the adaptable post

We are all familiar with thepressures facing mostposts in the last few years,

including a steep decline in mail vol-ume and increased competition. Inmechanized operations, volume hasoften dropped faster than machinesand labor can be taken out. Postsneed to come up with an operatingstrategy that is adapted to thesenew mail patterns, including new ap-proaches to distribution and operat-ing plans.

Industrialized posts have devel-oped highly automated technologiesto read addresses, and sort and se-quence letters and even small pack-ets. Operating plans provide the un-derlying discipline required toleverage the benefits of automation,and distribute and deliver the mailefficiently. Processing areas are de-fined, transport schedules are estab-lished, and deadlines for processingmail are set. These operatingschedules are refined over time, butthey remain essentially static andare changed infrequently. Laborschedules are often establishedbased on these static operatingplans.

Today, excess labor and infra-structure associated with these

BERNARD MARKOWICZ AND PIERRE KACHA

decision/analysis partners LLC

The Adaptable Post

Reprinted from the September 2011 Edition of the Mail & Express Review, Post & Parcel.

static plans are erasing some ofthe productivity gains achievedthrough automation in the lastthirty years.

Inventory is our friendEvery day, these static operat-

ing plans push items through thesame time definite paths, consoli-dating mail through the sameplants, using the same primary sortprograms, towards the same deliv-ery preparation and final deliveryprocesses. When one examinesthe mail in each stream, one oftenfinds faster mail, such as first classmail in the U.S. co-mingled withslower mail, like U.S. standard mail,being processed in the same timewindows, and at the same speed.The proportion of slower class mailbeing hurried to its destinationfaster than necessary is increasing,as the proportion of faster first classmail keeps dropping.

The additional amount of timeavailable to deliver standard mail,and sometimes the additional timealso available to deliver first class,could be used to perform a numberof cost saving actions. For instance,delivery may be avoided to certainpoints on certain days, facilities maybe bypassed on certain days, ortransport may be combined. Actionsmay include holding and consolidat-ing mail, or bypassing and reroutingmail to forego processing, or trans-port, and thereby create larger, moreeconomical batches. The main ideais to use information about mail andits characteristics to create anadaptable operations environment

that can take advantage of availableinformation and time and generatemore cost effective routings.

In the rest of this article, we ex-amine some of these possible ac-tions in the context of ‘the adaptablepost:’• Dynamic network management:

how mail flows can be managedin near real time.

• Delivery point economics: howdelivery operations can be con-trolled together as a function ofvolumes and service standards.

• Yield management: the ability towork with mailers to take advan-tage, like the airlines, of availablecapacity.

• Advanced labor management:crew scheduling.

Dynamic network managementThe main concept is to deliber-

ately take advantage of the time avail-able to deliver each mail piece. Thismeans that the normal mail process-ing operations cycle does not applyautomatically to each piece of mail,


Yield management is the process of understanding, anticipating

and influencing consumer behavior in order to maximize yield or

profits from a fixed, perishable resource.

and that a piece of mail may be heldor diverted based on a number of fac-tors. For instance, some mail in-ducted on Monday may be held in in-ventory along the way to form largerbatches, provided that service com-mitments are respected. Sort pro-grams on automated equipmentwould adapt from one day to another,driving mail through one facility in-stead of another. Transport will alsobe affected since mail will follow dif-ferent paths across the network on itsway to its destination mailbox.

Different degrees of flexibility canbe built into an operating environ-ment, and the system can be de-signed to react at different speeds. Atfirst, opportunities to adapt from thedaily schedule can be implementedon a repeatable weekly or monthlybasis. Sort schemes and transportschedules can be made to changepredictably from one day to anotherbecause of weekly or seasonal pat-terns. A post can then graduate to amore dynamic level of adaptation, forinstance when information aboutlarge mailings is integrated into oper-

ating plans in near real time. Sortschemes and transport are thenadapted based on overall processingcosts. The operating plans find waysto leverage network wide transportand processing capacity, aiming tomaximize the operating efficiency ofeach plant in the network, and thetransportation utilization on eachroute between plants.

Delivery point economicsDelivery point economics uses

the same concept: short term deliv-ery planning applications use de-tailed information about the mailpipeline to create opportunities to re-duce delivery costs. Mail can beheld in the network, or at deliveryunits, when distribution economicssuggest and service standards per-mit, so that delivery routes can beshortened, skipped, or combined.

A similar concept is being testedin France by La Poste, where mailcarriers collaborate to manage deliv-ery routes on a daily basis based onthe availability of personnel and thevolume of mail to be distributed.Finnish Post has gone further,emailing scans of physical mailpieces to rural customers, then opti-mizing rural deliveries of the physi-cal pieces every other week. Theobjective is to leverage both mail de-livery capacity and the time avail-able to deliver each piece to createheavier delivery density and lowerdelivery costs per piece.

Yield managementThe concept of yield management

was introduced by American Airlines

in 1985. Yield management is theprocess of understanding, anticipatingand influencing consumer behavior inorder to maximize yield or profits froma fixed, perishable resource. Forposts, the perishable resource is theprocessing and delivery capacity ofthe network on a given day. On somedays of the week, during somemonths of the year, there is additionalcapacity because overall mail volumeis lower. During or prior to holidays,available capacity may be reduced,and operators rely on more expensiveovertime.

Using its capacity to anticipatemail volumes on a future given day,the postal operator would price itsavailable capacity to mailers accord-ingly, and invite them to take advan-tage of this capacity. On low volumedays, prices offered to mailers foradvertising mail would go down toreflect the availability of processingcapacity. During high volume peri-ods, prices for advertising mailwould go up to reflect the scarcity ofcapacity available. Mailers couldreserve processing and delivery ca-pacity ahead of time at pre-agreedprices, thus commirring to stableand predictable mail flows.

Advanced labor managementTraditionally, postal operations

were made predictable by settingfixed labor schedules and rules thatenabled postal managers to line uppredictable human resources. To-day, modern enterprises must tailortheir human resources more pre-cisely to the demands of their opera-tions, and to assign the appropriate


Please reach out to the authors withcomments and questions:

Bernard [email protected]

Pierre [email protected]

level of labor to meet the expectedworkload.

Airlines and rail companies havelearned to assign the right level oflabor to the expected operationalworkload through crew scheduling.Under crew scheduling, qualifiedworkers bid for specific tours orcombinations of work shifts offeredby the company using a sophisti-cated software application that takesinto account seniority, skill levels, lo-cations where the work needs to beperformed, and labor agreements.Some programs even take into ac-count pairing of experienced work-ers with more junior members tocome up with balanced work teams.Labor rules at posts may have to beadjusted before crew scheduling canbe implemented, but airlines andrailroads have shown that this canbe done in a union environment.

Next stepsIndustrialized posts have done

an amazing job of developing andintroducing automation in the lastthirty years. Now, another revolutionis needed to extend these productiv-ity gains and further reduce costsand increase performance: leverag-ing information about the mailstream to find better and more costeffective ways to route mail throughthe network, every day. To moveforward with the concept of theadaptable post, operators shouldconsider the following steps:• Examine, describe and evaluate

key internal capabilities andprocesses to determine howadaptable they are. These include

engineering, network and opera-tions planning, network manage-ment, marketing and sales, laborand facilities management.

• Establish an internal measure ofadaptability by identifying variousoperational features and capabili-ties and periodically reporting onprogress.

• Outline an advanced operationsmanagement strategy which in-corporates adaptability, and de-velop an internal white paper tocommunicate the concept androadmap.

• Create a community of interestwithin the post to discuss proj-ects, initiatives and best prac-

tices. Organize visits and discus-sions with other posts.

• Outline and fund a number of ini-tiatives to gradually increase thedegree of adaptability, and meas-ure and report on progress.

• Appoint an executive to take thelead in enabling the transforma-tion, with the authority and themanpower to execute the change.


the adaptable post

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