Deconstructing The Postal System 2002

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Deconstructing The Postal System 2002

  1. 1. [1] Deconstructing the Postal System Biasi / Pintsov 10th Conference on Postal and Delivery Economics Potsdam, Germany June 5-8, 2002 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  2. 2. Observations [2] 1985 - End of SLOCR era OCR recognition rate ~ 50% (with machine % Gain in printed adresses) Productivity 2000 OCR recognition rate ~ 90% $$ Investment in Automation • Current postal systems were not designed, they evolved • Requirements imposed 200 years ago are still in force but not necessarily applicable • Postal systems developed with a focus on operational efficiency, not distribution and marketing • Rewards of automation are reaching the point of diminishing returns 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  3. 3. Motivation [3] • A more efficient postal system should be possible if historical requirements were modified and market forces applied • New businesses would emerge under these conditions driven by different economic models 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  4. 4. Mail Communication System Analysis [4] • Identify users of mail communication system and their applications (why they are using mail as a communication tool) • Applications define requirements • Requirements define homogeneous mail streams • Requirements define services for user groups and mail streams 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  5. 5. User / Application / Requirements Analysis [5] Business Users Primarily to / from consumers TO: Cost sensitivity to postage & material (less to equipment & process) Applications – limited number HH SOHO BUS Transaction Statement HH 5.7B 1.5B 6.1B Direct Marketing Remittance Application Characteristics High volumes (mainly to consumers) FROM: SOHO 10B 10B 9B Computer generated Good address quality Regular, stable patterns BUS 86B 56B 5B Segment Requirements Total mail process control mailpieces / year Predictable delivery based on US estimates Cost controls (especially postage, high level usage of postal discounts) 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  6. 6. User / Application / Requirements Analysis [6] SOHO / HH Users Cost sensitivity to equipment & TO: software (less to postage & material) Applications – wide variety HH SOHO BUS Billing Correspondence HH 5.7B 1.5B 6.1B Direct marketing Application Characteristics FROM: SOHO 10B 10B 9B Low volumes, small batches Unpredictable timing Unreliable address quality* BUS 86B 56B 5B Segment Requirements Timely delivery mailpieces / year Identity- based services based on US estimates Cost * 80% of postal costs are associated with exception handling processes 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  7. 7. New Business Entities [7] Entry Points Exit Points Pick up at business location Delivery to business location ~ 20,000 large businesses Small number of entry & exit points High value Business Acceptance and Delivery SOHO / HH Acceptance & Delivery Mail Sorting (including transportation) 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  8. 8. New Business Entities [8] Entry Points Exit Points Drop off at retail outlet or street Delivery to destination or pickup letter box at PO Box ~ 130 million households & small businesses Open access with multiple unmanned entry and exit points Special services available Business Acceptance and Delivery SOHO / HH Acceptance and Delivery Mail Sorting (including transportation) 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  9. 9. New Business Entities [9] BUSINESS A&D SOHO / HH A&D SOHO / HH A&D Focus on Economies of Scale BUSINESS A&D State-of-the-Art Equipment Business Acceptance and Delivery SOHO / HH Acceptance and Delivery Mail Sorting (including transportation) 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  10. 10. Cooperative Model [10] Postal Processing Nodes acceptance sorting delivery Senders Receivers • Deconstructed postal network has multiple service providers for different functions • Senders can select the route of their physical items through the network using information to control the process 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  11. 11. Key Role of Information in the Cooperative Model [11] Postal Processing Nodes acceptance sorting delivery Senders Receivers Between Between senders and service service providers providers and recipients Among service providers Between sender and receiver Information flow is critical in cooperative model 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  12. 12. Information Types [12] Service Description Information from all providers about available services and related parameters • Stable service parameters - timing, geographic location, capacity as a function of price • Variable service parameters – contract terms, pricing 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  13. 13. Information Types [13] Service Description Dynamic Process Information about the progress of a mail piece within the system • Job information – number of pieces, services selected, business rules defined by mailer • Planned events – location of a mail piece within the system as desired by the mailer • Exception events 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  14. 14. Information Types [14] Electronic mail file sent to the postal Machine-readable node containing Information gathered codes on the mail piece unique references as part of postal (e.g. mailing label) to all mail items in processing activities the job Mail job process information is generated in several ways 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  15. 15. Information Types [15] Service Description Payment & Dynamic Accounting Process Information about the payment due, accounting and the payment itself • Quality control information for reporting and payment • Account reconciliation, dispute resolution • Accounting provided for services delivered to mailer or exchanged among providers 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  16. 16. Cooperative Model [16] Postal Processing Nodes acceptance sorting delivery Senders Receivers Internet Central “postal” node provides Postal Trusted Third Party services and Node information linkages 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  17. 17. Cooperative Model Observations [17] Standards and protocols are critical • Critical to smooth information flow • Industry standards and protocols are emerging – XML (eXtended Markup Language), UDDI (Universal Description & Discovery Integration), SOAP (Simple Object Access Protocol), WSDL (Web Services Description Language) Functionality of nodes determines configuration • Hardware may be PCs or Internet appliance (e.g. network enabled meter) • Software for management of the applications for business rules, job definitions, requests for service, accounting, etc. resides on the node 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  18. 18. Reaching an Equilibrium [18] Effective organization Broad variety of services Physical mail remains an important tool in the communication arsenal of businesses and individuals 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany
  19. 19. In Conclusion [19] • What kind of mail communication system would emerge if all artificial (regulatory) constraints are abandoned? • From a purely economical viewpoint, the system will evolve in the direction of a more logical organization of services / cost allocation and pricing • New models are feasible from a technical viewpoint – Information technology has reached the stage when meeting all technical requirements is possible and cost effective • Future research – What would happen when some combinations of external constraints are preserved? – How can the model be improved? – detailed economic analysis and comparison 10th Conference on Postal and Delivery Economics June 5-8, 2002 Potsdam, Germany

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