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The Adaptable Post

  1. 1 Welcome to our Postal Webinar Series Use the chat window to ask questions during the presentation. We will answer them at the end. We will start in a few moments…
  2. The Adaptable Post Concept February 28, 2013
  3. Webinar outline Variability in the postal network Five concrete operational initiatives Moving forward 3
  4. 2011 2012 Total mail volume delivered 168,297,000,00 0 159,859,000,000 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 557,275,000 529,334,000 Delivery points to residential and business addresses 151,492,000 152,146,550 Increase in delivery addresses w respect to prior year +636,530 +654,560 Average mail volume delivered per address per day 3.7 3.5 Longer Term Trends (USPS illustration) 4
  5. Sources of Postal Traffic Variability Long-term trends Substitution Economic situation Seasonal variability Holidays Others Day-of-the week Customer preferences Operation cycles Mailings Large customer mailings Random failures Transport delays Equipment failure Other 5
  6. Capacity versus Variability Typically, postal operators run a network that is seldom adjusted, why? Complex network: impacts are difficult to anticipate Data not always available More often: No culture of “production planning & control” (PP&C) or analytics. What causes excessive costs in a “static” network? Equipment: Often sized for peak capacity Transport: Low utilization and/or inadequate timing Labour: Utilization not aligned to workload Sort plans: Bins, trays, containers are under-utilized Too many delivery routes, poorly defined. 6
  7. Interdependent functions across customers, resources, and partners Adapting the Network Mailers Processing Delivery Transportation Volume, Mix, Schedules Volume,Mix, Schedule Mode,Capacity, Schedule Mode,Capacity, Schedule 7 Feed Forward Info
  8. How can we adapt to cut costs? Variability Type What can be done? Long-term • Facilities, equipment sizing & configuration • Network, distribution, delivery, labour agreements Seasonal • Distribution, transport, labour, delivery • Manage peaks, yield mgmt., 3rd parties • Forecasting, skills & training Day-of-the-Week • Yield mgmt., distribution, delivery • Decision support, skills & training Mailings • Yield mgmt., distribution • Manage peaks, yield mgmt., • Decision support, skills & training Random Failures • Distribution, decision-support 8
  9. The adaptable post spans many areas 9 Long Term RandomSeasonal Day of Week Mailings Network Modeling Yield Mgmt Planning Distribution Planning Business Analytics Capacity Planning Contingency Planning Network Rationalization Asset Leasing 3rd Party Collaboration Sort and Hold Maintain Situational AwarenessDynamic Route Mgmt Delivery Pt Economics Labour Planning and Scheduling Skills and Training Yield Management Labour Scheduling
  10. Five concrete initiatives to increase adaptability Hold and sort Dynamic routing Delivery point economics Yield management Labour scheduling 10 Policies Initiatives Tools Plan Schedule Execute Measure
  11. Demand – capacity imbalance Postal networks operate in a environment with significant variability where demand for processing and delivery may not always be aligned to the current capacity. This creates an imbalance that may result in overtime labour, congestion or under- utilisation, or unmet service standards. 11 Demand Capacity Processing/ Deliver
  12. 1. Hold and Sort “Hold and Sort” deliberately takes advantage of time available to manage this imbalance Leverage service standards to hold mail for as many hours or days necessary to: Increase transport effectiveness Optimise sort centre machine utilisation Increase the density of mail delivered to a group of addresses 12 Demand Time available ? Cost-saving alternatives? Hold Process
  13. 1. Hold and Sort (continued) The consequence of this initiative may be to introduce 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 Routing Mail and parcel routing decisions can also be made dynamically, to mitigate seasonality, day-of-the-week fluctuations, or the variability due to large mailings. Routing is performed network-wide, or within specific regions Distribution programs can be adapted, driving mail through one facility or another Transport can be adjusted accordingly – perhaps capacity is already there Why? 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 needs Adaptability is achieved gradually, e.g., start with seasonal, weekly plan changes and gradually evolve to daily plan changes Key success factors are: An information-rich environment, and A highly flexible organizational structure 15
  16. 3. Delivery Point Economics 16 Delivery routes can be adapted to optimize the density of mail delivered per address Hold mail for delivery when economically attractive Develop specific mail products to support delivery point economic Shift the focus to ‘any-day delivery’ vs. ‘five or six day delivery’. Skip some delivery points while meeting service requirements
  17. 3. Delivery Point Economics (Continued) 17 Information requirements > medium/high Item level identification Smart network and delivery planning tools High degree of operational flexibility Flexible staging of mail Crew-based delivery workforce Introduces a strong information management discipline and improves the operational flexibility
  18. 4. Yield Management Yield management is the process of understanding, anticipating, and influencing customer behavior to maximize yield or profits from the processing and delivery capacity Daily processing and delivery capacity are perishable resources to be optimized. Commonly used in airlines and hotels Pricing policies for large mailings would take into account available network capacity based on day-of-the-week or seasonality. 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 USO Information 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 Management Advanced labour management initiatives will help posts be more adaptable and transition from fixed to variable-cost operations Methods to aligned labour to the variability in demand: Crew scheduling Bids of qualified workers to specific operations/shifts Variable labor assignment Fully utilize the flexibility that exists in the labour 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 techniques Information 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 Summary The commercial sector is driving cost out by being increasingly agile and adaptable Complexity of postal network and operations has kept them static Significant 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 Steps Diagnostic 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. 24 > insight > action > transformation