Jan. 11 2007 06:09 PM

Katrina is still a fresh memory. But how many mail center managers think a Katrina-type disaster can affect their operations and have, therefore, prepared? It's just one of the questions asked of our readers in the Mailing Systems Technology Annual Wage & Operations Survey. In this our 17th year of the survey, we delve into the challenges facing managers today as well as those operational issues that occur year after year. In the last issue of Mailing Systems Technology, we unveiled the wage portion of the survey; while in this part, we look at operational issues.


Disaster Planning: The Good and the Bad

Soon, over 73% of mail centers will have disaster recovery plans in place a commendable number. Topping the list of businesses that have plans are transactional mailers (financial, insurance, utility, communication and health care) who depend on the mail to transact bill payments. Having a mail center go down because of a disaster could certainly be devastating to the financial health of these companies. Surprisingly though, the majority of mail managers (60%) have designed a plan in which they recover internally, rather than outsourcing their workloads to other locations the time it might take to recover internally may have a substantial negative impact on cash flow. Least likely to have mail center disaster recovery plans are printers (32%), which could be due to the fact that they are providing a service, and their customers would simply shift to another printer until they have recovered. In fact, most printer contracts contain such language.


Yet Another Rate Hike

With two rate hikes in two years, managers are doing everything possible to hold down costs. This year, however, more managers are looking to reduce volume than in years past, while fewer are increasing budgets to offset costs. While most mailers will move documents to the Internet, some survey respondents noted that they would be doing finer presorts and shifting more mail to Standard delivery to counteract rising costs. Savvy managers who are reducing mail volumes seem to be capitalizing on the situation by selling excess capacity to other businesses. Thirty percent of mail centers now actively sell their services, up 29% from last year.


Driving Up the Cost of Doing Business

Even though mail managers are doing what they can to drive down costs as more documents move from print to electronic, they can't drive them down as rapidly as volumes are decreasing. We have witnessed a jump in the cost per piece this year, especially for all First-Class mailers, who are much more affected by

e-documents than Standard mailers. Processing costs jumped from 37. to 50. for First-Class and only increased 1. for Standard mailers (from 27. to 28.). It will be interesting to see in next year's survey if costs can be brought under control again as managers of First-Class operations are able to scale back more with further volume reductions.


Driving Down the Cost of Doing Business

One way to drive down costs is to combine print-mail functions. There is a 6. per piece difference in those who do combine (41.) and those who don't combine (47.). Yet, the industry may have reached a plateau at 67% print-mail facilities, the same percent as last year. Some of those who haven't been able to combine the functions have driven operational costs down (44.) by providing some printing services to their internal customers.


Best Yet

There is good news for the Postal Service, even though it has put forth two rates cases within two years. The USPS has received more excellent ratings from our readers than ever before in the history of this survey (31% rated the USPS excellent, up from 21% last year). Mail managers certainly understand the challenges the USPS faces as revealed by their responses to the survey's question about Postal Reform what is the #1 reform needed? Our readers most frequently answered "overhauling the rate-making process," which is controlled by the Postal Rate Commission. The second most frequent response was eliminating the pension burden placed on the USPS some referred to it as the "tax stamp," again an issue outside of USPS control.


Until Next Year

Mail managers will have an uphill battle over the next few months as they brace for another postage hike, and who knows if a lame duck session of Congress can pass Postal Reform or if it will again appear in the Halls of Congress. Next year's Mailing System Technology Wage & Operations  Survey will reveal how you are weathering the storm. So when you see the survey arrive with your magazine next spring, please take a few minutes to complete and return it. Just filling it out may help you focus on your own staffing and operational issues. And then, when the results are unveiled, you can compare how you coped with the challenges against how other managers coped. Well, that wraps up this year's survey, and we would like to thank those who took time to complete our annual survey. It is because of you that we are able to provide the mail industry with the only comprehensive analysis of wages and operations. Until next year.