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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…
The Adaptable Post Concept
February 28, 2013
Webinar outline
Variability in the postal network
Five concrete operational initiatives
Moving forward
3
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
> insight > action > transformation

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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