MANAGING COSTS IN A PERFECT STORM
Throughout the past decade, the Postal Service has steadily cut costs from its budget. Now, recession–driven revenue declines, ongoing mail volume reductions caused by Internet diversion and a crippling requirement to pre–fund retiree health benefits have combined to cause a “perfect storm” and focus more attention on the priority to reduce spending.
Cost-cutting is not new to USPS. In the last 10 years, the Postal Service has stripped more than $20 billion in costs. Cumulative savings over that period total $50 billion, with $6 billion in cost savings in fiscal year 2009 alone.
Compared to 10 years ago, 200,000 fewer career employees deliver mail to more than 15 million additional addresses and PO Boxes. USPS has achieved this workforce reduction largely through attrition and without sacrificing service.
The Postal Service has invested in tools and technologies to make its operations more efficient — in mail preparation, processing, delivery and retail, and transportation. Advanced technologies have revolutionized the way mail is sorted. Ten years ago, mail carriers spent 4 hours sorting mail and 4 hours delivering. Now they spend less time in the office before starting their routes, because automation sorts letters in delivery order at processing plants.
USPS has negotiated agreements with unions, providing management flexibility to align the workforce with changing operational processes and workloads. And agreements with suppliers have been renegotiated to obtain more favorable terms. Non-essential programs and projects, as well as certain construction projects, are no longer budget items.
The Postal Service began the decade using internal benchmarking and standards to increase operational efficiency. Today, USPS also has adopted Lean Six Sigma tools to simplify and streamline processes, document best practices and spread success throughout the organization.
Finally, the Postal Service has adopted a performance-based compensation system. Pay increases for managers based on time in grade have been eliminated. The new system features a balanced scorecard to set and manage objectives and a national performance assessment to measure and recognize results.
MANAGING COSTS IN A PERFECT STORM
Throughout the past decade, the Postal Service has steadily cut costs from its budget. Now, recession–driven revenue declines, ongoing mail volume reductions caused by Internet diversion and a crippling requirement to pre–fund retiree health benefits have combined to cause a “perfect storm” and focus more attention on the priority to reduce spending.
Cost-cutting is not new to USPS. In the last 10 years, the Postal Service has stripped more than $20 billion in costs. Cumulative savings over that period total $50 billion, with $6 billion in cost savings in fiscal year 2009 alone.
Compared to 10 years ago, 200,000 fewer career employees deliver mail to more than 15 million additional addresses and PO Boxes. USPS has achieved this workforce reduction largely through attrition and without sacrificing service.
The Postal Service has invested in tools and technologies to make its operations more efficient — in mail preparation, processing, delivery and retail, and transportation. Advanced technologies have revolutionized the way mail is sorted. Ten years ago, mail carriers spent 4 hours sorting mail and 4 hours delivering. Now they spend less time in the office before starting their routes, because automation sorts letters in delivery order at processing plants.
USPS has negotiated agreements with unions, providing management flexibility to align the workforce with changing operational processes and workloads. And agreements with suppliers have been renegotiated to obtain more favorable terms. Non-essential programs and projects, as well as certain construction projects, are no longer budget items.
The Postal Service began the decade using internal benchmarking and standards to increase operational efficiency. Today, USPS also has adopted Lean Six Sigma tools to simplify and streamline processes, document best practices and spread success throughout the organization.
Finally, the Postal Service has adopted a performance-based compensation system. Pay increases for managers based on time in grade have been eliminated. The new system features a balanced scorecard to set and manage objectives and a national performance assessment to measure and recognize results.
from usps news link-editor-mr.robert anderson
