It’s been clear for a while that one of the most significant cost-saving opportunities for the U.S. Postal Service is in address quality. Unfortunately, the most recent comprehensive cost study of undeliverable as addressed mail is from 1998.
It showed that the USPS spent about $1.5 billion on UAA mail. The vast majority was spent in three areas: forwarding mail (mainly First Class); returning to sender that which cannot be forwarded (mainly First Class); and destroying mail that cannot be delivered and is not entitled to forwarding or return services.
Again, using the 1998 numbers, the unit cost to forward mail was 21 cents per piece, to return to sender was 59 cents per piece and the cost to destroy was 4 cents per piece.
It would seem there are three basic ways for the USPS to reduce its costs:
· Work harder.
· Work smarter.
· Make work go away.
Working harder means getting employees to do more per work hour. Though that is possible, it is usually the most difficult means of increasing output per work hour. Working smarter means devising new methods, procedures and technologies to produce more per work hour. Examples of working smarter abound. They include mailer presorting and barcoding of mail and delivering mail on pallets instead of sacks.
However, the greatest opportunity may result from eliminating the need for some work. If every piece of mail entered into the system had a current recipient address, one that did not require forwarding or returning to sender, the vast majority of UAA cost could be eliminated.
Despite much effort by many people, the volume and cost to handle UAA does not seem significantly reduced. Some data introduced before the Postal Rate Commission even indicate an increase. It’s time for the USPS to consider new strategies. The first change needed is one of mindset. The postal service seems to be focusing its attempts to reduce UAA mail/costs in two ways: by developing new addressing tools and new addressing regulations. Instead, the USPS should have as its clear objective a reduction in the total expense associated with UAA mail.
How is this different? I would ask you to consider the change in New York City police department philosophy that began about a decade ago. Back then, police precinct commanders felt that their main job was to catch the bad guys. Then, through a change in mindset, Mayor Rudy Giuliani changed their responsibility to one of reducing crime in their district. The result, as we all know, has been a reduction in crime.
How can we change the mindset that the objective is to reduce the expense of UAA mail, not just introduce regulations and software tools and catch violators? I think Postmaster General John Potter started down that path in his March 21 speech at the Nashville National Postal Forum.
“I also want us to cut by 50 percent the amount of undeliverable as addressed [UAA] mail,” he said.
Consistent with a change in philosophy, I have specific thoughts on how the USPS can reduce its UAA expense, by at least the amount Potter set as a goal:
· Potter must assign someone in the USPS responsibility and accountability for halving the UAA expense. It’s unclear whom, if anyone, in the postal service has that specific assignment.
· Require that any mailer sending First-Class mail at an automation rate receive electronically data concerning the name/address of any of its First-Class mailings that are undeliverable. At a cost of more than 60 cents, each piece of undeliverable mail is physically returned to the sender. This practice should stop for automation-rate mailers unless they are willing to pay for it. The negotiated service agreements with several banks have shown the enormous monies that can be saved by not returning undeliverable First-Class mail. Any monies saved or received from this change should be considered, in a future rate case proceeding, to reduce the price of automation-rated First-Class mail. This change would have no effect on consumer-sent First Class.
· Charge automation-rated First-Class mail for any pieces that require forwarding. It should not be difficult to determine when First-Class mail requires forwarding, as it would have to be processed at a computerized forwarding site. Monies saved or received from this change should be considered, in a future rate case proceeding, to reduce the price of automation-rated First-Class mail. Again, this change would not affect consumer-sent First-Class mail.
· The USPS should develop a program to accept and distribute “qualified” changes of address from sources that get COA information earlier than the postal service. In the interest of full disclosure, I consulted for one of these “sources.” It had access, using Internet technology, to potentially millions of COAs, often several weeks earlier than the USPS. My relationship with this well-known company ended a few years ago, as it gave up after several years of battling an entrenched USPS bureaucracy. I’m also aware of another firm, with quality credentials, that quit because of similar stonewalling.
· The USPS should speed the completion of a new UAA cost study now under way so it can be available for the next postal rate case and could be used to introduce some of the new pricing concepts described above.
I have more thoughts that could affect UAA, but I’ll save them for another day.