Conclusion

In the first year of the Strategic Transformation Plan 2006–2010, the Postal Service continued to produce the kind of results that began with Transformation in 2002. This was the seventh straight year of total factor productivity growth. Efforts to make products easier to use continued to pay dividends in customer interest and volume growth. Mailers joined with the Postal Service to begin tackling long-standing quality issues around barcodes, address lists, and mail preparation. And postal employees were more engaged than ever in the goal to achieve breakthrough performance.

2006 was a pivotal year in Transformation because it saw the first steps in several ambitious new strategies designed to recast the future of mail: Total mail visibility. Seamless acceptance. Automated flats sequencing. These and other strategies will require a completely new way of thinking about mail — how it is developed, priced, processed, tracked, delivered, measured, and marketed.

The Postal Service surpassed its revenue plan by increasing the convenience of core products and working hard to communicate the value of mail. To continue to grow, postal products must meet customer needs better than alternatives. Revenue strategies acknowledge that Internet competition is rapidly reshaping communications, with implications for all services. But the Internet is affecting all businesses, not just the Postal Service. Technological and market developments bring risk but also create new opportunities. DVDs by mail — now a mainstay for many consumers — could not exist without mail, and in fact did not exist at all a few short years ago. Other services such as Click-N-Ship and Carrier Pickup demonstrate that the Internet and postal delivery network are perfect complements to one another. The proliferation of Vote-by-Mail programs underscores the point that creative new applications for mail need not always come from new technology.

In 2006 the Postal Service's financial challenges came into sharp focus as inflation in fuel and benefits costs combined with higher-than-planned workhour use. It responded by limiting spending to essentials and by expanding standardization and process control. Improved data on mail flows brought new life to breakthrough productivity initiatives. Successful live-mail tests of the Flats Sequencing System were a preview of the next wave of automated processing, set for the next step when a pre-production machine is installed in a Northern Virginia plant this year.

In service, a quiet revolution is taking place. The same technologies creating new cost savings are helping to identify service problems at the source - in mail preparation, staffing, maintenance, and transportation. Managers are armed with unprecedented amounts of information and versatile new tools for correcting errors. Real-time information from intelligent barcodes is flagging trouble spots and clearing backlogs. Surface visibility scans are tracking mail within plants and transportation networks. Information is integrated across functions and plants to improve end-to-end service performance. Improved service quality is consistent across the nation. The variance between the best and lowest-scoring performance clusters is smaller than ever before.

The 700,000 men and women of the Postal Service are among the hardest-working, most dedicated employees in America. They are the heart of the brand, and the Postal Service is redoubling its effort to attract and retain high-quality employees with well-planned career opportunities and the training they need to be successful. The objective is for employees to be fully informed, innovative, motivated, and appropriately compensated for their contribution to organizational achievement.

At the time this Report was produced, new postal legislation had been passed by the House and Senate. The law will not alter these key strategies. In fact Strategic Transformation has well prepared the Postal Service for change. It will remain focused on the advice offered by stakeholders at the very start of the Transformation process: Stay focused on customers, service, and cost control. That's what the Postal Service did in 2006, and that's what it will continue to do in 2007.