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The Adaptable Post


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The Adaptable Post

  1. 1. 1Welcome to our Postal Webinar SeriesUse the chat window to ask questions during the presentation.We will answer them at the end.We will start in a few moments…
  2. 2. The Adaptable Post ConceptFebruary 28, 2013
  3. 3. Webinar outlineVariability in the postal networkFive concrete operational initiativesMoving forward3
  4. 4. 2011 2012Total mail volume delivered168,297,000,000159,859,000,000Drop 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 557,275,000 529,334,000Delivery points to residential and business addresses 151,492,000 152,146,550Increase in delivery addresses w respect to prioryear+636,530 +654,560Average mail volume delivered per address per day 3.7 3.5Longer Term Trends(USPS illustration)4
  5. 5. Sources of Postal Traffic VariabilityLong-term trendsSubstitutionEconomic situationSeasonal variabilityHolidaysOthersDay-of-the weekCustomer preferencesOperation cyclesMailingsLarge customer mailingsRandom failuresTransport delaysEquipment failureOther5
  6. 6. Capacity versus VariabilityTypically, postal operators run anetwork that is seldom adjusted,why?Complex network: impacts aredifficult to anticipateData not always availableMore often: No culture of“production planning & control”(PP&C) or analytics.What causes excessive costs in a“static” network?Equipment: Often sized for peakcapacityTransport: Low utilization and/orinadequate timingLabour: Utilization not aligned toworkloadSort plans: Bins, trays, containersare under-utilizedToo many delivery routes, poorlydefined.6
  7. 7. Interdependent functions acrosscustomers, resources, and partnersAdaptingtheNetworkMailers ProcessingDelivery TransportationVolume, Mix,SchedulesVolume,Mix,ScheduleMode,Capacity,ScheduleMode,Capacity,Schedule7Feed ForwardInfo
  8. 8. How can we adapt to cut costs?Variability Type What can be done?Long-term • Facilities, equipment sizing & configuration• Network, distribution, delivery, labour agreementsSeasonal • Distribution, transport, labour, delivery• Manage peaks, yield mgmt., 3rd parties• Forecasting, skills & trainingDay-of-the-Week • Yield mgmt., distribution, delivery• Decision support, skills & trainingMailings • Yield mgmt., distribution• Manage peaks, yield mgmt.,• Decision support, skills & trainingRandom Failures • Distribution, decision-support8
  9. 9. The adaptable post spans manyareas9Long Term RandomSeasonal Day of Week MailingsNetworkModeling Yield Mgmt PlanningDistribution PlanningBusiness AnalyticsCapacity PlanningContingency PlanningNetworkRationalizationAsset Leasing3rd PartyCollaborationSort and HoldMaintainSituationalAwarenessDynamicRoute MgmtDelivery Pt EconomicsLabour Planning and SchedulingSkills and TrainingYield ManagementLabour Scheduling
  10. 10. Five concrete initiativesto increase adaptabilityHold and sortDynamic routingDelivery point economicsYield managementLabour scheduling10PoliciesInitiativesToolsPlanScheduleExecuteMeasure
  11. 11. Demand – capacity imbalancePostal networks operate in a environmentwith significant variability where demand forprocessing and delivery may not always bealigned to the current capacity.This creates an imbalance that may result inovertime labour, congestion or under-utilisation, or unmet service standards.11DemandCapacityProcessing/Deliver
  12. 12. 1. Hold and Sort“Hold and Sort” deliberately takes advantage oftimeavailable to manage this imbalanceLeverage service standards to hold mail for asmanyhours or days necessary to:Increase transport effectivenessOptimise sort centre machine utilisationIncrease the density of mail delivered to a groupof addresses12DemandTimeavailable ?Cost-savingalternatives?Hold Process
  13. 13. 1. Hold and Sort (continued)The consequence of this initiative may be tointroduce new products, tools, and technologiesEstablish an information-rich identification scheme thatrepresents critical mail piece, as well as advance shipnotices of large mailingsIntroduce products with flexible service commitments toincrease the density of mail delivered to a group ofaddresses (or block-face)Implement distribution management tools to perform thehold versus process decisionsIntroduce mail staging technologies thatenables storage and retrieval13
  14. 14. 2. Dynamic RoutingMail and parcel routing decisions can also be madedynamically, to mitigate seasonality, day-of-the-weekfluctuations, or the variability due to large mailings.Routing is performed network-wide, or within specificregionsDistribution programs can be adapted, driving mailthrough one facility or anotherTransport can be adjusted accordingly – perhapscapacity is already thereWhy?Leverage under-utilised capacity, service time allowingClose a facility temporarily (day or shift, formaintenance)Consolidate mail streams to reduce costs andimprove efficiency14
  15. 15. 2. Dynamic Routing (Continued)Needs good routing toolsNetwork models to balance workloadQuickly invoke or construct and put in placealternative sort plansAbility to evaluate transport needsAdaptability is achieved gradually, e.g., startwith seasonal, weekly plan changes andgradually evolve to daily plan changesKey success factors are:An information-rich environment, andA highly flexible organizational structure15
  16. 16. 3. Delivery Point Economics16Delivery routes can be adapted tooptimize the density of maildelivered per addressHold mail for delivery wheneconomically attractiveDevelop specific mail products tosupport delivery point economicShift the focus to ‘any-day delivery’ vs.‘five or six day delivery’.Skip some delivery points while meetingservice requirements
  17. 17. 3. Delivery Point Economics(Continued)17Information requirements> medium/highItem level identificationSmart network and delivery planning toolsHigh degree of operational flexibilityFlexible staging of mailCrew-based delivery workforceIntroduces a strong informationmanagement discipline and improves theoperational flexibility
  18. 18. 4. Yield ManagementYield management is the process ofunderstanding, anticipating, and influencingcustomer behavior to maximize yield orprofits from the processing and deliverycapacityDaily processing and delivery capacity areperishable resources to be optimized.Commonly used in airlines and hotelsPricing policies for large mailings wouldtake into account available networkcapacity based on day-of-the-week orseasonality.18
  19. 19. 4. Yield Management (Continued)Requires:Good costing & yield management modelsMailing reservation/e-manifest systemwith accurate production plans(coupled with dynamic routing)Mail pickup programPricing flexibility outside of USOInformation requirements > mediumGood historical averages can be usedCapacity and network impacts must beeasily evaluatedPricing must be offered beforehand19
  20. 20. 5. Advanced Labour ManagementAdvanced labour management initiativeswill help posts be more adaptable andtransition from fixed to variable-costoperationsMethods to aligned labour to thevariability in demand:Crew schedulingBids of qualified workers to specificoperations/shiftsVariable labor assignmentFully utilize the flexibility that exists in thelabour force20
  21. 21. 5. Advanced Labor Management(Continued)RequiresAbility to affect work assignmentsPart-time workersScattered shiftsIntegrated labour & operations planning system,and other advanced modeling techniquesInformation requirements > medium to highUnderstandingWork rulesLabour costs for each taskLabour productivity functions by work centerProjecting short to medium term volumes21
  22. 22. In SummaryThe commercial sector is driving cost out by being increasingly agile andadaptableComplexity of postal network and operations has kept them staticSignificant opportunities to adaptInfrastructure (Long-term changes in volume/mix)Distribution (Medium & short term)Delivery (Medium & short term)InformationHistorical: forecasting & simulation tools, business analyticsMailer data: advanced planning, distribution & routing toolsReal time: Situational awareness, operations controlMailpiece identification: real-time decision support, business analytics22
  23. 23. Next StepsDiagnosticDo 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?RoadmapImprove understanding of levels/impacts of variability in the enterpriseIdentify and prioritise initiatives to increase adaptabilityAcquire data and tools, develop skills23
  24. 24. 24> insight > action > transformation