Develop a Strategy to Optimize the Postal Network for Customer Value, Pricing, Security and Reliability
Recommendation Recap
The October 2001 report of the Mailing Industry Task Force urged the industry and the Postal Service jointly to develop a strategy to optimize the total postal network so that customers receive the best value and pricing with the assurance of security and reliability.
Last fall, the Task Force concluded the combined USPS-private sector postal network should be
configured in a way that encourages the mailing industry to present mail at that point in the postal stream where the USPS and the industry operate in combination with maximum efficiency.
The Task Force, as a result, made two decisions going forward. First, that it would embrace the Postal Service’s Network Integration and Alignment (NIA) project, which has a charter to create a flexible logistics network that reduces Postal Service and customers’ costs, increases overall operational effectiveness,
and improves consistency of service, as the initiative most likely to achieve this recommendation’s objective. Second, that it would integrate the work being done by members on mail preparation and entry optimization with the network committee’s efforts, to ensure that both industry teams worked towards complementary solutions. The Task Force applauded the Postal Service’s decision to include in its April 2002 Transformation Plan a recommendation to “redesign the postal logistics network” by optimizing the location and number
of processing centers and transportation nodes.
“The NIA network model will be a powerful tool for decisionmaking,” commented Task Force Steering Committee member William Davis, Chairman and CEO of R.R. Donnelley. “With it, the Postal Service should be able to plan how to reconfigure its network in ways that will provide significant benefits to our industry, the Service itself, and the American people.”
Task Force Progress
During the late spring and summer, the Postal Service conducted a series of workshops with key postal and mailing industry stakeholders to develop various strategic scenarios to model. The objective of the modeling process is to analyze costs, capacities, and volume flows for each mail processing facility. These models will also determine which facilities remain viable and necessary within the future infrastructure and what distribution and transportation roles will be performed by those facilities that remain as parts of an optimal, fully integrated network. The eventual findings will support a set of recommendations on how to redefine the network — a blueprint for future network operations management.
In its deliberations, the Task Force cautioned Postal Service executives to make certain that postal network optimization didn’t result in external mailing network sub-optimization. “We want to make sure that the Postal Service is looking at locations where mailers or partners have their plants,” noted Task Force co-chairman Michael Critelli.
“The goal is to reduce total system-wide costs, both for the Postal Service and our customers,” commented USPS NIA manager Pranab Shah.
One benefit to the mailing industry may be enhanced Postal Service ability to accurately identify and quantify impacts of alternative work-share concepts within a simulated environment. “The opportunity for streamlining is there,” stated Deputy Postmaster General John Nolan, co-chairman of the Task Force. “We have to seize the day, and understand that it’s the right thing to do.”
Future Actions
Additional Modeling and Initial Recommendations. Scenarios tested on the national models will be validated
in early fall through additional tests using regional simulation models. Those validated findings will then be used by the Postal Service in determining its first set of network optimization recommendations, which are tentatively planned to be made public in November. The Task Force will provide feedback and commentary on those recommendations, when they are presented.
Network Optimization Committee Membership
The Task Force committee includes representatives from R.R. Donnelley, ADVO, Advance Presort Services, Inc., Automated Data Processing, Capital One, Lockheed Martin, Mid-America Mailers, Quad Graphics, Quebecor World, Time, Inc., Gruner & Jahr, McGraw Hill, Time Customer Service, Inc., and the PSI Group. The committee is co-chaired by William Davis, Chairman and CEO of R.R. Donnelley and by John Rapp, Senior Vice President, Operations of the United States Postal Service.