The Adaptable Post BERNARD MARKOWICZ AND PIERRE KACHA decision/analysis partners LLC e are all familiar with the pressures facing mostW posts in the last few years,including a steep decline in mail vol-ume and increased competition. Inmechanized operations, volume hasoften dropped faster than machinesand labor can be taken out. Postsneed to come up with an operatingstrategy that is adapted to thesenew mail patterns, including new ap-proaches to distribution and operat-ing plans. Industrialized posts have devel-oped highly automated technologiesto read addresses, and sort and se-quence letters and even small pack-ets. Operating plans provide the un-derlying discipline required toleverage the benefits of automation,and distribute and deliver the mailefficiently. Processing areas are de-fined, transport schedules are estab-lished, and deadlines for processingmail are set. These operatingschedules are refined over time, butthey remain essentially static andare changed infrequently. Laborschedules are often establishedbased on these static operatingplans. Today, excess labor and infra-structure associated with these Reprinted from the September 2011 Edition of the Mail & Express Review, Post & Parcel.
static plans are erasing some ofthe productivity gains achievedthrough automation in the lastthirty years.Inventory is our friend Every day, these static operat-ing plans push items through thesame time definite paths, consoli-dating mail through the sameplants, using the same primary sortprograms, towards the same deliv-ery preparation and final deliveryprocesses. When one examinesthe mail in each stream, one oftenfinds faster mail, such as first classmail in the U.S. co-mingled withslower mail, like U.S. standard mail,being processed in the same timewindows, and at the same speed.The proportion of slower class mailbeing hurried to its destinationfaster than necessary is increasing,as the proportion of faster first classmail keeps dropping. The additional amount of timeavailable to deliver standard mail,and sometimes the additional timealso available to deliver first class,could be used to perform a number that can take advantage of available • Yield management: the ability toof cost saving actions. For instance, information and time and generate work with mailers to take advan-delivery may be avoided to certain more cost effective routings. tage, like the airlines, of availablepoints on certain days, facilities may In the rest of this article, we ex- capacity.be bypassed on certain days, or amine some of these possible ac- • Advanced labor management:transport may be combined. Actions tions in the context of ‘the adaptable crew scheduling.may include holding and consolidat- post:’ing mail, or bypassing and rerouting • Dynamic network management: Dynamic network managementmail to forego processing, or trans- how mail flows can be managed The main concept is to deliber-port, and thereby create larger, more in near real time. ately take advantage of the time avail-economical batches. The main idea • Delivery point economics: how able to deliver each mail piece. Thisis to use information about mail and delivery operations can be con- means that the normal mail process-its characteristics to create an trolled together as a function of ing operations cycle does not applyadaptable operations environment volumes and service standards. automatically to each piece of mail,Reprinted from the September 2011 Edition of the Mail & Express Review, Post & Parcel.
Yield management is the process of understanding, anticipating and inﬂuencing consumer behavior in order to maximize yield or proﬁts from a ﬁxed, perishable resource.and that a piece of mail may be held ating plans in near real time. Sort in 1985. Yield management is theor diverted based on a number of fac- schemes and transport are then process of understanding, anticipatingtors. For instance, some mail in- adapted based on overall processing and influencing consumer behavior inducted on Monday may be held in in- costs. The operating plans find ways order to maximize yield or profits fromventory along the way to form larger to leverage network wide transport a fixed, perishable resource. Forbatches, provided that service com- and processing capacity, aiming to posts, the perishable resource is themitments are respected. Sort pro- maximize the operating efficiency of processing and delivery capacity ofgrams on automated equipment each plant in the network, and the the network on a given day. On somewould adapt from one day to another, transportation utilization on each days of the week, during somedriving mail through one facility in- route between plants. months of the year, there is additionalstead of another. Transport will also capacity because overall mail volumebe affected since mail will follow dif- Delivery point economics is lower. During or prior to holidays,ferent paths across the network on its Delivery point economics uses available capacity may be reduced,way to its destination mailbox. the same concept: short term deliv- and operators rely on more expensive Different degrees of flexibility can ery planning applications use de- overtime.be built into an operating environ- tailed information about the mail Using its capacity to anticipatement, and the system can be de- pipeline to create opportunities to re- mail volumes on a future given day,signed to react at different speeds. At duce delivery costs. Mail can be the postal operator would price itsfirst, opportunities to adapt from the held in the network, or at delivery available capacity to mailers accord-daily schedule can be implemented units, when distribution economics ingly, and invite them to take advan-on a repeatable weekly or monthly suggest and service standards per- tage of this capacity. On low volumebasis. Sort schemes and transport mit, so that delivery routes can be days, prices offered to mailers forschedules can be made to change shortened, skipped, or combined. advertising mail would go down topredictably from one day to another A similar concept is being tested reflect the availability of processingbecause of weekly or seasonal pat- in France by La Poste, where mail capacity. During high volume peri-terns. A post can then graduate to a carriers collaborate to manage deliv- ods, prices for advertising mailmore dynamic level of adaptation, for ery routes on a daily basis based on would go up to reflect the scarcity ofinstance when information about the availability of personnel and the capacity available. Mailers couldlarge mailings is integrated into oper- volume of mail to be distributed. reserve processing and delivery ca- Finnish Post has gone further, pacity ahead of time at pre-agreed emailing scans of physical mail prices, thus commirring to stable pieces to rural customers, then opti- and predictable mail flows. mizing rural deliveries of the physi- cal pieces every other week. The Advanced labor management objective is to leverage both mail de- Traditionally, postal operations livery capacity and the time avail- were made predictable by setting able to deliver each piece to create fixed labor schedules and rules that heavier delivery density and lower enabled postal managers to line up delivery costs per piece. predictable human resources. To- day, modern enterprises must tailor Yield management their human resources more pre- The concept of yield management cisely to the demands of their opera- was introduced by American Airlines tions, and to assign the appropriate Reprinted from the September 2011 Edition of the Mail & Express Review, Post & Parcel.
level of labor to meet the expectedworkload. Airlines and rail companies havelearned to assign the right level oflabor to the expected operationalworkload through crew scheduling.Under crew scheduling, qualifiedworkers bid for specific tours orcombinations of work shifts offeredby the company using a sophisti-cated software application that takesinto account seniority, skill levels, lo-cations where the work needs to beperformed, and labor agreements.Some programs even take into ac-count pairing of experienced work-ers with more junior members tocome up with balanced work teams.Labor rules at posts may have to beadjusted before crew scheduling canbe implemented, but airlines andrailroads have shown that this canbe done in a union environment.Next steps Industrialized posts have done engineering, network and opera- tices. Organize visits and discus-an amazing job of developing and tions planning, network manage- sions with other posts.introducing automation in the last ment, marketing and sales, labor • Outline and fund a number of ini-thirty years. Now, another revolution and facilities management. tiatives to gradually increase theis needed to extend these productiv- • Establish an internal measure of degree of adaptability, and meas-ity gains and further reduce costs adaptability by identifying various ure and report on progress.and increase performance: leverag- operational features and capabili- • Appoint an executive to take theing information about the mail ties and periodically reporting on lead in enabling the transforma-stream to find better and more cost progress. tion, with the authority and theeffective ways to route mail through • Outline an advanced operations manpower to execute the change.the network, every day. To move management strategy which in-forward with the concept of the corporates adaptability, and de-adaptable post, operators should velop an internal white paper to Please reach out to the authors withconsider the following steps: communicate the concept and comments and questions:• Examine, describe and evaluate roadmap. email@example.com Bernard Markowicz key internal capabilities and • Create a community of interest processes to determine how within the post to discuss proj- adaptable they are. These include ects, initiatives and best prac- firstname.lastname@example.org Pierre Kacha Reprinted from the September 2011 Edition of the Mail & Express Review, Post & Parcel.