This article originally appeared in the January/February, 2018 issue
of Mailing Systems Technology.
Growing up in southern California in a small, middle-class home, my parents taught me at a young age that certain words were inappropriate. After an unexploded firecracker (one of several that I had been playing with in the fireplace days earlier) suddenly went off during our Sunday night viewing of the latest Bonanza episode, I learned what a few of those words were!
“What’s one of the dirtiest words in business? Chances are that the word “outsourcing” comes to mind. Some despise it, many business owners shy away from it and countless entrepreneurs depend on it.”
That quote from YFS Magazine reminds me of an old Dennis the Menace comic strip: “If I have to sit in the corner for sayin' it, at least you could tell me what it means!” I’m here to let you know the good, the bad, and, perhaps, the ugly, of outsourcing. Regardless of how one feels about outsourcing, it’s not always a bad thing. And let’s not forget its opposite: insourcing, which has its own set of perks as well.
Outsourcing is defined as “to procure (something, such as some goods or services needed by a business or organization) from outside sources and especially from foreign or nonunion suppliers [or] to contract for work, jobs, etc., to be done by outside or foreign workers” by Merriam Webster. Common synonyms include “contract out,” “farm out,” “subcontract,” and “delegate.”
On the flip side, insourcing is defined as the practice of using an organization’s own personnel or other resources to accomplish a task or provide a service. It can also be defined as delegating a job to someone within a company. In the simplest of terms: You do the work!
Before diving into the ins and outs of sourcing your work, let’s look at the typical services found in many, if not most, mail service operations.
Most companies handle their inbound mail delivery. This can include internal delivery of large and small envelopes, magazines, and packages, as well as inter-office mail. In smaller operations, inbound mail is often sorted once for final delivery. In many larger operations, inbound volumes are sorted more often: a primary sortation to organize mail into delivery routes, followed by a second sortation as mail is delivered to individuals or locations.
Operations that receive a large volume of inbound packages, such as colleges and universities, may separate typical mail from packages and create a route dedicated to package delivery. Some institutions will rely on individual carriers providing the last mile of delivery, while others prefer to reduce the amount of traffic on their campuses and maintain control of package delivery.
Nearly all mail service operations process outbound mail; that’s where the money is made and/or saved. Regardless of the industry, all organizations must take responsibility for their outgoing mail, whether that’s desktop mail – mail that is generated during the course of normal business operations – or bulk mail including marketing, sales, solicitation mail, or similar types of communications. If you prepare your company’s bulk mailings, there is a good chance that some of the processes include folding, inserting, tabbing, list preparation, and more. Regardless of organization size or its corresponding mail volumes, there are ample opportunities to take advantage of both outsourcing and insourcing.
There are a variety of reasons for companies and organizations to look to outsourcing some processes and services. In my 35-plus years in the mailing industry, the number one reason for outsourcing mail operations has been the high costs of labor and benefits. Upper management often feels that savings can be realized by letting an outside mail processing company handle the company’s mail. However, that may not always be the most cost-effective decision.
Another reason many organizations outsource their mail is mail volumes just aren’t large enough to warrant in-house processing. In these cases, it may be wise to selectively outsource that portion of your mail processing. If your volumes don’t warrant postal discounts, a nearby consolidator or presort bureau may be a good alternative.
Along with low volumes, another hurdle is the lack of funding for mailing equipment and software. Inserting, inkjet addressing, and tabbing equipment can be pricey. There’s also the cost of mailing software plus annual equipment maintenance and software updates.
Another common option is the outsourcing of mail handling personnel. By having another company process your mail, you free up existing manpower for other tasks. It also transfers the headaches that often come with hiring, firing, and training new employees.
Can I Insource?
If you can bring in additional work, you can make more efficient use of existing equipment. It allows you to spread depreciation and/or operational costs over a greater base. In many cases, it would also allow you to qualify for additional work-sharing postal discounts. By spreading labor costs over a broader workload, it would also assist in right-sizing your organization for the peaks and valleys that often come throughout the year.
Another reason that companies may choose to insource is due to bad experiences with outsourcing. “One reason for insourcing to occur is if a company had previously outsourced a certain task, but was no longer satisfied with the work being done on that task, so the company could therefore insource the task and assign it to someone within the company who they believe will do a better job,” as explained by Merriam Webster.
By keeping the work in-house, you’re able to maintain better control over operational processes. This can provide for better customer satisfaction. And with seasoned staff, you maintain better control of institutional memory and corporate identity, something that is often overlooked when management is simply looking at numbers.
Trust the Scout Motto: Be Prepared
How do you prepare your operation to be the most qualified to handle your organization’s mail? Start with your staff. Keep them motivated and constantly seeking innovated ways to process your mail. All the players should have a vested interest in the success of the operation, whether outsourced or not.
Make sure you keep all employees, especially those up the line, aware of the good that you do. When things run smoothly, little notice is given. It’s ok to brag, but you have to be able to back it up with solid proof consisting of actual monetary and time savings, efficiencies, and problems solved.
When something bad happens — and trust me, it will — look at it as an opportunity to exceed expectations. A customer’s or department’s mis-delivered or delayed letter or package is seemingly never forgotten. If a mistake is made, own it, learn from it, and implement changes to prevent it from occurring in the future. Look for ways to exceed that customer’s expectation. Perhaps have a supply of movie tickets, gift cards, or restaurant vouchers that you can offer to an unhappy customer. (These are also good for rewarding individual employees for going above and beyond.)
One critical aspect of any mail operation is knowing your costs. EVERYTHING must be measured. Count everything that is touched each time it is touched. Count containers, not individual pieces. Use standard volumes, either industry or your own, to identify those quantities. Most operations will use 500 letters per full tray, 150 flats per full tub, 75 parcels per full hamper, and 100 parcels in a full cage. Your numbers may differ. Regardless of which numbers you use, make sure you use the same numbers throughout the year, allowing you to compare “apples to apples.”
Measure all mail streams: incoming mail and packages from all carriers, internal mail and packages, outgoing mail and packages, both domestic and international, and, of course, outgoing bulk mail, or Marketing Mail. It’s also critical to keep track of costs and expenses: salaries, benefits, equipment (both acquisition and maintenance), vehicles, and supplies.
As more companies shift from hardcopy mail to digital, mail volumes will continue to decline. One aspect of mail processing that is rising is the volume of both inbound and outbound packages. Look for opportunities to provide package services. Work with state government or industry associations to qualify for discounted shipping rates. Add a processing fee that keeps the price lower than the published price and make a little profit while providing the customer a discount.
Look for ways to improve secure delivery using tracking systems. There are several excellent companies that provide tracking software and hardware.
Look for additional services that you may be able to provide. What about your not-so-typical mail services? Over the past several years, many mail operations have either been brought into the printing processes or mailers have now added printing to their list of services. By mailing what you print and printing what you mail, you gain better control of the entire process as well as the finished product. This is especially important for maintaining a positive corporate or company identity.
Other mail operations have added services such as passports, print/mail fulfillment, and local express deliveries, especially for those items produced by your organization.
Not everything in life runs smoothly. Be patient, be diligent, work to improve processes, and as you continue moving forward, remember the words from the movie Galaxy Quest: “Never give up! Never surrender!” And leave the dirty words to R-rated movies.
Thom Roylance has served as the Assistant Director of Brigham Young University for almost 30 years. He also served as the president of the National Association of College and University Mail Services (NACUMS) from 1995-1997. This article on the “Ins and Outs of Sourcing your Work” is taken from a presentation given at both the National Postal Forum (NPF) and at NACUMS.