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  • 1. Welcome to our Postal Webinar SeriesUse the chat window to ask questions during the presentation. We will answer them at the end. We will start in a few moments… 1
  • 2. The Adaptable Post Concept February 28, 2013
  • 3. Webinar outlineVariability in the postal networkFive concrete operational initiativesMoving forward 3
  • 4. Longer Term Trends (USPS illustration) 2011 2012 168,297,000,00Total mail volume delivered 159,859,000,000 0 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 557,275,000 529,334,000Delivery points to residential and business addresses 151,492,000 152,146,550 Increase in delivery addresses w respect to prior +636,530 +654,560 yearAverage mail volume delivered per address per day 3.7 3.5 4
  • 5. Sources of Postal Traffic VariabilityLong-term trends Mailings Substitution Large customer mailings Economic situation Random failuresSeasonal variability Transport delays Holidays Equipment failure Others OtherDay-of-the week Customer preferences Operation cycles 5
  • 6. Capacity versus VariabilityTypically, postal operators run a What causes excessive costs in anetwork that is seldom adjusted, “static” network?why? Equipment: Often sized for peak Complex network: impacts are capacity difficult to anticipate Transport: Low utilization and/or Data not always available inadequate timing More often: No culture of Labour: Utilization not aligned to “production planning & control” workload (PP&C) or analytics. Sort plans: Bins, trays, containers are under-utilized Too many delivery routes, poorly defined. 6
  • 7. Interdependent functions across customers, resources, and partners Feed Forward Info Volume, Mix,Mailers Processing Schedules Volume, Mix, Mode, Capacity, Adapting Schedule Schedule the NetworkDelivery Transportation 7
  • 8. How can we adapt to cut costs?Variability Type What can be done?Long-term • Facilities, equipment sizing & configuration • Network, distribution, delivery, labour agreementsSeasonal • Distribution, transport, labour, delivery • Manage peaks, yield mgmt., 3rd parties • Forecasting, skills & trainingDay-of-the-Week • Yield mgmt., distribution, delivery • Decision support, skills & trainingMailings • Yield mgmt., distribution • Manage peaks, yield mgmt., • Decision support, skills & trainingRandom Failures • Distribution, decision-support 8
  • 9. The adaptable post spans many areasLong Term Seasonal Day of Week Mailings Random Network Distribution Planning Contingency Planning Modeling Yield Mgmt Planning Skills and Training Capacity Planning Business Analytics Labour Planning and Scheduling Network 3rd Party Sort and Hold Maintain Rationalization Collaboration Yield Management Situational Dynamic Labour Scheduling Awareness Asset Leasing Route Mgmt Delivery Pt Economics 9
  • 10. Five concrete initiatives to increase adaptabilityHold and sort PoliciesDynamic routingDelivery point economicsYield management InitiativesLabour scheduling Plan Measure Schedule Tools Execute 10
  • 11. Demand – capacity imbalancePostal networks operate in a environmentwith significant variability where demand for Demandprocessing and delivery may not always bealigned to the current capacity. Processing/This creates an imbalance that may result in Deliverovertime labour, congestion or under-utilisation, or unmet service standards. Capacity 11
  • 12. 1. Hold and Sort“Hold and Sort” deliberately takes advantage of Demandtimeavailable to manage this imbalance TimeLeverage service standards to hold mail for as available ?manyhours or days necessary to: Increase transport effectiveness Cost-saving Optimise sort centre machine utilisation alternatives? Increase the density of mail delivered to a group of addresses Hold Process 12
  • 13. 1. Hold and Sort (continued)The consequence of this initiative may be tointroduce 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
  • 14. 2. Dynamic RoutingMail and parcel routing decisions can also be madedynamically, to mitigate seasonality, day-of-the-weekfluctuations, or the variability due to large mailings.Routing is performed network-wide, or within specificregions Distribution programs can be adapted, driving mail through one facility or another Transport can be adjusted accordingly – perhaps capacity is already thereWhy? 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
  • 15. 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 needsAdaptability is achieved gradually, e.g., startwith seasonal, weekly plan changes andgradually evolve to daily plan changesKey success factors are: An information-rich environment, and A highly flexible organizational structure 15
  • 16. 3. Delivery Point EconomicsDelivery routes can be adapted tooptimize the density of maildelivered per address Hold mail for delivery when economically attractive Develop specific mail products to support delivery point economicShift the focus to ‘any-day delivery’ vs.‘five or six day delivery’. Skip some delivery points while meeting service requirements 16
  • 17. 3. Delivery Point Economics (Continued)Information requirements> medium/high Item level identification Smart network and delivery planning toolsHigh degree of operational flexibility Flexible staging of mail Crew-based delivery workforceIntroduces a strong informationmanagement discipline and improves theoperational flexibility 17
  • 18. 4. Yield ManagementYield management is the process ofunderstanding, anticipating, and influencingcustomer behavior to maximize yield orprofits from the processing and deliverycapacity Daily processing and delivery capacity are perishable resources to be optimized. Commonly used in airlines and hotelsPricing policies for large mailings wouldtake into account available networkcapacity based on day-of-the-week orseasonality. 18
  • 19. 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 USOInformation requirements > medium Good historical averages can be used Capacity and network impacts must be easily evaluated Pricing must be offered beforehand 19
  • 20. 5. Advanced Labour ManagementAdvanced labour management initiativeswill help posts be more adaptable andtransition from fixed to variable-costoperationsMethods to aligned labour to thevariability in demand: Crew scheduling Bids of qualified workers to specific operations/shifts Variable labor assignmentFully utilize the flexibility that exists in thelabour force 20
  • 21. 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 techniquesInformation 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
  • 22. In SummaryThe commercial sector is driving cost out by being increasingly agile andadaptableComplexity of postal network and operations has kept them staticSignificant 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
  • 23. Next StepsDiagnostic 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 24