webinar 2013 the adaptable post

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1 Welcome to our Postal Webinar Series Use the chat window to ask questions during the presentation. We will answer them at the end. We will start in a few moments…

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Page 1: Webinar 2013   the adaptable post

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Welcome to our Postal Webinar Series

Use the chat window to ask questions during the presentation. We will answer them at the end. We will start in a few moments…

Page 2: Webinar 2013   the adaptable post

The Adaptable Post Concept

February 28, 2013

Page 3: Webinar 2013   the adaptable post

Webinar outline

� Variability in the postal network

� Five concrete operational initiatives

� Moving forward

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Page 4: Webinar 2013   the adaptable post

2011 2012

Total mail volume delivered168,297,000,00

0159,859,000,000

Drop in mail volume with respect to prior year (2,562,000,000) (8,438,000,000)

Decline with respect to prior year (1.0%) (5.0%)

Average mail volume delivered daily 557,275,000 529,334,000

Delivery points to residential and business addresses 151,492,000 152,146,550

Increase in delivery addresses w respect to prior year

+636,530 +654,560

Average mail volume delivered per address per day 3.7 3.5

Longer Term Trends(USPS illustration)

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Page 5: Webinar 2013   the adaptable post

Sources of Postal Traffic Variability

� Long-term trends

� Substitution

� Economic situation

� Seasonal variability

� Holidays

� Others

� Day-of-the week

� Customer preferences

� Operation cycles

� Mailings

� Large customer mailings

� Random failures

� Transport delays

� Equipment failure

� Other

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Page 6: Webinar 2013   the adaptable post

Capacity versus Variability

Typically, postal operators run a network that is seldom adjusted, why?

� Complex network: impacts are

difficult to anticipate

� Data not always available

� More often: No culture of

“production planning & control”

(PP&C) or analytics.

What causes excessive costs in a “static” network?

� Equipment: Often sized for peak

capacity

� Transport: Low utilization and/or

inadequate timing

� Labour: Utilization not aligned to

workload

� Sort plans: Bins, trays, containers

are under-utilized

� Too many delivery routes, poorly

defined.

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Page 7: Webinar 2013   the adaptable post

Interdependent functions across customers, resources, and partners

Adapting the

Network

Mailers Processing

Delivery Transportation

Volume, Mix,

Schedules

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Feed ForwardInfo

Page 8: Webinar 2013   the adaptable post

How can we adapt to cut costs?

Variability Type What can be done?

Long-term • Facilities, equipment sizing & configuration

• Network, distribution, delivery, labour agreements

Seasonal • Distribution, transport, labour, delivery

• Manage peaks, yield mgmt., 3rd parties

• Forecasting, skills & training

Day-of-the-Week • Yield mgmt., distribution, delivery

• Decision support, skills & training

Mailings • Yield mgmt., distribution

• Manage peaks, yield mgmt.,

• Decision support, skills & training

Random Failures • Distribution, decision-support

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Page 9: Webinar 2013   the adaptable post

The adaptable post spans many areas

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Long Term RandomSeasonal Day of Week Mailings

Network

Modeling Yield Mgmt Planning

Distribution Planning

Business Analytics

Capacity Planning

Contingency Planning

Network

Rationalization

Asset Leasing

3rd Party

Collaboration

Sort and HoldMaintain

Situational

AwarenessDynamic

Route MgmtDelivery Pt Economics

Labour Planning and Scheduling

Skills and Training

Yield Management

Labour Scheduling

Page 10: Webinar 2013   the adaptable post

Five concrete initiatives to increase adaptability

� Hold and sort

� Dynamic routing

� Delivery point economics

� Yield management

� Labour scheduling

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Policies

Initiatives

Tools

Plan

Schedule

Execute

Measure

Page 11: Webinar 2013   the adaptable post

Demand – capacity imbalance

� Postal networks operate in a environment

with significant variability where demand for

processing and delivery may not always be

aligned to the current capacity.

� This creates an imbalance that may result in

overtime labour, congestion or under-

utilisation, or unmet service standards.

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Demand

Capacity

Processing/Deliver

Page 12: Webinar 2013   the adaptable post

1. Hold and Sort

� “Hold and Sort” deliberately takes advantage of

time

available to manage this imbalance

� Leverage service standards to hold mail for as

many

hours or days necessary to:

� Increase transport effectiveness

� Optimise sort centre machine utilisation

� Increase the density of mail delivered to a group

of addresses

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Demand

Time available ?

Cost-savingalternatives?

Hold Process

Page 13: Webinar 2013   the adaptable post

1. Hold and Sort (continued)

� The consequence of this initiative may be to

introduce new products, tools, and technologies

� Establish an information-rich identification scheme that

represents critical mail piece, as well as advance ship

notices of large mailings

� Introduce products with flexible service commitments to

increase the density of mail delivered to a group of

addresses (or block-face)

� Implement distribution management tools to perform the

hold versus process decisions

� Introduce mail staging technologies that

enables storage and retrieval

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Page 14: Webinar 2013   the adaptable post

2. Dynamic Routing

� Mail and parcel routing decisions can also be made

dynamically, to mitigate seasonality, day-of-the-week

fluctuations, or the variability due to large mailings.

� Routing is performed network-wide, or within specific

regions

� Distribution programs can be adapted, driving mail

through one facility or another

� Transport can be adjusted accordingly – perhaps

capacity is already there

� Why?

� Leverage under-utilised capacity, service time allowing

� Close a facility temporarily (day or shift, for

maintenance)

� Consolidate mail streams to reduce costs and

improve efficiency

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Page 15: Webinar 2013   the adaptable post

2. Dynamic Routing (Continued)

� Needs good routing tools

� Network models to balance workload

� Quickly invoke or construct and put in place

alternative sort plans

� Ability to evaluate transport needs

� Adaptability is achieved gradually, e.g., start

with seasonal, weekly plan changes and

gradually evolve to daily plan changes

� Key success factors are:

� An information-rich environment, and

� A highly flexible organizational structure

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Page 16: Webinar 2013   the adaptable post

3. Delivery Point Economics

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� Delivery routes can be adapted to

optimize the density of mail delivered per address

� Hold mail for delivery when

economically attractive

� Develop specific mail products to

support delivery point economic

� Shift the focus to ‘any-day delivery’ vs.

‘five or six day delivery’.

� Skip some delivery points while meeting

service requirements

Page 17: Webinar 2013   the adaptable post

3. Delivery Point Economics (Continued)

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� Information requirements

> medium/high

� Item level identification

� Smart network and delivery planning tools

� High degree of operational flexibility

� Flexible staging of mail

� Crew-based delivery workforce

� Introduces a strong information

management discipline and improves the

operational flexibility

Page 18: Webinar 2013   the adaptable post

4. Yield Management

� Yield management is the process of

understanding, anticipating, and influencing

customer behavior to maximize yield or

profits from the processing and delivery

capacity

� Daily processing and delivery capacity are

perishable resources to be optimized.

� Commonly used in airlines and hotels

� Pricing policies for large mailings would

take into account available network

capacity based on day-of-the-week or

seasonality.

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Page 19: Webinar 2013   the adaptable post

4. Yield Management (Continued)

� Requires:

� Good costing & yield management models

� Mailing reservation/e-manifest system

with accurate production plans

(coupled with dynamic routing)

� Mail pickup program

� Pricing flexibility outside of USO

� Information requirements > medium

� Good historical averages can be used

� Capacity and network impacts must be

easily evaluated

� Pricing must be offered beforehand

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Page 20: Webinar 2013   the adaptable post

5. Advanced Labour Management

� Advanced labour management initiatives

will help posts be more adaptable and

transition from fixed to variable-cost

operations

� Methods to aligned labour to the

variability in demand:

� Crew scheduling

� Bids of qualified workers to specific

operations/shifts

� Variable labor assignment

� Fully utilize the flexibility that exists in the

labour force

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Page 21: Webinar 2013   the adaptable post

5. Advanced Labor Management (Continued)

� Requires

� Ability to affect work assignments

� Part-time workers

� Scattered shifts

� Integrated labour & operations planning system,

and other advanced modeling techniques

� Information requirements > medium to high

� Understanding

� Work rules

� Labour costs for each task

� Labour productivity functions by work center

� Projecting short to medium term volumes

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Page 22: Webinar 2013   the adaptable post

In Summary

� The commercial sector is driving cost out by being increasingly agile and

adaptable

� Complexity of postal network and operations has kept them static

� Significant opportunities to adapt

� Infrastructure (Long-term changes in volume/mix)

� Distribution (Medium & short term)

� Delivery (Medium & short term)

� Information

� Historical: forecasting & simulation tools, business analytics

� Mailer data: advanced planning, distribution & routing tools

� Real time: Situational awareness, operations control

� Mailpiece identification: real-time decision support, business analytics

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Page 23: Webinar 2013   the adaptable post

Next Steps

Diagnostic

� Do you know how variable your demand and operations are?

� How adaptable is your operation?

� How often do you adapt your infrastructure?

� How often do you revise your distribution plans?

� Do you have the proper tools & methods for each type of variability?

Roadmap

� Improve understanding of levels/impacts of variability in the enterprise

� Identify and prioritise initiatives to increase adaptability

� Acquire data and tools, develop skills

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> insight > action > transformation