4 August 2011

The US Postal Service... Reloaded.

Part of me feels bad, picking on an organization like the USPS. Then the rational part of me steps back and realizes, who better than to take on than an organization with so many problems. Who else is in more need of some new ideas?

The organizations issues are numerous:

  • A large debt load in the form of 31,000 local offices
  • A large pension fund to maintain for retired employees and future retirees
  • A declining revenue stream
  • A mission to serve all parts of the US, even those that are extremely remote and vastly unprofitable.
  • A workforce that works more days (six) than most citizens (even if their days are often shorter than the standard 8 hour day)
  • Increasing direct costs in the form of increasingly expensive gasoline
  • Declining usage due to many of its core customers moving away from print and to digital distribution
I could go on, but I think you get the idea. So now I would like to float a few ideas that I think might help the postal service survive, or even thrive, in the future. I'm definitely not an expert, although my day job does give me a lot of knowledge about the economics of delivery, but that's actually kind of the point.

To structure my ideas, I'd like to focus on a coupe classes of ideas. First up is cost reduction:
  • Restructure your pension fund. Take a lesson from the automotive companies and pay out a lump sum to some other entity to pay for retirees. Its painful in the short term, especially since you are already deep in debt, but it frees you for the future.
  • For decades, you've invested in OCR technology to help you sort mail with less human involvement. Progress has been slow, but you're getting there. Make it better; partner with someone who has done a lot with OCR recently, namely Google. Yeah, their email application is part of what's killing your business, but if anyone knows how to interpret the chicken scratch we call handwriting today, its probably them. Yes, they will exact a price from you, most likely in terms of access to wire up your delivery vehicles with tracking devices for multiple purposes (traffic patterns, better street maps, whatever), but you've got to make a deal somewhere and these guys are the least of your bad options. In the end, get your sorting process up to an unbelievably high standard.
  • Don't like my OCR idea? Fine, kill stamps. Make all postage required to be digital. Make people enter the delivery address on your website (or self-serve kiosks in your retail locations) and print postage on demand. Make them 3D barcodes. Do whatever you need, but kill stamps.
  • Speaking of kiosks, add more to your retail locations and make the software not suck. I can figure it out myself if you guide me through it. I figured out the self-serve checkout software on the ATM and at the grocery store, I'm pretty sure I can do it for my package as well.
  • One area I can't really fault you in is package routing efficiency. Sure we could all do better, but you're pretty good. Learn from the Japanese car companies; make small changes, continue to tweak and drive out costs.
But cutting cost is only half the battle. What about revenue?
  • You've got great retail spaces. Use them. There's a reason FedEx purchased Kinko's and that UPS purchased Mailboxes Etc. Learn from your younger siblings; expand your vision. Don't make the run to digital like your failed attempt to be an email gateway in the 90s.
  • Two words: premium services. Which ones? I have no idea. Maybe have Lady Gaga lick envelopes for anyone willing to pay $1000 to mail a letter. I'm leaving this one up to you because frankly, I'm drawing a blank. Doesn't mean it isn't a good idea, just not one I have a good grasp on. You've got smart people, I'm sure you'll figure it out.
  • Partner with those who are competing against you. Carry packages for UPS and FedEx, especially in those really remote areas they don't want to service but you are required to. Charge them through the nose for it, too.
  • Win some sales deals. There is a reason amazon.com delivers at least once per week to my house. When I polled my coworkers, my number of shipments was pretty much average for the group. Yes, you already deliver a good number of their shipments, but do more.
Yes, many of the things I suggest are outside of your mandate or outside of your traditional offerings. That's the way of the market. You've stood still too long, doing what you've always done, but times have changed while you have not. There is one more thing you need to think about... what happens after your mission is over?

Don't get me wrong, people will always need to move physical goods from one location to another without making the trip themselves. But your mission, delivering mail everywhere, will end, if for no other reason than everything ends at some point. What plans have you made for your organization when that day comes?

The time is now to invest in the future. Innovate. You can do it; you've got the people and the history, you just need to make it happen.


  1. Looking at the original dot points it struck me they could expand out of mail and become a transport company.

    Which could lead to a whole bunch of other innovations in that space.

    They could also potentially move into tech products like cloud hosting, street maps and electronic messaging, but given the maturity and talent in the established players this would be suicide.

    And probably what they'll do.

  2. A few point: First, the US Postal Service, like every other federal government entity, participates in the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), both administered by the Office of Personnel and Management. Second, the USPS sells a whole lot of stamps that are never used, whether they get hoarded by collectors or lost in the junk drawer, so converting to a purely digital system would reduce revenues, probably significantly. Third, those airplanes with the Fedex and UPS logos are a big part of their respective brands, so I doubt either would be willing to pay the USPS to carry their freight, even if it was a lot cheaper than they do for themselves. The first time the mail man delivered a Fedex package would mark the beginning of a rapid end for them - not gonna happen.

    Innovation is about incremental improvement; revolution is about the violent displacement of the old order. Wind and solar energy represent revolution to the oil companies,and Fedex represented revolution to the USPS, gutting their corner on delivery of first class mail. You don't respond to revolution with innovation; you either crush it, or you succumb to it. If it weren't for federal subsidies, the USPS would have succumbed years ago. Will it survive the coming slash of the federal budget to help shrink the national debt? I wouldn't count on it.

  3. Have a look at what Canada did: close almost all of their locations while franchising the retail side to existing retailers. In my neighborhood, I go to the local drugstore which has a postal outlet at the back. There are many more locations to choose from where in the past there was one local post office location.

    You dump the bricks and mortar and focus on delivery. Last time I was in a US Post Office, the lines were long and slow-moving, and it was the only location for miles. They may seem like "great retail spaces", but they do not provide an acceptable service level. People working in US Post Offices are about as service-oriented as border guards.

    Canada also nixed door-to-door delivery for all new housing built after a certain point (1990 or so, I know its been a while). Each block has a set of boxes, a truck puts mail in it each day, you have a key and pick up your mail while driving home each day. There is space for large items as well.

    Oh, and get rid of Saturday delivery too.