When I was first started in this industry, the software was not available for us to do these analyses on a computer. Most offices did not have computers, and certainly no one had one dedicated for their personal use! We literally had printouts of the address lists, a map with the USPS’ bulk mail centers (BMC), which are now called network distribution centers, or NDCs. These locations were highlighted on a cork board with push pins. We would sit for long periods of time and insert push pins into the map to identify “density,” which is defined here as the proximity of the mailing addresses to each other. We were looking for pockets of addresses that were highly concentrated in geographic areas served by the postal facilities. If the push pins indicated as much, we would review the options for transporting those pieces to the nearest USPS entry facility to take advantage of the lower postage rates offered by entering our mail there rather than presenting it at local USPS facilities.
Of course, there was a time advantage associated with this as well, but the savings to the organization was the true driving factor. For the purposes of this article, I am going to use USPS Marketing (formerly Standard) Mail for the example I share. My example will also focus on commercial letters using automation rates, and the entry points available are USPS NDCs and SCFs (Sectional Center Facility). The logic and process I share apply to all “destination entry” scenarios across mail types that offer these discounts (they are not offered for First-Class Mail). Some of us in the industry still refer to this a “zone skipping” or “drop shipping,” but it basically focuses on transporting your mail for USPS acceptance and entry to a facility near the delivery addresses on the pieces.
The Benefits Outweigh the Costs
Why would mailers want to incur this cost? Simply put, the available savings outweigh the cost incurred. Another benefit to any distribution plan is that this can positively impact delivery performance and predictability with respect to “in home” date measurements. This is crucial when deadlines are tight and costly options, including upgrading to First-Class mail, are being weighed due to service failures within your organization. In these cases, the savings do not need to outweigh the costs. They just need to outweigh the additional cost of upgrading all or some portion of the mail to First-Class postage to achieve delivery within defined timeframes.
The most recent USPS rate fold (Notice 123) is a great tool and is the place where the savings potential comes into focus. It clearly shows the opportunity available:
USPS Marketing Mail - Commercial Letters Automation
Letters weighing 3.5 oz. or less per piece price
Once you have access to a presort software to properly run scenarios with your files, the rest is all math. Running scenarios between local entry (“None” above) and destination NDC or SCF entry (the “D” in front of each denotes this), the math dictates what you should do. How many pieces can you present at the NDC and/or SCF level (in other words, how much would this save you)? And, on the flip side, what is the cost of doing so?
For example, in a mailing of 200,000 pieces, your postal software tells you that all the pieces qualify for 5-digit entry, and of those, 100,000 qualify for NDC entry and the remaining 100,000 qualify for SCF entry. This report can tell you which NDC and SCF entry points are appropriate and from there you obtain the costs of going to each point in the distribution plan. The savings are easy to calculate in this example.
Entering the mail at the appropriate postal facility generates a savings. For those entered at an NDC, you save $0.022/piece ($0.256-$0.234). On 100,000 pieces, you save $2,200.00. For those entered at an SCF, you save $0.028/piece ($0.256-$0.228). On 100,000 pieces, you save $2,800.00. If your cost to get the pieces to these facilities is lower than $5,000.00, you have generated revenue for the organization. This is a simplistic example but truly represents what you need to understand: As you review the data, follow the savings. Complexity does not change this. Some mail pieces are best presented local to where they are produced, and knowing which projects to mix requires planning and adherence to schedules. Plans and schedules change requiring dynamic adjustments, but as most mailers know, that is nothing new.
Not all pieces should or will qualify for these entry savings as presented in this example. Multiple entry facility options for the mail must be considered. It may optimize savings to take all the pieces to only the NDC or SCF. This is the true “art” in this process. Transportation rates vary based on the point of origin (where you are producing the work), weight of the load, and the USPS facilities you choose for entry and acceptance. Knowing these things and then running multiple scenarios is always beneficial.
Best Practices for Mailers
First, establish distribution plans that can be utilized across multiple mailings. The cost factors are often consistent, and businesses fall into repeatable cycles. Transportation has components that are variable, but the consistent logistics elements (distance, time, and return hauls) are remarkably stable, so we all learn patterns that allow us to generally predict savings potential.
Second, never underestimate the value of good postal software. Coming from the old “push pin” days, I can tell you that the tools available today are wonderful. They allow you to run multiple scenarios and associated distribution plans for every project. More than that, they allow you to support your decisions and plans with documentation that clearly delineates the expected outcomes against the cost factors considered for each project.
Lastly and most importantly, have fun and share the knowledge you gain with others. It is fun to learn new things and to find and report on savings within your organization. Having this knowledge will help you during those times when operational challenges leave you feeling empty and out of options. Providing new and low-impact options during these times helps everyone move forward in a direction that benefits the organization and its customers. Sharing how this was possible with others and teaching them to do the same allows them to grow, representing you well as a leader to the entire organization. Knowledge is powerful, but it is not poweras many believe. Knowledge that is shared is both. Sharing knowledge and actively teaching others is the only true way that we can all move forward in our organizations into roles of greater impact and responsibility.
Mark Rheaume is a Services Engineer, Enterprise Services Sales Engineering, at Ricoh USA, Inc. He has over 35 years of industry experience developing, designing, and implementing solutions. Mark is and has been an active member in several postal industry associations as a board member, speaker, and writer. These associations include: MTAC, Idealliance, NPOA, PCC, MSMA, Mailcom, NPF, and Printing Industries of Minnesota. He can be contacted at Mark.Rheaume@ricoh-usa.com.