This document outlines initiatives to increase the adaptability of postal networks to address variability. It discusses holding mail to optimize processing and transport, using dynamic routing to leverage underused capacity, aligning delivery routes with mail density, applying yield management to pricing for large mailers, and advanced labor scheduling. The goal is to transition from fixed to variable capacity through information and operational flexibility.

1. Welcome to our Postal Webinar Series
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2. The Adaptable Post Concept
February 28, 2013

3. Webinar outline
Variability in the postal network
Five concrete operational initiatives
Moving forward
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4. Longer Term Trends
(USPS illustration)
2011 2012
168,297,000,00
Total mail volume delivered 159,859,000,000
0
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
+636,530 +654,560
year
Average mail volume delivered per address per day 3.7 3.5
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5. Sources of Postal Traffic Variability
Long-term trends Mailings
Substitution Large customer mailings
Economic situation Random failures
Seasonal variability Transport delays
Holidays Equipment failure
Others Other
Day-of-the week
Customer preferences
Operation cycles
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6. Capacity versus Variability
Typically, postal operators run a What causes excessive costs in a
network that is seldom adjusted, “static” network?
why? Equipment: Often sized for peak
Complex network: impacts are capacity
difficult to anticipate Transport: Low utilization and/or
Data not always available inadequate timing
More often: No culture of Labour: Utilization not aligned to
“production planning & control” workload
(PP&C) or analytics. Sort plans: Bins, trays, containers
are under-utilized
Too many delivery routes, poorly
defined.
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7. Interdependent functions across
customers, resources, and partners
Feed Forward
Info
Volume, Mix,
Mailers Processing
Schedules
Volume, Mix,
Mode, Capacity,
Adapting
Schedule
Schedule
the
Network
Delivery Transportation
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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
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9. The adaptable post spans many
areas
Long Term Seasonal Day of Week Mailings Random
Network Distribution Planning Contingency Planning
Modeling Yield Mgmt Planning
Skills and Training
Capacity Planning
Business Analytics Labour Planning and Scheduling
Network 3rd Party Sort and Hold
Maintain
Rationalization Collaboration Yield Management Situational
Dynamic Labour Scheduling Awareness
Asset Leasing Route Mgmt
Delivery Pt Economics
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10. Five concrete initiatives
to increase adaptability
Hold and sort Policies
Dynamic routing
Delivery point economics
Yield management Initiatives
Labour scheduling Plan
Measure Schedule
Tools
Execute
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11. Demand – capacity imbalance
Postal networks operate in a environment
with significant variability where demand for Demand
processing and delivery may not always be
aligned to the current capacity.
Processing/
This creates an imbalance that may result in Deliver
overtime labour, congestion or under-
utilisation, or unmet service standards. Capacity
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12. 1. Hold and Sort
“Hold and Sort” deliberately takes advantage of Demand
time
available to manage this imbalance
Time
Leverage service standards to hold mail for as available ?
many
hours or days necessary to:
Increase transport effectiveness Cost-saving
Optimise sort centre machine utilisation
alternatives?
Increase the density of mail delivered to a group
of addresses
Hold Process
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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
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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
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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
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16. 3. Delivery Point Economics
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
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17. 3. Delivery Point Economics
(Continued)
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
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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.
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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
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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
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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
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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
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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
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24. > insight > action > transformation
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