At long last, the condition of the U.S. Postal Service is being recognized for what it is and isn't. It isn't the strong, dependable and healthy service that one would expect it to be from its motto, "neither snow nor sleet, etc." Instead, it is an ailing monster that is in need of major reform. It is stalled on the information highway and doesn't know which way to turn. Former Postmaster General Marvin Runyon attributed the Postal Service's problems to a lack of control over the three Ps: people, prices and products. His predecessor, former Postmaster Anthony Frank felt that the answers were in automation and barcoding. Current thinking in the Postal Service is that the playing field needs to more level, thereby giving the Postal Service the ability to compete against UPS, FedEx, etc. The need for market pricing and negotiated service agreements (NSAs) has been identified as what's needed and not only the Postal Service but also the Board of Governors is calling attention to these reforms as critical. Every opportunity is used to further the blame for its current state on the Postal Rate Commission, competitors and anyone else who happens to be around at the time. Blame is always placed everywhere except where it rightly belongs, with the Postal Service itself and, especially, the Board of Governors.
In the early 80s, the Postal Service spent 81. out of every dollar in revenue on labor. After investing billions of dollars in new technology and claims of increased productivity annually, the Postal Service still spends nearly the same amount on labor. There is something definitely wrong with this picture.
To determine what's broken and in need of repair, we need to look at how the Postal Service managed to get to this point. When I was a child, there were two ways to ship packages, Railway Express and USPS Parcel Post. There was no UPS or FedEx. Railway Express accommodated the shipments that exceeded the Postal Services weight allowances. The Postal Service had all the parcel business. What happened?
Not that many years ago, if you wanted a mailbox instead of home or business delivery, you rented a box at the local post office. Today, the rent for that box is $22.00 for six months. The box rental business once belonged totally to the USPS. Today, you have many choices for box rental through franchises of national corporations such as Mail Boxes Etc. and others. Rates for renting a box from them is as much as six times the cost of the Postal Service. How can they stay in business charging 600% more than the USPS?
The reason the Service lost out on parcel delivery and box rental is simple. The Postal Service gave that business away and, in doing so, played the major role in the creation and nurturing of its competition. The Postal Service didn't · lose the business because of an inability to charge market prices, it lost it because it didn't listen to its customers and provide the services that the customers wanted and were willing to pay for. Customers are willing to pay 600% more than the cost of a Postal Service box rental because they want the service they can't get from the USPS. Access to mail in post office lobby boxes pretty much mirrors the time most people are at work so it is difficult to get to the post office and pick up mail. Saturdays are about the only option, whereas with a CMRA (commercial mail-receiving agent) access is 24 hours a day, seven days a week. You can even call and they will tell you if you have mail to be picked up, thereby saving you a trip if there is no mail. That's service!
The loss of the parcel business is also attributable to lack of service. Parcel Post was a very slow service with a lack of predictable delivery. Deliveries through FedEx and UPS are predictable and timely. Services such as signature confirmation, return service and the like were not available. Expedited services were an outgrowth of UPS and FedEx listening to customers and fulfilling their needs. On the other hand, the USPS announced with tremendous fanfare its two-pound, two-day $2.90 expedited service. Then, it had to recant the two-day delivery because of an inability to meet its own service standard and it had to increase the price to $3.19 to cover costs.
So, the reason the Postal Service is in trouble is because it has been anything but proactive in the delivery business and identifying and satisfying customer needs. It hasn't listened to the customer. Instead, in light of its financial crisis, it is considering the possibility of major changes to the service it provides, (i.e. elimination of six day a week service, etc). The example given regarding the willingness of the customer to pay six times the cost of a P.O. box at the post office tells us that market pricing is not the problem.
Then what is the problem? The Board of Governors and the USPS itself are the answers. The Board of Governors for not demanding that the USPS provide the services that the customers want and the USPS for not recognizing, over time, that the customers will prevail in satisfying their needs, with or without using the USPS. Competition will emerge to satisfy those needs. And, once again, the Postal Service will come up a day late and a dollar short. The Board of Governors' inability to recruit a proven, results-oriented leader who will make the necessary demands of the Postal Service will surely result in further maintenance of the status quo.
The answer lies in listening to the customer and then creatively providing the services requested and much more. Fresh thinking and insight rather than market pricing and a level playing field will go a long way to turn the Postal Service around. New services and capitalizing on the Postal Service's strengths (yes, it does have strengths) in the information highway can result in a healthy Postal Service. As an example, the Postal Service maintains a database known as NCOA (National Change of Address file) where they update customers' addresses whenever one relocates. By adding two more fields to that record, they could also offer to update electronic addresses and list phone numbers. Customers would pay a fee to have this information made available and direct marketers could be charged as well. This is just one example of a product offering where the Postal Service could use its existing strengths and expertise to provide a service that has applicability in this information age. (This was suggested to the Postal Service, by the author, three years ago. He was told it would be available within 60 days.)
The bottom line is we need a Board of Governors that understands the Postal business and is demanding of both the Postal Service and the people it employs. Creativity, capitalization on existing strengths and reengineering of existing products to meet the needs of today's customers are the answer, market pricing and a level playing field are not.
Update: Three weeks after submitting the article for publishing, the writer read of a mail forwarding service (New York Times, June 7, 2001) for those who switch ISP providers called Re-Route. The program being offered is exactly what the writer had recommended to the USPS including an opt in/opt out option for customers and a fee structure similar to the one that the writer suggested. Information on the program can be found at www.re-route.com.
Alan Kline is founder and president of Net Outcome, Inc., a New Jersey corporation offering consulting services to the business community. He has more than 36 years of professional purchasing/sourcing experience, 25 of which were with the American Management Association as the Corporate Director of Strategic Sourcing Worldwide. He has served as president of the Alliance of Nonprofit Mailers, as a member of the Mailers Technical Advisory Committee (MTAC) and is a frequent speaker at the National Postal Forum. Contact Net Outcome, Inc. at 732-901-0209 or 732-890-2932 or by e-mail at netoutcomeinc@mindspring.com.
