advisory services worldwide.
15. Plant & Work Center Design decision/analysis partners helps organizations design and configure their letter- mail and parcel processing centers. We use best practices in plant & work center design by combining process management talent with industrialAT A GLANCE: engineering and material handling expertise to optimize our clients’ investments and operational costs.D/AP OFFERS COMPREHENSIVEPLANT & WORK CENTER DESIGNADVISORY SERVICES, INCLUDING: Sorting Center Mail Flow Analysis d/ap uses a proven top-down planning approach to design letter-mail and SORTING CENTER MAIL FLOW ANALYSIS parcel sorting centers that meet distribution requirements. Starting with a block layout analysis, we provide design alternatives and evaluate their DETAILED SORTING CENTER dimension and cost implications on the new or remodeled center, taking into DESIGN. account volume projections, product mix, containerization alternatives, network WORK CENTER DESIGN AND distribution alternatives, and inbound/outbound transportation options. OPTIMIZATION AUTOMATION & MATERIAL Detailed Sorting Center Design HANDLING EVALUATION We refine the plant design by developing detailed layouts in close collaboration TENDER DEVELOPMENT AND with our clients. Analyses include operational and material staging/handling PROPOSAL EVALUATION space requirements, freight yards and loading docks analyses, INDEPENDENT TESTING AND architectural/structural requirements, mechanical/electrical requirements, and EVALUATION OF SOFTWARE safety/environmental analyses. CAD renderings support the design selection. AND HARDWARE COMPONENTS AND SYSTEMS. Work Center Design & Optimization Detailed work center designs generate complete configurations of each work center based on staging and flow requirements of trays/tubs and containers throughout the 24-hour cycle. We also evaluate freight yards and loading docks, as well as sorting center employee parking lot to determine the availability of spaces based on projected shift activity. Each work center design is documented in a report that describes mail flows, equipment/supplies requirements, space allocation and labor requirements. Tender Development d/ap assists its clients with the development of tenders for the acquisition of automation and material handling systems, software, or integration services. We develop functional, technical, maintenance, and performance requirements.
16. We also develop independent cost estimates to facilitate the evaluation of tender cost proposals, perform vendor research, and develop tender strategies. Automation & Material Handling Tender Evaluation decision/analysis partners provides clients with technical evaluations of tenders for automated and mechanized equipment, complex systems, and material handling installations. We have specific experience with mail and parcel sorting equipment, storage systems, and other material handling systems. We follow a principled evaluation process which includes performance attributes, maintenance, installation, and various risk factors. Analytical techniques are used, if appropriate, and scores are presented to clients in the form of dashboards. Independent Testing & Verification d/ap has significant experience in developing and performing first-article test plans to verify that information systems and/or automation components satisfy tender technical specifications and requirements. We create test data orOUR EXPERIENCE: arrange for test material and schedule tests to minimize operational impact. We have performed tests in support of legal proceedings and comply to theDECISION/ANALYSIS PARTNERS highest standards of engineering and testing compliance.HAS SIGNIFICANT EXPERIENCEASSISTING AND TRANSFORMING About decision/analysis partnersPOSTAL ORGANIZATIONS AND decision/analysis partners is an independent technical and managementSUPPLIERS OF POSTAL advisory services firm offering operations management, business strategy,SOLUTIONS & TECHNOLOGIES market analysis and technology consulting services in the postal, shipping andWORLDWIDE. mailing industry. Our approach uses sound and proven analytical methodologies to develop and evaluate viable solutions for our clients. Our team includes technical and management consultants with significant postal experience, systems engineers, business architects, postal technologists, and postal operations managers. We have led major postal and logistics enterprise transformation initiatives. Our company is based in Fairfax, Virginia, outside Washington, DC, and in Brussels, Belgium. We deliver advisory services worldwide.
17. ttrt Simulation & Optimization of the UnitedAT A GLANCE: States Postal Network InfrastructureD/AP DEVELOPED A STATE-OF-THE-ART SIMULATION MODEL SITUATIONOF THE USPS OFFICE OF The Postal Service processing and transportation (P&T) network infrastructureINSPECTOR GENERAL TO is at a crossroads, following decades of mail volume growth and breakthroughEVALUATE FACILITY improvements in processing technology. With mail volumes predicted to dropCONSOLIDATION SCENARIOS. over the next decades and mail patterns continuing to evolve, the USPS Office of Inspector General tasked decision/analysis partners (d/ap) with conducting aTHE ANALYSIS SHOWS stakeholder survey and with developing an analytical model designed toTHAT SIGNIFICANT evaluate first order P&T infrastructure scenarios using forecasted mail volumes.CONSOLIDATION CAN BEACHIEVED THAT WOULDPROVIDE SIGNIFICANT APPROACHSAVINGS IN PROCESSING d/ap conducted key interviews in the mailing industry, and developed aCOSTS UNDER CERTAIN complex simulation model using Symphony REPAST, an open sourceDISTRIBUTION CONCEPTS. application. The model follows these steps: A pre-processor sets a number of plants and hubs across the U.S. as part of scenarios. For each scenario, the model routes forecasted mail through facilities to destination while evaluating a number of distribution concepts (mesh, hub-and-spoke). Labor costs are determined as a function of the volume of mail and labor productivity in each facility, and added to transport costs. RESULTS The analysis conducted with the simulation model shows that the number of Postal Service letter and flat processing plants could be substantially consolidated to attain significant lower processing costs with minimal impact on service performance. Compared to today’s 269 plants and 21 hubs, a scenario with 82 plants and 11 hubs shows minimum cost with some service degradation. A scenario with 172 plants and 18 hubs shows almost no service
18. degradation. According to stakeholders, an opportunity exists throughnetwork consolidation to better align services offered with network capabilitiesto ensure that each service’s speed and reliability are achieved. Baseline
19. ttrt Redesigning the Montreal Letter ProcessingAT A GLANCE: CenterD/AP PROVIDED A COMPL ET EREDESIGN OF T HE MONT REAL SITUATIONLETT ER PROCESSING CENT ER AS Canada Post Corporation (CPC) is undergoing a major modernization effortPART OF CANADA POST’ MAJOR to equip itself with new mail sequencing equipment. The deployment of theMODERNIZATIONS EFFORT. new equipment requires a complete redesign of major processing centers with minimal building alterations and in a way that minimizes impacts onCANADA POST TOOK OWNERSHIPOF T HE CAPACITY MODEL operations during the transition period.DEV ELOPED BY D/AP AS PART OF CPC retained the services of decision/analysis partners (d/ap) to helpTHE PROJECT. design a plant layout that would accommodate all operating equipment, reduce non-value added mail movements, and minimize labor costs. APPROACH decision/analysis partners developed a comprehensive approach consisting of the following major steps: Developed block layout diagrams to identify key work centers and dimension them based on projected workload Built a detailed simulation model of the operations to estimate capacity requirements (number and type of processing equipment, and labor requirements) Developed detailed work center designs to estimate spatial requirements at work centers to accommodate for staging areas Developed multiple layout scenarios to present alternative options. Evaluated each option in terms of impact on operation during transition, adherence to safety standards, material flows between work-centers, expansion and/or building renovation requirements, and related costs.
20. RESULTSCPC adopted one of the layouts proposed, and has taken ownership of thecapacity model built by d/ap to evaluate impacts of varying operationalalternatives. The model is now being used by CPC as a planning tool toestimate labor requirements.