On September 30, 2005, the U.S. Postal Service will publish its Strategic Transformation Plan for 2006-2010. The final plan will incorporate feedback from postal customers reflecting their thoughts, comments and ideas concerning the future of the U.S. Postal Service and the Strategic Transformation Plan 2006-2010. All of the feedback survey responses, e-mails and letters is being categorized for key themes, trends, concerns and suggestions and will be reviewed by postal management and executives as part of the development and approval process for the final draft.
Customer-driven initiatives will be at the forefront of the plan. Initiatives will be organized around four basic strategies:
1. Fostering growth through customer value
2. Increasing operational efficiency
3. Enhancing a customer-focused, as well as performance-based culture
4. Improving service
The plan will combine key elements of the Postal Service Five-Year Strategic Plan, the Annual Performance Plan, the original Transformation Plan and the Transformation Progress Reports. At the Postal Service, our fundamental mission is to provide prompt, reliable mail delivery at fair and equitable prices to all customers and communities. The plan will be structured around this mission and will address the requirements outlined in the Government Performance and Results Act (GPRA) of 1993. The plan will provide key strategies for achieving our goals and objectives.
The original Transformation Plan was set in motion in 2002. Following that initial blueprint, the Postal Service has been transforming into a leaner, more efficient and modern organization. The first phase of the plan helped the Postal Service achieve success in the areas of customer satisfaction and finance as well as workplace improvement. Transformation has driven service and customer satisfaction indicators to record highs. Debt has been reduced by $9.5 billion to the lowest level in 20 years, and all accumulated prior year deficits have been cleared. Costs have been reduced by more than $4.3 billion, driven in part by a 5.2% gain in productivity. We are on track to achieve or exceed the Transformation Plan target of $16 billion cumulative and $5 billion incremental annual savings earlier than was planned, and new technologies and greater efficiency are ushering in a sixth straight year of productivity gains. These successes have enabled us to provide our customers with stable rates since the start of the Transformation. Though our accomplishments through the Transformation have been substantial, our continued ability to provide affordable, high-quality universal mail service is at risk. Declining First-Class Mail volumes and today's competitive market for hard copy mail and package delivery services are challenging our current business model. We can no longer rely on revenue from continually rising mail volumes to offset the costs of an ever-growing delivery base.
Though overall volumes are increasing, the mail mix is changing, and the shift from First-Class to lower revenue-per-piece mail is challenging our bottom line. Mail deliveries continue to grow by 1.8 million new addresses last year and 1.9 million the year before. We need to modernize our current business model in order to keep our rates affordable. Volume erosion from rising rates could eventually jeopardize the residential and commercial services that are so important to all Americans. The current Postal Service filing for a rate increase for 2006 is not due to a revenue shortfall in fact, the USPS expects to finish the year more than $1 billion in the black. The proposed increase is needed to cover the cost of the $3.1 billion escrow funding required by Public Law 108-18, the Postal Civil Service Retirement System Funding Reform Act of 2003. From 2003 to 2005, the Postal Service was allowed to use funds that would have resulted in an overpayment to the Civil Service Retirement Fund to reduce debt, offset operational costs and keep rates stable. In 2006, we will be required to hold those funds in escrow. The USPS will be monitoring costs associated with legislation currently under consideration in the House and Senate, and these will determine the need to go forward with across-the-board rate hikes in 2006.
The continued health and viability of the Postal Service is of great concern to those of us in the mailing industry. The Strategic Transformation Plan 2006-2010 will keep us aggressively focused on managing our business so that we can continue our mission well into the 21st Century. USPS is transforming, and the results are making a difference for customers and our organization.
Shoshana Grove works with the USPS Package Services. You can contact her by email at sgrove@usps.gov or visit www.usps.com/strategicplanning/2006-2010.htm.
