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Reduce Costs

Use of mail processing equipment (MPE) operating reports spread as a best practice, driven by the development of two systems, MPEWatch and RedMaint. The reports are used to manage machine performance in processing quality. MPEWatch is a Web-based tool that allows real-time scrutiny of equipment performance. The ability to monitor jams and stops allows rapid response to correct problems before they cause delays. RedMaint reports provide trend analyses of equipment issues.

Delivery
The Postal Service's largest cost center is delivery, accounting for 43 percent of expenses. Delivery is also where most network growth is occurring. Carrier letter mail preparation has been automated into delivery point sequence (DPS). The percentage of DPS letters has risen to more than 80 percent and continues to increase. The goal is to reach 95 percent by 2010. DPS for flats is less than two years away.

As automation reduces manual work, delivery managers have reduced costs by matching daily workload to workhours used, adjusting routes, and by following a rigorous standardization of best practices through a program called AM/SOP. This term stands for A.M. (morning) Standard Operating Procedures. Last year's completion of AM/SOP implementation and this year's gains in DPS letters are driving improvements in the efficiency of delivery operations. Deliveries per hour increased 1.4 percent. Delivery career complement is down as are the number of city routes. Delivery point growth is concentrated in lower cost rural and contract delivery, which accounted for 72 percent of the new deliveries. Nationally, rural and contract deliveries now comprise 31.5 percent of all possible deliveries.

However, additional savings opportunities remain. More effective control of office and street workhours could reduce as much as 14 million workhours (more than 35 percent of the planned 2007 field workhour reduction). Strategies for reducing delivery costs emphasize using AM/SOP standardization and street performance reports to reduce day-to-day office and street costs. Longerterm, more savings are available from using Carrier Optimal Routing software to adjust delivery routes and increase delivery efficiency. Enhancements to the Delivery Operations Information System (DOIS) software added features that support integrated operating plans. DOIS also provides a link to MYPostOffice improving customer-carrier interfaces on services like Carrier Pickup, redelivery, hold orders, and change of address forwarding. City Delivery operations initiated a new recognition program — The Best of the Best — that recognizes performance and promotes improvement.

Long Life Vehicles (LLV) will soon reach their original projected service life of 24 years. An economic and feasibility study was conducted to assess a possible LLV refurbishment project. The study concluded the cost to perform the refurbishment far outweighed the cost of a "fix as fails" strategy. The final phase of a requirement to place 15,000 additional postal-owned vehicles on rural routes is being met through the planned acquisition of 5,856 vehicles. These left-hand drive vehicles will replace current right-hand drive vehicles on city routes. The right-hand drive vehicles will then be reassigned to rural routes.

Retail
Similar to processing and delivery operations, retail has established standards based on best practices. Retail productivity increased, driven by the broader use of scheduling tools. Point of Service (POS) retail terminals provide detailed transaction data used to better align staffing with customer demand. Such tools are proving essential because increasing customer use of self-service, especially the Automated Postal Center, Priority Mail Flat-Rate Boxes, and PC Postage, is changing the nature of retail counter service. Despite a 3.2 percent decline in transactions for Express Mail, Priority Mail, and Parcel Post, the number of total retail transactions rose 2.8 percent, possibly attributable to the change in rates.

A single POS terminal vendor was established and 27,539 systems at 6,742 sites were successfully converted from another vendor. This conversion will result in more consistent customer service and will reduce support costs by roughly $70 million over 5 years.