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Reduce Costs

Preparation standards were also implemented that require Periodicals customers to identify non-presorted pieces and bundles for destinations served by First-Class Mail transportation. In addition to reducing sack usage by including an option to prepare tubs in lieu of sacks, this change improved service by enabling Periodicals to be worked with First-Class Mail at origin. Further expansion of co-mailing and co-palletization options is in the works. In cooperation with mailers and vendors, the Postal Service has developed preparation and documentation requirements to allow different classes of flat-shaped mail (Periodicals and Standard Mail) to be combined within bundles (co-mailing) or for separate bundles of Periodicals and Standard Mail to be combined on the same pallet (co-palletization). After testing during the early part of 2007, these concepts are expected as an option later that calendar year.

5. Streamline Internal Business Processes
In addition to Operations, postal support organizations have also made changes to streamline business practices and reduce costs. The savings have resulted from reengineering work processes, expanding the use of external benchmarking and spend analysis, and a new round of strategic sourcing to cut costs in office supplies, utilities, equipment, vehicles, information technology (IT), and telecommunications.

Supply Management is refining organizational processes to manage physical assets more effectively. Asset management processes will be integrated, standardized, and automated across all business units. Asset management activities will be evaluated to determine which should be performed by an Asset Management organization to allow each business unit to focus on activities that are core to their business.

Energy volatility during the last 2 years focused additional attention on management of this major cost driver. To ensure the Postal Service has a comprehensive energy plan and effective processes in place, a new Energy Initiatives office was created. This group will develop and manage a strategic energy plan to reduce costs and consumption, ensure that legal requirements are met, and support continuity of operations.

Supply Management targeted cost reduction initiatives in energy, waste management, and equipment-maintenance support purchases. Shared Energy Savings contracts were awarded where contractors conduct facility audits to identify improvements that make facilities more energy efficient. The contractors are responsible for capital and implementation costs, and receive a share of the energy savings that result. Energy conservation contracts were awarded to six companies. The contracts will produce annual savings and provide environmental benefits. Other contracts with utilities in Northeastern states, Maryland, and Washington, D.C., will result in lower energy rates providing savings during the next 2 years.

Servicing responsibilities for all trash and recycling contracts have been consolidated at a single procurement center. As they expire, trash removal contracts are being converted to Total Solid Waste Management contracts through a negotiation process. Consolidation of waste removal and recycling contracts has reduced the number of suppliers needed to serve 254 facilities from 51 to nine and will reduce annual waste removal costs. In some locations, recycling revenue has totally offset trash removal costs.