Drew Aliperto Western Area Vice President Erica brix Western area manager, operations Support - PowerPoint PPT Presentation

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Drew Aliperto Western Area Vice President Erica brix Western area manager, operations Support
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Drew Aliperto Western Area Vice President Erica brix Western area manager, operations Support

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  1. June 17, 2014 Western Area Focus Group Drew Aliperto Western Area Vice President Erica brix Western area manager, operations Support

  2. Western Area Focus Group Thank You for Your Participation In This valuable process Value of the Area Mailer Industry Focus Groups: • Forum to Communicate Operational Changes • Provides a Forum for Crucial Feedback / Suggestions / Ideas • Builds Critical Relationships at All Levels of the Organization • Immediate Issue Resolution

  3. Volume Universal Service Obligation • Transactional volume • declining due to e-diversion • Advertising mail is subject to more substitution options • Mail volume highly sensitive • to economic changes • Mail mix changes – lost profit contributions Postal network driven by: • Delivery points • Retail locations • Sortation facilities • Six-day delivery Price Labor Costs • ~80% of total costs • COLA increases • Benefits: pensions, retiree health, health insurance • Limited flexibility • Retiree prefunding obligation, rising workers’ compensation costs • Limited pricing flexibility Business Imperative for Change Declining steadily Fixed cost base These trends will continue to put pressure on USPS ability to provide affordable universal service Rising cost per hour Rising but capped

  4. Continuous Efficiency Improvements Have Helped Mitigate the Impact of Business Threats $16 Billion of Annualized Savings in the past seven fiscal years with workhours reduced by 24% Despite Significant Cost Reductions Losses Remain At Unsustainable Levels Total Workhours (Millions) Savings (Billions) Career Employees – Reduced by 205K since 2006, without layoffs Postal Service is More Efficient Than Ever 800 30 696 685 24.2 663 Annual Growth 1.2% [2000 – 2013] 623 25 584 557 20 528 491 15 TFP Cumulative Trend 10 5 Annual Growth 0.3% [1972 – 1999] 0 '06 '07 '08 '09 '10 '11 '12 13 19721980199020002013

  5. A Deep Financial Hole • Liabilities exceed assets by approx. $40 billion • The USPS has only 35 cents of assets to cover each dollar of its liabilities ASSETS LIABILITIES • * Newly available data on forever stamp usage resulted in a $1.3B reduction in Deferred Revenue – Prepaid Postage • ** Under multi-employer accounting rules, there are approximately $51B in obligations not shown on the balance sheet. • Significant profits over years and legislation are needed to recover.

  6. USPS Business Plan Closing the Gap 2016 Savings • Legislative Initiatives $11.1B • Operational Initiatives $6.0 • Transforming Infrastructure • Continuous Improvement • Workforce $2.6B • Reduce the Unit Cost of labor • Increased Flexibility 6

  7. Key Legislative Goals • Require USPS Health Care Plan • Resolves RHB Prefunding Issue • Refund FERS Overpayment • Adjust Delivery Frequency (6-Day Packages, 5-Day Mail) • Streamline Governance Model • Authority to Expand Products and Services • Require Defined Contribution System for Future Postal Employees • Instructions to Arbitrator • Reform Workers’ Compensation • Right to Appeal EEOC Class Action Decisions 7

  8. Western Area Focus Group Delivery and Post Office Operations Transforming Infrastructure Facilities Retail Ops Network Operations 8

  9. Western Area Focus Group Delivery Optimization 9

  10. Major Optimization Initiative Delivery Optimization Transforming Infrastructure • Units • 2,513 Delivery Unit Consolidated • Routes • 24,000 City Routes Reduced • Deliveries • Efficient Mode of Delivery 10

  11. Delivery Mode Conversions Current Policy/Strategies are Driving Migration to More Efficient Delivery Mode USPS Delivery Modes FY 2013 Growth by Mode Fiscal Year 2013 FY 2013 Growth % Total CENTRAL DOOR Door (61.2K) (6%) 37.8M 40.5M Curbline 490.9K 47% 31% 28% Centralized 607.6K 59% CURBLINE 55.0M Total Growth 1.04M - - 41.0% Total street deliveries – 133.3M

  12. Western Area Focus Group Access Optimization 12

  13. USPS Retail Network 13

  14. Retail Strategy Retail Channel Strategy Focus • Grow Revenue • Reduce the Cost to Serve • Transform Customer Experience in High Traffic Post Offices • Enhance Customer Convenience Through Expanded • Retail Partnerships • Preserve Retail Services in Rural America • 50% of Post Offices realigned to match community needs

  15. Western Area Focus Group Facilities management & Disposal 15

  16. Facilities Optimization USPS Facilities New Jersey Network Distribution Center – 1.4M Sq Ft Owned 8,596 Leased 23,763 16 Ochopee FL Post Office – 62 Sq Ft

  17. Facilities Optimization Objective • Generate Revenue and Reduce Expenses by: • Selling owned buildings • Terminating leases • Re-purposing space Over 6.7M Sq. Ft. Eliminated

  18. Advantages of a Transformed Infrastructure • Fewer Facilities • Denser Bundles/Trays and Pallets • Increased Equipment Utilization • Increased Productivities • Maximized Transportation • Better Utilization of Air/Surface Trips • Gain Economies of Scale • Right-sized Workforce • Employee Flexibility • Revised Pay Structure Complement

  19. Western Area Focus Group Major FY 2014 Initiative DSCF Standard Mail Load Leveling Erica Brix Manager, Operations Support Western Area 19

  20. Imbalance of Mail Delivered by DOW 45% Disproportionate amount of Standard Mail is scheduled for delivery on Monday resulting in: 40% • Service Variability 35% • Operational Inefficiencies • Increased Cost 30% 25% 20% 15% 10% 5% 0% SAT MON TUE WED THU FRI Postal Quarter 1 FY 13

  21. Expected Days of Delivery SCOPE OF LIMITED CHANGE DELIVERY DAYS MEETING SERVICE STANDARD Thursday Friday, Saturday, Monday Friday, Saturday, Monday DSCF Standard Mail** Dropped Before 4pm* on Prior to April 10 Current Friday Saturday, Monday Saturday, Monday, Tuesday Saturday Monday, Tuesday Monday, Tuesday, Wednesday Sunday Monday, Tuesday, Wednesday Monday, Tuesday, Wednesday *The current Critical Entry Time (CET) for Standard mail is 4 pm **For delivery in the continental United States 21

  22. Expected Days of Delivery What Hasn’t Changed • Standard mail dropped at a DDU does not change • Standard mail dropped at a NDC does not change • EDDM Retail does not change • Periodical/Newspaper processing does not change • First-Class does not change • Priority does not change 22

  23. Delivered Volume % OF Total Delivered Volume by Day Baseline PERIOD DSCF Load Leveling to Date * * 4/19 through 6/6 23

  24. Service Performance DSCF Standard Letters 4/12 – 5/23 Standard SCF Letters UCL / LCL UCL / LCL Target Target SPLY SPLY Standard SCF Flats DSCF Standard Flats 4/12 – 5/23 24

  25. Standard DSCF Flats April 11 – May 30 Friday Start-the-Clock Day 1 – Saturday 23.82% Day 2 – Monday 53.99% Day 3 – Tuesday 19.00% Service Variance

  26. DSCF Standard Mail Load Leveling • Results are Promising • Mail Processing working to capacity • Reducing average hours per route • Balanced workload with consistent service performance • Controls and Monitoring • Facility Audits • New data driven diagnostic reports • Address the Vital Few Opportunities • Operational Tiger Teams for site visits and improvement recommendations

  27. Benefits • Benefit to Mailers and Customers • Predictable and Reliable Service • Consistent Delivery Times by Day of the Week • Less Competition in the Mailbox • Increase Visibility • Cost Containment – Maintain Affordable Prices 27

  28. 100% Visibility 100% Product Visibility Provides the ability to track mail pieces and containers through the postal network and provide business intelligence to enhance operational performance and provide customer value 28

  29. Attributes of 100% Product Visibility Unique barcodes on letters, flats, packages, trays and containers Access to analytical capabilities for forecasting and predictive workloads Real-time Data & Intelligence 29

  30. Next Generation Equipment Delivery Sortation System PASS Real-Time Scanners Mobile Delivery Device (Replaces Real-Time Scanners) C007 Dec 2012- March 2014 Nov 2012-Sept 2013 Feb-May 2013 Jul 2014-Dec 2014 Jan–Dec 2014 Deployment May-Nov 2014 Deployment Jan 2015 – Aug 2015 Scanning Units Scanning Units Scanning Units Scanning Units Scanning Units Scanning Units Scanning Units Total – 12,500 Total – 4,167 Total – 225,000 210,608 75,000 150,000 11,700 3,137 1,030 800 30

  31. Delivery Management System (DMS) • Evaluates Carrier Route Status to plan and color-coded route status • Estimates Delivery Time for all packages in unit • Currently being tested in limited ZIP Codes 31

  32. Predictable and Measureable HOW? Does USPShave the mail? Where is it in the process? When will itbe delivered? How did the overall mailing perform? An optimized plan for: Full Service Intelligent Mail Strategies Avoidingbottle necks Balance resources & reduce costs Response Rates & ROI Consistent, predictable delivery Business Intelligence Enhances the Performance& Value of Your Mailings 32

  33. Phase 2 Network rationalization

  34. PHASE 2 NETWORK RATIONALIZATION VOLUME REALITIES Mail Volume Shifting to a Less Profitable Mix Volume in Billions of Pieces

  35. PHASE 2 NETWORK RATIONALIZATION NETWORK RATIONALIZATION STATISTICS

  36. PHASE 2 NETWORK RATIONALIZATION FIRST-CLASS MAIL SERVICE AFTER IMPLEMENTATION Overnight – 20.05% 2 Day – 35.6% 3 Day – 44.1% The time it takes First-Class Mail to reach its destination will increase from an overall average of 2.14 days to 2.25 days

  37. Network Rationalization NETWORK CAPACITY 1970 2014 2006 37

  38. Plant Consolidations Processing Plant Consolidations 800 • Over 350 Facilities Eliminated • Reduced over 75M miles 673 700 623 614 599 600 528 487 500 461 417 400 320 300 Phase 1 200 38

  39. PHASE 2 NETWORK RATIONALIZATION EMPLOYEE IMPACT • Approximately 15,000 employees affected • Will work within negotiated employee agreements, laws, and regulations to place employees in other vacant positions available through normal attrition

  40. Western Area Focus Group Growth Opportunities Drew Aliperto Vice President Western Area 40

  41. Growth Opportunities • Enhance the value of Direct Mail and Catalogs • Increase Market Share of Packages • Innovate across USPS Business Platforms Continue to Optimize the Value of the Infrastructure 41

  42. Mail is Relevant – Most Direct Way to Communicate 12%.....the share of total American marketing spend on mail. It’s been consistently about 12 percent for the past 30 years. • Four Key Ideas: • Personally Relevant – Interest • Actionable – Speed to purchase • Functional – Imbed technology in paper • Creative – Color, construction, size 42

  43. Growing Direct Mail The Impact of Direct Mail is Significant Using direct mail and email in integrated campaigns creates synergies that boost response more than using either medium alone. Source: Marketing Sherpa Study 43

  44. Mobile Commerce Mobile Technology Helping Drive Long-Term Value with Direct Mail and Catalogs. • Smartphones and tablets interact with the printed page • Direct Mail or Catalog becomes “catalyst” for mobile commerce • Direct Mail and Catalog integration with technology increases: • Relevance • Effectiveness • Convenience • Responsiveness • Engagement NFC Mobile Barcode Image Recognition Augmented Reality 44

  45. Committed to Mail • We remain committed to growing mail • Will collaborate with the industry to grow and enhance direct mail and catalogs • Embrace technology to attract consumers to new possibilities • Continue to seek promotional ideas from customers The power of mail enhances package delivery & returns. 45

  46. Growth Opportunity Opportunity in Packages Building a World Class Package Platform 46

  47. E-Commerce Continues to Grow Rapidly Attain market share NOW grow with hyper-growth of market 47

  48. Package Growth Opportunity Elements to Building a World Class Platform • Integrated Package Network Plan • Product Development Plan • Package Delivery Optimization Plan • Next Generation Equipment • International Package Processing Plan • Improve Customer Pick-up Experience • 100% Product Visibility SEVEN KEY ELEMENTS 48

  49. Build a World Class Package Platform

  50. Growth Opportunity Align Our Returns Portfolio with the Needs of Ecommerce Shippers Create a simpler returns product line • Consolidate disparate offerings to Network and First Mile Eliminate obstacles to onboarding • Fees • Separate permits Make products easier for users • Roundtrip label • Print and Deliver label • Expand customer base for Scan-based Payment