Our Capital has traditionally been the favored venue for hosting the annual National Postal Forum. Washington DC always seems to draw the largest mailing crowds for this gathering. However, pre-registered attendance was reported to be down a few thousand to 4,200. This most probably was due to the struggling economy. The 140 educational sessions and 120,000 square feet of exhibit area for manufacturers and suppliers were solidly dedicated to how best to use traditional first class and standard mail.
It was enlightening to hear (1) the restructuring plans by the United States Postal Service to counter its heavy losses being incurred as well as (2) the roll out plans for the most significant software technology this 200 hundred year old institution has ever envisioned â¬" the Intelligent Mail Barcode (IMb). The Postal Service is clearly betting on the IMb to be the cornerstone for its future efficiencies and the containment of its escalating labor cost burden.
This article will reflect upon the USPS initiatives taken to restructure its organization and the potential alternative courses of action that the small to medium sized mailing service providers (including full service printers) might consider in achieving IMb readiness.
Permanent (?) Erosion of Centuries Old Business Model
Lets capsulate the volume/capacity situation. For nine consecutive quarters mail volumes have progressively dropped. This year alone 20 billion pieces less than the 2008 tally of 203 billion. This 20 billion lost exceeds the total annual mail volume for each of the majority of the developed nations of the world. Each billion pieces of mail represent $380 million of revenue.
Stated another way daily pieces of mail delivered to each US addressee has fallen from 6 to less than 5. Offsetting the mail volume drop is the addition of a million new addresses each year. The most labor intensive task at the post office is the â¬Å"last mile delivery.â¬â Rearranging routes for carriers due to this declining volume is a significant savings. Over 7,000 routes will be eliminated this year alone.
Postal revenues this fiscal year will fall to less than $70 billion with projected losses of $6.5 billion. This loss is attributed to the $5.4 billion of payments that must be paid this year as mandated by the Postal Accountability and Enhancement Act (PAEA) of 2006. Additionally another $2 billion must be paid to the Office of Personnel Management for annual retiree health benefit premium. Both of these figures are scheduled to escalate each year through 2016. Congress could amend the PAEA to leave the PAEA payment stream intact, but allow the Postal Service to pay its retiree health premiums out of a $32 billion trust fund that it has been contributing to.
With $1.4 billion of cash carry over from FY2008, according to USPS CFO Joe Corbett, the Postal Service will still need to borrow $3 billion from the Treasury to make these payments back to these employee benefit funds. Congressional Committee hearings on this proposed action, as H.R. 22, were proceeding at the same time as the Postal Forum. If enacted, H.R. 22 would reduce the FY09 loss by $2 billion. This new $3 billion loan would leave the USPS with a $10 billion overall debt.
Fairly accurate mail volume projections have traditionally been made utilizing GDP, Retail Sales, and Investment indices. Following that norm Post Master General Jack Potter expects the bottom to be about 170 billion pieces of mail next year before a turnaround is reached. Because of the unusual nature of the successive quarters of volume collapse, the Mailing Technical Advisory Committee (MTAC) comprised of 55 associations is being polled for its individual projections of mail volume in the near future.
Various research reports, e.g., the Winterberry Report of earlier this year and the recent Borrell Associates report, forecast a steady decline of direct mail volumes in favor of the less expensive e-mail advertising. Whether their numbers hit the mark matters less than the contrary view expressed that an improving economy will not necessarily increase conventional mail volume as espoused by the PMG.
Price Discounting & Advertising Hope to Increase Mail Volumes
The 30% Summer Sale on incremental standard mail volumes was approved by the Postal Regulatory Commission (PRC) in early May. This first ever, seasonal incentive has been widely reported in the trade press and therefore this article wonâ¬t dwell on its complex details. Plus the small to medium sized printers reading this article are not eligible for it anyway! Following the 80-20 rule, i.e., 20% of clients represent 80% of volume. The Direct Marketing Association says â¬Å"roughly 3,250 mailers, who account for 75% of Standard Mail volume,â¬â are being offered this short-fused initiative. The good news is that no large mailing service provider is eligible, only the firms buying the mailing. This will prevent the bigger MSPs from siphoning volume from smaller mailers to take advantage of the seasonal sale.
The simplicity of a smaller percentage, say 5%, across the board cut targeting the entire mailing market was rejected by these non-marketing types. Much time was rumored to be spent by the PRC and USPS debating the â¬Å"any howâ¬â mail, i.e., the mail that would come through the system at regular prices anyhow with no discounting necessary. Concern was apparently also expressed for mail volume that might be pulled out of the â¬Å"any howâ¬â mailing slot of October back into the summer to qualify as higher incremental volume. Such incremental decreases in October volume will offset the increased summer volumes and therefore 30% discounts hopefully earned, i.e., a gotcha. Seems the PRC wants to-have-its-cake-and-eat-it-to. Despite the fact that no Marketing 101 professor would have passed anyone in that class, the mere initiative must be acknowledged as heading in the right direction.
Results of this initiative will not officially be reported until probably late fall. And the USPS hopefully should be announcing a follow on Summer Sale â¬10 in early winter in order to give necessary time to plan and execute full campaigns in the ensuing six months. Hence, the PRC must have the details of the next promotion in their hands for review before the actual results of this first effort are fully known. The expectations for this initial effort being successful to any appreciable degree are dubious at best because of the minimal planning horizon allowed. This, of course, disregards the precept that the future landscape for direct mail is changing regardless of the impact of any temporary pricing adjustments.
While the USPS is hiring new executives in their sales arenas, their pricing flexibility is unfortunately limited to negotiated service agreements and high volume packaging arrangements. The members of the Postal Regulatory Commission, while distinguished legal professionals, are not typically known for their entrepreneurial or retail marketing prowess. So it is difficult to surmise what if any promotion might follow up this first effort.
The advocates for variable data digital printing continue to report return on investment results that are so high that no PRC member would ever expect to rationalize a reason to discount what is perceived to be an already cheap monopolistic distribution venue. And the more successful personalized targeted mailing becomes the shorter the run lengths anticipated. This is contrary to the old tried and true business model of huge blanket runs of standard mail promotions of two decades ago. Hence, small businesses, which are acknowledged to be the generators of most new jobs in America, will probably not swing much clout with the Postal Service since they will never be part of the 80-20 elite described earlier.
The postal executives acknowledge that they have never advertised their products and services to the extent of their â¬Å"traditionalâ¬â competition, i.e., FedEx, UPS, & DHL. While they have a relatively modest advertising budget, they have decided to concentrate the bulk of those moneys this year at the Priority Mail product. This represents a $6 billion product market to the USPS. They feel their variety of products at modest cost with free containers to be shipped anywhere in the United States is a strong competitive offering of which presumably not everyone is aware.
Three Key Operational Fulcrum Points
The United States Postal Service seems to be betting its future on three operational initiatives; (1) maximize address quality, (2) automate every stage of mail material handling possible, and (3) reduce and outsource as much labor intensive tasks as possible. The first will be achieved by charging extra for UAA (undeliverable) addresses. This will be achieved by refusing to allow discounts for inaccurate lists poorly applied that amount to a certain percent of the whole list. The heart of the second point is the implementation of the Intelligent Bar Code (IMb), which will be discussed in more detail later in this article. The final point is driven by the untenable cost escalation of the labor union contracts.
Despite the continuous investment in automation by the USPS, not to mention mailers, and the normal retirement attrition from 803,000 employees at its 1999 peak to 635,000 employees now, 80% of the total costs of this nearly $70 billion business continues to be labor. (Ten points of this is the retirement burden described earlier.) This elevated ratio is unheard of in any business of any free market democracy. Printers labor cost proportions are typically 40% while mail service providers are around 56%.
The analogy with the UAW costs and how far they out distance the labor cost packages of the foreign automakers running United States manufacturing plants may well be falling on deaf ears. The answer is simple; the various mail employee unions see no competition and embrace a two century long entitlement attitude. It is not fathomable how USPS management will be able to overcome that hurdle particularly since the federal elected officials seems inclined to favor the union position.
The result canâ¬t help but be a continual downward pressure on mail volume due to untenable annual cost hikes. Hence, annual USPS downsizing could be the norm until an alternative private sector entrepreneurial effort proves successful. Remember that the USPS had a lock on all United States packaging business in the 70s. Their entire original network of bulk mailing centers (BMCs) was unfortunately engineered to handle primarily packages and secondarily the less lucrative mail. Then FedEx, and shortly thereafter UPS, came in and took 90+% of this business away from the Postal Service. While the erosion took several years, the USPS simply could not react effectively to defend their turf.
This demise might come about much quicker than the USPS and Congress might imagine. Especially if the current Administrationâ¬s multi-trillion dollar federal expenditures result in near term double-digit inflation as is being forecast by many economists. The PAEA law allows the USPS to follow suit and increase annual postal rates to that level of annual inflation. The Postal Union contracts would be expected to seek tagalong exorbitant hikes. It is hard to imagine that a viable private sector, business model could not be built based upon 65+¢ first class and 45+¢ per piece standard mail revenue streams totaling only $10-20 billion of annual revenues.
Intelligent Mail Barcode â¬" Where is the small mailer benefit?
Letâ¬s analyze the IMb and see how it will contribute both to the USPS⬠vital automation object, but also a quick start up of a private sector alternative distribution network.
It will be interesting to see if the modest postal discount, i.e., 0.3¢ for first class and 0.1¢ for standard mail, is economic incentive enough to entice the mainstream mailing service providers to invest in IMb proficiency. The current economy at the very least is eliminating much corporate â¬Å"investmentâ¬â perceived to be of â¬Å"longer termâ¬â benefit. Keep in mind that mail owners will be pressing to have this modest discount passed along to them while mail service providers are the ones incurring the IT expense. Since the discount will be debited to the permit account owner, the MSPs donâ¬t have much incentive at all, particularly if enough competitor MSPs likewise choose not to anti-up the IT investment.
Letâ¬s get back to basics. The Intelligent Mail Barcode replaces all previous five barcodes, many with their own objective. This IMb 31-digit barcode in five fields has the combined objective of sorting, tracking, and address correction (feedback to mailer) in one barcode. Initially offered as a â¬Å"basicâ¬â version with no discounts. The â¬Å"full serviceâ¬â IMb version carries the discounts and the added benefit of enhanced â¬Å"eDocâ¬â of electronic communications with the USPS.
These Internet communications allow the cash management efficiencies of funds transfer and to make appointments for mail induction into the postal system. Presumably these appointments will prevent the MSPs trucks from waiting in line to be processed. A flashback to the analogy of dental and family physician appointments is inevitable. Presented to customers as a means to minimize their waiting room time, they ultimately maximize the service providers⬠productivity. Hopefully in this instance it will prove to be mutually beneficial.
This two-way â¬Å"eDocâ¬â communications has three design features. It includes the Confirm⢠service, which has been available for a decade and has proven to allow retailers to better manage their call centers saving labor expense and hopefully improving their own perceived customer service. Confirm⢠will continue to be an extra expense.
â¬Å"eDocâ¬â will facilitate the automated address correction feedback to the mailer to update their mailing lists. Under â¬Å"basicâ¬â IMb there is a charge for this address correction service (ACS) while ACS is â¬Å"freeâ¬â to â¬Å"full serviceâ¬â IMb. Itâ¬s free, but the mailer has 30-days to incorporate these changes in subsequent mailings or they lose various portions of their â¬Å"IMb efficiencyâ¬â discounts. Another carrot with a cat-oâ¬-nine-tails on the end ⬦
Finally eDoc allows MSPs the transparency of observing the operational efficiencies of the various USPS supply chain touch points. There have always been the accusations by some MSPs, perhaps on behalf of the largest mailers, of unnecessary or certainly unexplained kinks-in-the-hose of mail delivery. So now blame will be more easily placed which will lead to quicker correction?
The two-way communications feature will create a storage and transmission burden on these computer systems involved due to the present size of the mail.dat files. IDEAlliance, which designed the original mail.dat specifications, has followed that up with a mail.XML file format, which will be more efficient for large volume full service IMB practitioners. Mail.dat, which is followed by most MSPs, will continue to be accepted after the November 2009 implementation of mail.XML but obviously not preferred by many full service IMB practitioners.
One technical IMb nuance that may take time to implement to its fullest potential is that fact that each intelligent barcode must be unique for at least 45 days. One of the five data fields totaling 9 of the 31-digits can be prescribed by the mailer to add enhanced historical logistical information to the chosen pieces of mail. Helping mailers to understand, design, and apply this logic will be an IT consultantâ¬s dream or MSPs⬠nightmare, if the MSP provides the mailing list processing services. Mail.dat Version 9.1 will be required of the full service folks.
The nightmare comes in when the mailer chooses to apply logical identity to a fraction of the list and the mailing list processing service provider must program the â¬Å"selectâ¬â random assignment of unique numbers to the balance of the list within the constraints of a deadline. All it takes is a more robust IT mailing program to minimize the labor input, which translates to higher investment. This will probably be at the realistic economic exclusion of more and more small to medium-sized MSPs.
Basic to the IMb implementation will not only be the printing of a unique IMb on every mail piece but the printing and application unique IMb tray and container/pallet labels.
While nearly half of what is printed is mailed, the highest margin and fastest growing printing, i.e., variable data digital printing, is nearly all mailed. So compliance with changing and potentially more stringent - at least perceived to be so by smaller converters - postal regulations is concerning. IMB will definitely be more stringent if optimum discounts are desired by mail owners and therefore mail service providers.
Vice President of USPS Customer Service, Steve Kearney announced that there would be â¬Å"no new mailing standards instigated until the end of November.â¬â This was in reaction to the mailers agonizing over both the continued evolving standards landscape as well as the perceived fast track implementation schedule of IMb.
This article may imply that choosing the IMb service for small to medium-sized mailing service providers and full service regional printers could be an uphill battle. However, there will definitely be a core group that see the underlying uncut diamond and make the commitment. The problem then becomes, who is going to help them. The USPS will be available by phone and offer basic webinars but do not offer on site custom consultative handholding.
The opportunity appears to exist for some trade association to step forward and serve as a facilitator between small software vendors and their forward thinking association members. Or is there a student submitting a business plan to his entrepreneurial class in college to incorporate the public domain IT infrastructure for mail distribution management into a series of shared logistical contracts. Itâ¬s happened before. Thatâ¬s how FedEx started. The college professor gave the founder of FedEx a â¬Å"Câ¬â for this idea.
An added incentive to this start-up entity is the USPS trend away from meaningful economic incentives for mailing service providers to assume more difficult mailing production tasks. Instead the USPS is stating their MSP â¬Å"partnersâ¬â will lose their discounts if their work does not meet a minimum level of perfection. MERLIN successfully applied this appropriately so in many instances when select MSPs were printing out addresses in poor alignment and contrary to pretty simple manufacturing specifications. To project the MERLIN cat-o-nine-tail model to higher and higher levels of sophistication could drive a segment of the market to the new competitor. Another example is the USPS stating that all mailers must convert to the â¬Å"basicâ¬â Intelligent Mail barcode format by May 11, 2011 or risk losing all automation discounts. Thatâ¬s what free enterprise is all about. Free enterprise does not exist in a monopolistic service model.
C. Clint Bolte is of C. Clint Bolte & Associates in Chambersburg, Pennsylvania. For additional information please call 717-263-5768 or e-mail cbolte3@comcast.net.
It was enlightening to hear (1) the restructuring plans by the United States Postal Service to counter its heavy losses being incurred as well as (2) the roll out plans for the most significant software technology this 200 hundred year old institution has ever envisioned â¬" the Intelligent Mail Barcode (IMb). The Postal Service is clearly betting on the IMb to be the cornerstone for its future efficiencies and the containment of its escalating labor cost burden.
This article will reflect upon the USPS initiatives taken to restructure its organization and the potential alternative courses of action that the small to medium sized mailing service providers (including full service printers) might consider in achieving IMb readiness.
Permanent (?) Erosion of Centuries Old Business Model
Lets capsulate the volume/capacity situation. For nine consecutive quarters mail volumes have progressively dropped. This year alone 20 billion pieces less than the 2008 tally of 203 billion. This 20 billion lost exceeds the total annual mail volume for each of the majority of the developed nations of the world. Each billion pieces of mail represent $380 million of revenue.
Stated another way daily pieces of mail delivered to each US addressee has fallen from 6 to less than 5. Offsetting the mail volume drop is the addition of a million new addresses each year. The most labor intensive task at the post office is the â¬Å"last mile delivery.â¬â Rearranging routes for carriers due to this declining volume is a significant savings. Over 7,000 routes will be eliminated this year alone.
Postal revenues this fiscal year will fall to less than $70 billion with projected losses of $6.5 billion. This loss is attributed to the $5.4 billion of payments that must be paid this year as mandated by the Postal Accountability and Enhancement Act (PAEA) of 2006. Additionally another $2 billion must be paid to the Office of Personnel Management for annual retiree health benefit premium. Both of these figures are scheduled to escalate each year through 2016. Congress could amend the PAEA to leave the PAEA payment stream intact, but allow the Postal Service to pay its retiree health premiums out of a $32 billion trust fund that it has been contributing to.
With $1.4 billion of cash carry over from FY2008, according to USPS CFO Joe Corbett, the Postal Service will still need to borrow $3 billion from the Treasury to make these payments back to these employee benefit funds. Congressional Committee hearings on this proposed action, as H.R. 22, were proceeding at the same time as the Postal Forum. If enacted, H.R. 22 would reduce the FY09 loss by $2 billion. This new $3 billion loan would leave the USPS with a $10 billion overall debt.
Fairly accurate mail volume projections have traditionally been made utilizing GDP, Retail Sales, and Investment indices. Following that norm Post Master General Jack Potter expects the bottom to be about 170 billion pieces of mail next year before a turnaround is reached. Because of the unusual nature of the successive quarters of volume collapse, the Mailing Technical Advisory Committee (MTAC) comprised of 55 associations is being polled for its individual projections of mail volume in the near future.
Various research reports, e.g., the Winterberry Report of earlier this year and the recent Borrell Associates report, forecast a steady decline of direct mail volumes in favor of the less expensive e-mail advertising. Whether their numbers hit the mark matters less than the contrary view expressed that an improving economy will not necessarily increase conventional mail volume as espoused by the PMG.
Price Discounting & Advertising Hope to Increase Mail Volumes
The 30% Summer Sale on incremental standard mail volumes was approved by the Postal Regulatory Commission (PRC) in early May. This first ever, seasonal incentive has been widely reported in the trade press and therefore this article wonâ¬t dwell on its complex details. Plus the small to medium sized printers reading this article are not eligible for it anyway! Following the 80-20 rule, i.e., 20% of clients represent 80% of volume. The Direct Marketing Association says â¬Å"roughly 3,250 mailers, who account for 75% of Standard Mail volume,â¬â are being offered this short-fused initiative. The good news is that no large mailing service provider is eligible, only the firms buying the mailing. This will prevent the bigger MSPs from siphoning volume from smaller mailers to take advantage of the seasonal sale.
The simplicity of a smaller percentage, say 5%, across the board cut targeting the entire mailing market was rejected by these non-marketing types. Much time was rumored to be spent by the PRC and USPS debating the â¬Å"any howâ¬â mail, i.e., the mail that would come through the system at regular prices anyhow with no discounting necessary. Concern was apparently also expressed for mail volume that might be pulled out of the â¬Å"any howâ¬â mailing slot of October back into the summer to qualify as higher incremental volume. Such incremental decreases in October volume will offset the increased summer volumes and therefore 30% discounts hopefully earned, i.e., a gotcha. Seems the PRC wants to-have-its-cake-and-eat-it-to. Despite the fact that no Marketing 101 professor would have passed anyone in that class, the mere initiative must be acknowledged as heading in the right direction.
Results of this initiative will not officially be reported until probably late fall. And the USPS hopefully should be announcing a follow on Summer Sale â¬10 in early winter in order to give necessary time to plan and execute full campaigns in the ensuing six months. Hence, the PRC must have the details of the next promotion in their hands for review before the actual results of this first effort are fully known. The expectations for this initial effort being successful to any appreciable degree are dubious at best because of the minimal planning horizon allowed. This, of course, disregards the precept that the future landscape for direct mail is changing regardless of the impact of any temporary pricing adjustments.
While the USPS is hiring new executives in their sales arenas, their pricing flexibility is unfortunately limited to negotiated service agreements and high volume packaging arrangements. The members of the Postal Regulatory Commission, while distinguished legal professionals, are not typically known for their entrepreneurial or retail marketing prowess. So it is difficult to surmise what if any promotion might follow up this first effort.
The advocates for variable data digital printing continue to report return on investment results that are so high that no PRC member would ever expect to rationalize a reason to discount what is perceived to be an already cheap monopolistic distribution venue. And the more successful personalized targeted mailing becomes the shorter the run lengths anticipated. This is contrary to the old tried and true business model of huge blanket runs of standard mail promotions of two decades ago. Hence, small businesses, which are acknowledged to be the generators of most new jobs in America, will probably not swing much clout with the Postal Service since they will never be part of the 80-20 elite described earlier.
The postal executives acknowledge that they have never advertised their products and services to the extent of their â¬Å"traditionalâ¬â competition, i.e., FedEx, UPS, & DHL. While they have a relatively modest advertising budget, they have decided to concentrate the bulk of those moneys this year at the Priority Mail product. This represents a $6 billion product market to the USPS. They feel their variety of products at modest cost with free containers to be shipped anywhere in the United States is a strong competitive offering of which presumably not everyone is aware.
Three Key Operational Fulcrum Points
The United States Postal Service seems to be betting its future on three operational initiatives; (1) maximize address quality, (2) automate every stage of mail material handling possible, and (3) reduce and outsource as much labor intensive tasks as possible. The first will be achieved by charging extra for UAA (undeliverable) addresses. This will be achieved by refusing to allow discounts for inaccurate lists poorly applied that amount to a certain percent of the whole list. The heart of the second point is the implementation of the Intelligent Bar Code (IMb), which will be discussed in more detail later in this article. The final point is driven by the untenable cost escalation of the labor union contracts.
Despite the continuous investment in automation by the USPS, not to mention mailers, and the normal retirement attrition from 803,000 employees at its 1999 peak to 635,000 employees now, 80% of the total costs of this nearly $70 billion business continues to be labor. (Ten points of this is the retirement burden described earlier.) This elevated ratio is unheard of in any business of any free market democracy. Printers labor cost proportions are typically 40% while mail service providers are around 56%.
The analogy with the UAW costs and how far they out distance the labor cost packages of the foreign automakers running United States manufacturing plants may well be falling on deaf ears. The answer is simple; the various mail employee unions see no competition and embrace a two century long entitlement attitude. It is not fathomable how USPS management will be able to overcome that hurdle particularly since the federal elected officials seems inclined to favor the union position.
The result canâ¬t help but be a continual downward pressure on mail volume due to untenable annual cost hikes. Hence, annual USPS downsizing could be the norm until an alternative private sector entrepreneurial effort proves successful. Remember that the USPS had a lock on all United States packaging business in the 70s. Their entire original network of bulk mailing centers (BMCs) was unfortunately engineered to handle primarily packages and secondarily the less lucrative mail. Then FedEx, and shortly thereafter UPS, came in and took 90+% of this business away from the Postal Service. While the erosion took several years, the USPS simply could not react effectively to defend their turf.
This demise might come about much quicker than the USPS and Congress might imagine. Especially if the current Administrationâ¬s multi-trillion dollar federal expenditures result in near term double-digit inflation as is being forecast by many economists. The PAEA law allows the USPS to follow suit and increase annual postal rates to that level of annual inflation. The Postal Union contracts would be expected to seek tagalong exorbitant hikes. It is hard to imagine that a viable private sector, business model could not be built based upon 65+¢ first class and 45+¢ per piece standard mail revenue streams totaling only $10-20 billion of annual revenues.
Intelligent Mail Barcode â¬" Where is the small mailer benefit?
Letâ¬s analyze the IMb and see how it will contribute both to the USPS⬠vital automation object, but also a quick start up of a private sector alternative distribution network.
It will be interesting to see if the modest postal discount, i.e., 0.3¢ for first class and 0.1¢ for standard mail, is economic incentive enough to entice the mainstream mailing service providers to invest in IMb proficiency. The current economy at the very least is eliminating much corporate â¬Å"investmentâ¬â perceived to be of â¬Å"longer termâ¬â benefit. Keep in mind that mail owners will be pressing to have this modest discount passed along to them while mail service providers are the ones incurring the IT expense. Since the discount will be debited to the permit account owner, the MSPs donâ¬t have much incentive at all, particularly if enough competitor MSPs likewise choose not to anti-up the IT investment.
Letâ¬s get back to basics. The Intelligent Mail Barcode replaces all previous five barcodes, many with their own objective. This IMb 31-digit barcode in five fields has the combined objective of sorting, tracking, and address correction (feedback to mailer) in one barcode. Initially offered as a â¬Å"basicâ¬â version with no discounts. The â¬Å"full serviceâ¬â IMb version carries the discounts and the added benefit of enhanced â¬Å"eDocâ¬â of electronic communications with the USPS.
These Internet communications allow the cash management efficiencies of funds transfer and to make appointments for mail induction into the postal system. Presumably these appointments will prevent the MSPs trucks from waiting in line to be processed. A flashback to the analogy of dental and family physician appointments is inevitable. Presented to customers as a means to minimize their waiting room time, they ultimately maximize the service providers⬠productivity. Hopefully in this instance it will prove to be mutually beneficial.
This two-way â¬Å"eDocâ¬â communications has three design features. It includes the Confirm⢠service, which has been available for a decade and has proven to allow retailers to better manage their call centers saving labor expense and hopefully improving their own perceived customer service. Confirm⢠will continue to be an extra expense.
â¬Å"eDocâ¬â will facilitate the automated address correction feedback to the mailer to update their mailing lists. Under â¬Å"basicâ¬â IMb there is a charge for this address correction service (ACS) while ACS is â¬Å"freeâ¬â to â¬Å"full serviceâ¬â IMb. Itâ¬s free, but the mailer has 30-days to incorporate these changes in subsequent mailings or they lose various portions of their â¬Å"IMb efficiencyâ¬â discounts. Another carrot with a cat-oâ¬-nine-tails on the end ⬦
Finally eDoc allows MSPs the transparency of observing the operational efficiencies of the various USPS supply chain touch points. There have always been the accusations by some MSPs, perhaps on behalf of the largest mailers, of unnecessary or certainly unexplained kinks-in-the-hose of mail delivery. So now blame will be more easily placed which will lead to quicker correction?
The two-way communications feature will create a storage and transmission burden on these computer systems involved due to the present size of the mail.dat files. IDEAlliance, which designed the original mail.dat specifications, has followed that up with a mail.XML file format, which will be more efficient for large volume full service IMB practitioners. Mail.dat, which is followed by most MSPs, will continue to be accepted after the November 2009 implementation of mail.XML but obviously not preferred by many full service IMB practitioners.
One technical IMb nuance that may take time to implement to its fullest potential is that fact that each intelligent barcode must be unique for at least 45 days. One of the five data fields totaling 9 of the 31-digits can be prescribed by the mailer to add enhanced historical logistical information to the chosen pieces of mail. Helping mailers to understand, design, and apply this logic will be an IT consultantâ¬s dream or MSPs⬠nightmare, if the MSP provides the mailing list processing services. Mail.dat Version 9.1 will be required of the full service folks.
The nightmare comes in when the mailer chooses to apply logical identity to a fraction of the list and the mailing list processing service provider must program the â¬Å"selectâ¬â random assignment of unique numbers to the balance of the list within the constraints of a deadline. All it takes is a more robust IT mailing program to minimize the labor input, which translates to higher investment. This will probably be at the realistic economic exclusion of more and more small to medium-sized MSPs.
Basic to the IMb implementation will not only be the printing of a unique IMb on every mail piece but the printing and application unique IMb tray and container/pallet labels.
While nearly half of what is printed is mailed, the highest margin and fastest growing printing, i.e., variable data digital printing, is nearly all mailed. So compliance with changing and potentially more stringent - at least perceived to be so by smaller converters - postal regulations is concerning. IMB will definitely be more stringent if optimum discounts are desired by mail owners and therefore mail service providers.
Vice President of USPS Customer Service, Steve Kearney announced that there would be â¬Å"no new mailing standards instigated until the end of November.â¬â This was in reaction to the mailers agonizing over both the continued evolving standards landscape as well as the perceived fast track implementation schedule of IMb.
This article may imply that choosing the IMb service for small to medium-sized mailing service providers and full service regional printers could be an uphill battle. However, there will definitely be a core group that see the underlying uncut diamond and make the commitment. The problem then becomes, who is going to help them. The USPS will be available by phone and offer basic webinars but do not offer on site custom consultative handholding.
The opportunity appears to exist for some trade association to step forward and serve as a facilitator between small software vendors and their forward thinking association members. Or is there a student submitting a business plan to his entrepreneurial class in college to incorporate the public domain IT infrastructure for mail distribution management into a series of shared logistical contracts. Itâ¬s happened before. Thatâ¬s how FedEx started. The college professor gave the founder of FedEx a â¬Å"Câ¬â for this idea.
An added incentive to this start-up entity is the USPS trend away from meaningful economic incentives for mailing service providers to assume more difficult mailing production tasks. Instead the USPS is stating their MSP â¬Å"partnersâ¬â will lose their discounts if their work does not meet a minimum level of perfection. MERLIN successfully applied this appropriately so in many instances when select MSPs were printing out addresses in poor alignment and contrary to pretty simple manufacturing specifications. To project the MERLIN cat-o-nine-tail model to higher and higher levels of sophistication could drive a segment of the market to the new competitor. Another example is the USPS stating that all mailers must convert to the â¬Å"basicâ¬â Intelligent Mail barcode format by May 11, 2011 or risk losing all automation discounts. Thatâ¬s what free enterprise is all about. Free enterprise does not exist in a monopolistic service model.
C. Clint Bolte is of C. Clint Bolte & Associates in Chambersburg, Pennsylvania. For additional information please call 717-263-5768 or e-mail cbolte3@comcast.net.
