Costing Model for Postal Services
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Costing Model for Postal Services

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SVP Advisors presents the key features, capabilities and applications of the BULRIC model for Postal Services, which covers all relevant services and activities of the Postal Value Chain through a ...

SVP Advisors presents the key features, capabilities and applications of the BULRIC model for Postal Services, which covers all relevant services and activities of the Postal Value Chain through a comprehensive process parameterization and modelling.

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Costing Model for Postal Services Costing Model for Postal Services Presentation Transcript

  • Costing Model for Postal Services Model Capabilities and Applications March 2012
  • About SVP Advisors International Footprint  SVP Advisors is an international management consulting firm specialized in the broad technology sectors  We serve clients across four verticals: Strategy and Innovation, Regulation, Operations and Profitability, and Madrid (HQ) Corporate Finance Miami  Our international client base includes Bangalore (Associate Office) operators and equipment providers, technology firms, policy makers and regulators, international or multilateral organizations and financial institutions SVP Advisors Offices  We are present in developed and emerging markets, including Europe, SVP Advisors Assignm ents (18 countries) Latin America, Middle-East and India Previous Team Experience (24 countries)2
  • Introducing SVP Advisors’ Costing Model for Postal Services First-in-class Whole range of services  1st bottom-up (BU) LRIC model used for Postal  Incorporates traditional postal services as well services’ costing and regulation in the as courier, periodicals, etc… European Union Multi-Purpose Powerful Analysis  Applications include wholesale tariff setting,  Can carry out scenario and sensitivity Universal Service Obligations costing, price- analysis, geographical disaggregation, cost by squeeze tests, efficiency analysis, cost activity and driver forecasting Accurate Multiple Standards  Re-conciled with actual financials and  Can provide costs under different standards operational figures (hybrid approach) to (Historic, LRIC, LRIC+) provide a high level of confidence3
  • Model structured in three main blocks…  A Geographic Model defines the optimum routes between the different network nodes Routes Routes CALCULA- OUTPUT TION  The BU LRIC Model (core model) contains the core calculations for the determination of postal services’ costs INPUTS OUTPUTS  The Competition Tool (external module) establishes the cost and margins of postal services available in the market INPUTS OUTPUTS4
  • …and in a highly structured way for easy update and expansion General Architecture of SVP Advisors’ BU LRIC Model for Postal Services 1. INPUTS 2. ALLOCATION 3. DIMENSIONING 4. COSTING 5. OUTPUTS MATRIXES (ALLOCATION TO SERVICES) DEMAND By service OUTPUTS MAPPING NETWORK By geo-type By time TO DIMENSIONING DRIVERS By resource PROCESSES COSTING By cost category AND By service ALLOCATION By activity MAPPING By service TO Resource by activity EXTERNAL FACTORS ACTIVITIES By geo-type CHARTS GEO - MODEL LRIC analysis Graphs By route KPIs UNIT COSTS SCENARIO ANALYSIS By resource Sensitivity PARAMETERISATION List of services List of service groups List of resources List of cost types List of geo-types List of drivers List of Routes List of ext. Factors List of activities5 Source: SVP Advisors
  • The Geo Model automatically calculates optimum conveyance routes How the Geo Model works STEP 1. Geo-localization of postal offices GeoData  Actual geographical coordinates of all postal offices are introduced in the costing Model STEP 2. Real Distances and Times for national transport National  The model automatically calculates the real Distances (road/air) distances and times between any pair of Automatically main nodes integrated with cloud- based GIS and fully Local STEP 3. Real Distances and Times for local transport implemented Distances  The model automatically calculates the real (road) distances in MS Excel and times between any pair of local nodes STEP 4. Determination of Optimum Routes Optimum The model determines the optimum routes for conveyance routes  subject to constraints6 Source: SVP Advisors
  • All relevant Services and Activities of the Postal Value Chain are covered... General Overview of Operating Activities7 Source: SVP Advisors
  • ... through comprehensive process parameterization and modelling Illustrative Activity Workflow Illustrative Process Parameterization Manual sorting National outgoing 5,00% Out of specifications from the machine International outgoing 5,00% Out of specifications from the machine International incoming 10,00% Out of specifications from the machine Small packages (micro-parcels) 100,00% Newspapers, printed papers and books 100,00% Advertising mail (addressed) 100,00% Registered/insured 100,00% Automatic sorting National outgoing 95,00% International outgoing 95,00% International incoming 90,00% Standardized address National outgoing 80,00% International outgoing 50,00% International incoming 20,00% Non standardized address (video room recognition) National outgoing 20,00% International outgoing 20,00% International incoming 20,00% Ready to go after sorting program 1 National outgoing 50,00% International outgoing 45,00% International incoming 40,00% Note: values altered for confidentiality reasons8 Source: SVP Advisors
  • Powerful and user-friendly reporting… Total Cost by Activity Service Cost by Activity Others 100% 90% Delivery 80% 70% Inward 60% Sorting 50% Transport 40% 30% Outward Sorting 20% 10% 0% Collection Letter up Letter 21- Letter 51- Letter up Letter 21- Letter 51- Letter Letter Letter to 20g 50 g 100g to 20g 50 g 100g 101-200g 201-350g >350g BULK REGULAR Service Cost by Driver Unit Cost by Standard SERVICE CATEGORY Dom estic Letter Mail SERVICE SUBCATEGORY Regular ATC (FAC/CCA) Letter 101-200g Letter 201-350g Letter up to 20g Letter 51-100g Letter 21-50 g Letter >350g 2,07 LRIC UNIT COST (EUR cents) SERVICE TYPE Regular mail Bulk mail VALUE CHAIN SEGMENT COST DRIVER 30,77 32,14 45,77 62,49 94,81 320,94 1,21 Collection Letters-Number of item s 7,17 6,82 7,35 7,00 6,72 3,96 Collection Letters-Weight 1,03 1,63 4,22 8,38 16,10 29,24 0,92 Outward Sorting Letters-Number of item s 1,88 1,79 2,56 2,44 2,34 2,62 Outward Sorting Letters-Weight 0,36 0,57 1,14 2,27 4,35 14,62 0,67 Transport and Distribution Letters-Number of item s 0,17 0,16 0,17 0,16 0,16 0,17 Transport and Distribution Letters-Weight 0,22 0,36 0,93 1,83 3,52 11,83 0,42 0,36 0,31 Inward Sorting Letters-Number of item s 0,51 0,48 0,52 0,50 0,48 0,53 0,31 0,33 0,27 0,21 0,23 Inward Sorting Letters-Weight 0,30 0,47 1,21 2,41 4,63 15,55 0,12 0,13 0,18 0,09 0,10 0,15 Delivery Letters-Number of item s 12,11 11,52 12,41 11,82 11,35 71,52 Delivery Letters-Weight 1,92 3,05 7,87 15,62 29,99 129,06 Others Letters-Number of item s 4,38 4,16 4,48 4,27 4,10 4,59 Others Letters-Weight 0,71 1,12 2,91 5,77 11,08 37,23 Letter Letter Letter Letter Letter Letter Letter Letter Letter Total Letters-Number of items 26,23 24,94 27,50 26,21 25,15 83,40 up to 21-50 g 51- 101- 201- >350g up to 21-50 g 51- Total Letters-Weight 4,54 7,20 18,28 36,29 69,65 237,54 20g 100g 200g 350g 20g 100g Note: values altered for confidentiality reasons9 Source: SVP Advisors
  • …supporting a wide range of operational and regulatory applications Wholesale Tariffs USO Costing Unit Cost vs Post Items per capita URBAN A Uniform pricing policy URBAN C NON Post Items per Capita PROFITABLE URBAN B AREAS PROFITABLE RURAL D AREAS URBAN D RURAL C RURAL B RURAL A RURAL E Unit Cost R² = 0,8313 Operational Forecasting Competition Assessment 1,60 1,40 1,20 1,00 Price / Cost EUR 0,80 Price > ATC Predatory in exceptional cases 0,60 ATC LRIC < Price < ATC 0,40 Predatory if demonstrated intent LRIC* 0,20 Price < LRIC Presumed predatory - 500 1.000 1.500 2.000 NOTE*: LRIC as best proxy to Average 2.500 Avoidable Cost (AAC) Weight (g) Price Trend Reasonable Margin Trend Unit Cost LRIC Note: values altered for confidentiality reasons10 Source: SVP Advisors
  • For further information please contact:Julio VillalobosPartnerjulio.villalobos@svpadvisors.com SVP Advisors SL SVP Advisors LLC Almagro, 15, 5 One SE 3rd Avenue, 28010 Madrid 25th Floor,Miami Spain FL 33131,USA Tel: +34 91 310 28 95 | Fax: +34 91 141 28 11 Email: requests@svpadvisors.com