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Delivering the Future Delivery Frequency March 29, 2010

This presentation outlines the reasons for moving to a 5-day delivery schedule and the proposed actions to achieve cost savings. It discusses customer input, proposed operational changes, and the timeline for implementation. The plan aims to address the Postal Service's financial challenges and ensure its long-term sustainability.

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Delivering the Future Delivery Frequency March 29, 2010

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  1. Delivering the Future Delivery Frequency March 29, 2010

  2. Today’s Agenda • Delivering the Future • Reason for moving to 5-day delivery • Business plan – proposed actions • Customer input • Proposed operational changes • Cost savings • Next steps • Five-day delivery website 2

  3. Delivering the Future • Management actions within the law • Facing 10-year, $238 billion cumulative deficit • Pursuing opportunities in these critical areas: • Legislative and regulatory oversight • Restructuring prepayment of retiree health benefits • Pricing and product freedom and flexibility • Expanding access to products and services • Delivery frequency 3

  4. Delivering the Future • Delivery frequency offers significant cost savings • Approaching on parallel tracks • Requesting an advisory opinion from PRC • Seeking legislative change • Need to act as quickly as possible – we cannot afford to wait 4

  5. Delivering the Future Revenue and volume decrease, but costs increase 5 Source: Boston Consulting Group, March 2nd Presentation. Based on 312 delivery days including 10 holidays.

  6. Reasons for Moving to Five-Day Delivery • Decreasing mail volumes • Increasing delivery points • Mail mix – lower volumes, lower contribution per piece • Existing cost cutting programs not enough • In FY2009, the Postal Service successfully removed more than $6 billion in costs • FY2009 operating loss = $3.8B • Operating losses forecasted 6

  7. + + + + + Business Plan: Proposed Actions Cumulative value 2010 - 2020 Actions w/in USPS control $80 - 123B Retiree Health Benefits $0 - 50B Delivery Frequency $0 - 40B Expanded Access $0 - 10B Workforce TBD Revenue (Pricing & Products) $0 - 158B Remaining gap (from $238B) $0B

  8. Stakeholder Input and Mailer Issues • Briefed five-day concept to stakeholders • Union/management associations • Major mailers/associations • Presentations to mailers and Mailers Technical Advisory Committee (MTAC) • Mailers’ issues • Conducted market research • Refined operations plan

  9. Five-Day Proposed Operations Plan • Post Offices will be open on Saturdays • Saturday mail delivery to P.O. Boxes continues • No street delivery or collections, except Express Mail on Saturday • Mail accepted at offices on Saturday, processed Monday 9

  10. Five-Day Proposed Operations Plan • Network mail processing and transportation will continue 365 days per year • Remittance mail remains available seven days a week • Bulk mail and drop shipments will continue to be accepted 10

  11. Five-Day Proposed Operations Plan • Plan for timely delivery of mail on Monday or after 3-day holiday weekend • Postal Service already delivers mail in a timely manner after holiday weekends, at least 5 times a year • Continue processing and transportation mail over the weekend to support Monday delivery 11

  12. Five-Day Proposed Operations Plan • Election mail delivered to P.O. Box addresses • No delivery of government checks on Saturday • Increase in electronic payments • Provide appropriate lead time for mailer and recipient adjustments 12

  13. Five-Day Proposed Operations Plan • 5 days of delivery • 6 days of service • 7 days of network processing and transportation 13

  14. Mailers’ Technical Advisory Committee Survey • MTAC / Postal Service business customer survey of 4,100 businesses in August 2009 • 65% favor going to five-day delivery; 32% oppose it. • 65% percent of respondents were very or somewhat optimistic that their business will be able to adjust to five-day delivery. 14

  15. Maritz Survey • Survey of 1,047 residential and 1,144 small business (250 employees or less) customers in August 2009 • Residential • 98% said that it is important for the Postal Service to remain in business. • 68% are in favor of five-day delivery. • 60% said the five-day delivery plan would have no impact. • Small businesses • 97% said that it is important for the Postal Service to remain in business. • 68% in favor of the five-day delivery plan. • 69% said the five-day delivery plan will have no impact • 55% said Saturday delivery is unimportant 15

  16. Opinion Research Corporation • Qualitative Market research (August – October 2009) • Small businesses and consumers • Most indicated five-day delivery would have little or no impact • Most would adjust how they mail or would make use of other alternatives • Most will accept five-day delivery if it is necessary to help the Postal Service regain its financial stability • Larger businesses • Virtually all said Postal Service must be financially stable • Most indicated that while five-day delivery would have some impact, they would be able to adjust if given enough time to plan 16

  17. USPS Cost Savings Analysis 17

  18. Next Steps 6-month timeline to implement • We would like the change to occur as early in 2011 as possible • Changes to IT and network processing systems • Ongoing communication with employees, customers and stakeholders 18

  19. New websitewww.usps.com/communications/five-daydelivery 19

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