Uncertainties Surround Flat Sorters, Make-Up Rules
Business doesn't like uncertainty. Sure, some thrive under it, but most prefer to operate in an environment with a minimal number of unknowns. However, there appear to be just too many unknowns as part of the current U.S. Postal Service rate increase filing. And those unknowns likely will affect the growth of mail volume.
One unknown involves compatibility. Compatibility is an issue that most of us understand. Take PC software. When Microsoft changed from Windows 95 to Windows 98 to Windows XP, it had an impact. However, Microsoft tried to reduce the impact and smooth the transition from one operating system to the next. As the leader of the software industry, it's mandatory that Microsoft provide to PC users a migration path that permits existing software to run under both the old and new operating systems. Apparently, the USPS does not feel that same compulsion.
I am referring to the postal service's migration from one flat-sorting machine to a newer model. The USPS currently uses two flat sorters. Flats are defined by specific dimensions, but for our purposes consider them to be magazines, catalogs or oversized envelopes. The older, existing flat sorter is called the FSM 1000. It is being replaced in the field by a newer machine called the FSM 100. The FSM 100 ultimately will be replaced by a newer-technology machine, currently called the FSS.
The problem for mailers is that these newer machines have less tolerant specifications. The sizes of flats that the new machines can process are more restrictive. This is a big deal for many mailers: As the specifications change for what the machine can process, the postal charge also will change. These less flexible machines will turn many flats that were considered automated into non-automated. The price difference can add 5 cents or more to the postage cost, probably even more when the higher rates are in place next year.
One of these processing restrictions involves the rigidity of the flat. Many of the flat pieces affected are CDs and DVDs. They will be unable to pass through the rollers and tracks and make the turns necessary for processing on the FSM 100. The USPS has suggested that if mailers merely use additional packaging to make the piece more flexible, then the FSM 100 will be able to process it. Someone must think that this additional packaging is free.
This incompatibility between machines is hard to understand. The USPS has to be the largest individual buyer of flat-sorting machines. One would think the postal service could control the specifications of the machines it purchases. It should be expanding the flexibility of the machines, not restricting them, especially as it looks to Standard Mail, particularly flats, for mail volume growth.
A second area of uncertainty involves the upcoming changes in the postal service's processing network. These changes, which appear well thought out, will result in a new transportation and processing network called Evolutionary Network Development.
Today, the processing environment consists mainly of Bulk Mail Centers and Sectional Center Facilities. Mailers and logistics providers have developed a well-understood flow of mail, entered, at a discount, into the BMC/SCF network. Probably sometime next year we'll see the start of END. It will change the flow of mail, as is intended. But it will introduce confusion, and uncertainty, as the new network evolves and is understood.
Last among the uncertainties, though I'm sure others have more, are the make-up rules. I know I've discussed these before, but they are vital for several reasons. These rules determine how a mailer must put together his mail to meet postal regulations and to receive a particular discount. For example: How many pieces are the minimum required to get a five-digit presort discount? What is the minimum or maximum weight of a pallet for magazines or catalogs? These rules are critical in determining the actual rate increase that mailers will see.
These rules are the English language input used to create the computer code that controls the sequence and groupings of the mail as it is output. This software is likely to be produced by one of just a few companies that produces postal software. Then typically this "make-up" software is integrated into the mailer's computer system, which determines what is to be mailed as a bill, a promotion or a product. The computer translation of the rules - the integration into the mailer software - must be tested to ensure that it's error free.
A certain level of anxiety is creeping into mailers' minds that they will not have enough time to do all that is necessary. It would help if the USPS made an early announcement that a minimum of 60 days would be given after the Postal Rate Commission decision on the rate case and after the final make-up rules are announced, whichever comes later, before new rates are implemented next year. This should provide time to clean up all the software errors and ensure a clean integration. However, we've still got the questions of machine flexibility and the END network to work out.