accenture postal cost reduction slideshare · accenture postal cost reduction slideshare author:...

DRIVINGSTRATEGIC COST REDUCTION

Accenture Post and Parcel Industry Research 2019

Copyright © 2019 Accenture. All rights reserved. 2

THE REVENUE MIX IS SHIFTING AND MARGINS ARE DECLINING

67%of players saw a decline in EBIT(1) margins between the last two reported financial years

Posts and Integrators

60%Integrators

Absolute EBIT margins decline range

(0.5%) – (2.2%)

Shifting Revenue Mix

Mail to parcels has declined(2)

28:12014

15:12018

(1) EBIT = Earnings Before Interest and Tax; (2) For 10 players considered as part of the analysis

Increasing Cost Pressure

Employee Costs

Transportation Costs

Rental Costs

68%Absolute EBIT margins decline range

(0.5%) – (5.7%)

Posts


COST DRIVERS ARE AFFECTING MARGINS

(1) Analysis done for the last two reported Financial Years; (2) Range expressed for top to bottom performers; (3) Property, facilities and maintenance costs; *Considered only those companies as part of the analysis which are reporting respective expenses separately i.e. 11 for transportation expenses, 17 for rental expenses and 24 for employee wage rate

100%Companies* saw increased transportation expenses

Change as a percentage of revenue(2)

+0.1%Austrian Post bpost

+5.6%

59%Companies* saw increased rental(3) expenses

% Growth in rental expenses(2)

-25%Posti bpost

+42%

71%Companies* saw increased average employee wage

% Growth in average employee wage(2)

-6%Posten Norge PostNord

+17%


INTEGRATORS NEARLY 3X MORE PROFITABLE

9.7%Median margin for parcels(4)

Integrators have made parcels three times more profitable

Postal players bear the brunt of the decline despite having mail delivery synergies(1)

Median margin for mail(2) Median margin for parcel(3)

10.7% 3.7%

(1) Analysis done for the last two reported Financial Years; (2) Postal companies for mail includes Austria Post, PostNL, CTT, Posten Norge, Swiss Post; (3) Postal companies for parcel includes Royal Mail, Austria Post, SingPost, PostNL, CTT, La Poste, Canada Post, Posten Norge, Swiss Post; (4) Integrators includes UPS, FedEx, DPDHL and Aramex.


INTEGRATORS HAVE HIGHER CONTRIBUTION PER UNIT

13.8

9.9

13.7

11.2

6.5

5.4

7.4

6.1

4.1

1.2

1.2

1.2

1.1

0.5

0.4

0.3

0.2

0.1

15.1

11.1

14.9

12.3

7.0

5.8

7.7

6.3

4.3

La Poste

Fedex

DPDHL

UPS

Swiss Post

PostNL

Austria Post

Canada Post

Royal Mail

Parcel EBIT per unit

[FY 2018]

Parcel Revenue per unit

[FY 2018]

Parcel Cost per unit

[FY 2018]

Posts

Integrators

Median parcel EBIT margin8.2%

Median parcel EBIT margin5.6%

Cost per stop

Parcels per stop

Cost per parcel

First time delivery rate

B2B B2C

$5.00(1) $5.50(1)

~3(2) ~1.05(2)

$1.67 $5.23

97% 85%

(1) Cost per stop based on industry averages for parcel delivery (excludes mail) for integrators and postal players with organized labor; (2) Parcels per stop based on industry average for parcel delivery (excludes mail) for integrators and postal players.


WHAT CAN POST AND PARCEL PLAYERS DO TO

REDUCE COSTS?

Analyzed 24 post and parcel organizations


Developed a representative organization from existing financial statements

Pinpointed examples of successful cost take

out from other industries that apply to post

and parcel organizations

Applied findings to representative

organization

Identified 29 Digital & Non-Digital initiatives across post and parcel value chain

Quantified FTE and Non-FTE financial impact across post and parcel value chain

Created a customizable Strategic Cost

Reduction Model

Found $500 million cost takeout opportunity

UNDERSTANDING THE OPPORTUNITY TO IDENTIFY POTENTIAL COST SAVINGS, ACCENTURE HAS:


LABOR SAVINGS (FTE) VS. OTHER SAVINGS (NON-FTE)

(1) In a base case scenario. *Full time employee

% Contribution to Total Cost Reduction ($500 million total)*(1)

~$350 million in FTE cost reduction

Transportation FTE

Warehousing & Sortation FTE

Support Functions FTE

Post Offices & Other FTE

Transportation Non-FTE

Support Functions Non-FTE

Warehousing & Sortation Non-FTE

Post Offices Non-FTE65%

13%

13%

9%

54%31%

10%6%

~$150 million in non-FTE cost reduction

Core Operations


Workforce Organization

Customer

Touchpoints

Support

Functions

PERSPECTIVEVALUE CHAIN

POST AND PARCEL ORGANIZATIONS CAN MAKE SAVINGS IN:


VALUE CHAIN PERSPECTIVE:CORE OPERATIONS

1) In a base case scenario. Does not fully account combinatorial impact across initiatives. Does not include the impact of CRM Support Solutions and Procurement Optimization; *These initiatives have EBITDA impact due to revenue increase and/or cost reduction, however, here only cost reduction impact of such initiative has been taken into consideration. In case of only revenue impact, cost reduction contribution will be zero.

78

47

33

31

16

14

11

28

22

21

2

Self-Service Kiosks or Smart CollectionBoxes on Retail Points

Connected Vehicles with loT and Telematics

Routing Algorithms

Alternate Delivery Day

Robotics & AGV in Warehouse & Sortation

Consumer Control & Seamless ParcelDelivery Experience*

Sorting Automation & Efficiency Improvement

Electric Vehicles for Last Mile Delivery

Robotic or drone delivery

Predictive Analytics for Maintenance in Warehouse& Sortation

Distribution & Logistics Network Rationalization

[~$210-394 million]

[$million impact]

Conservative Scenario

Base Scenario

Optimistic Scenario


VALUE CHAIN PERSPECTIVE:WORKFORCE ORGANIZATION

[~$35-121 million]

[$million impact]


Right FTE Mix or Flexible Workforce

Workforce Augmentation ThroughWearables & Handhelds

Workforce Analytics

Outsourced & Contracted Delivery*


Base Scenario

Optimistic Scenario

40

11

23

1


VALUE CHAIN PERSPECTIVE:CUSTOMER TOUCHPOINTS


AI Powered Care/Chatbot*

Parcel Specific Pick & Drop Parcel Lockers*

11

23

1

35

9

[~$32-55 million]

[$million impact]


Base Scenario

Optimistic Scenario


VALUE CHAIN PERSPECTIVE:SUPPORT FUNCTIONS


Marketing Performance Analytics

RPA in Support Functions

Sales Force Enablement or Effectiveness

Digitized HR Employee Self Service

HVAC Analytics

Finance Analytics

Zero Based Budgeting - ZBS

1

11

5

1

28

18

5

[~$39-100 million]

[$million impact]


Base Scenario

Optimistic Scenario


WHERE TO

NEXT


FIVE ACTIONS FOR THE FUTURE

BECOME VALUE FOCUSED

02 LEARN FROM OTHERS

Successful implementations and strategies employed both within and outside the industry can provide a roadmap to unlock value

01Create cost visibility that accurately captures granular cost data to incorporate into cost take out initiatives

DEVELOP COST VISIBILITY

03Technologies such as artificial intelligence, robotics and cloud make it possible to unlock an entirely new set of cost savings

TAKE ADVANTAGE OF NEW, PROVEN TECHNOLOGIES

04Successful cost take out programs include the right focus, the right structure and governance and the right data and reporting

IMPLEMENT A RIGOROUS COST TAKE OUT PROGRAM

FOR MORE INFORMATION

/in/brodybuhler

BRODY BUHLERGlobal Managing Director, Accenture Post & Parcel Industry

@brodybuhler

[email protected]

www.accenture.com/postal

/in/andre-pharand

ANDRE PHARANDGlobal Management Consulting Lead Accenture Post & Parcel Industry

@andre_pharand

[email protected]

ABOUT ACCENTURE

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 482,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

Copyright © 2019 Accenture. All rights reserved.Accenture and its logo are trademarks of Accenture.

https://www.linkedin.com/in/brodybuhler

https://twitter.com/brodybuhler

mailto:[email protected]

https://www.accenture.com/us-en/insight-new-delivery-reality-post-parcel-players?c=acn_glb_publicserviceslideshare_11036659&n=smc_0919

https://www.linkedin.com/in/andre-pharand/

https://www.linkedin.com/in/brodybuhler

https://www.linkedin.com/in/andre-pharand/ https:/twitter.com/andre_pharand

https://twitter.com/andre_pharand [email protected]

mailto:[email protected]

accenture postal cost reduction slideshare · accenture postal cost reduction slideshare author:...

Documents