USPS Promises Progress on Product Redesign

With Civil Service Retirement System legislation signed into law, the U.S. Postal Service now is intensifying efforts to push its Product Redesign initiative.

Begun in 2001, the initiative aims to bring sweeping changes to postal products and services. Goals include developing flexible cost-based presort, preparation and entry; defining work-sharing opportunities; improving value to customers; driving costs out of the system through incentive-based practices; and having prices and products that generate growth in volume and revenue.

The USPS last undertook such an effort in the early 1990s. It was called classification reform, and the most important development was a change in rates and preparation requirements for automation letter-mail.

Members of the mailing community have expressed concern in recent months that the initiative has not progressed as planned. They also thought the USPS had not adequately informed them of the project's status.

“There hasn't been a lot of communication to those people that have [given] a lot of time and effort to meeting on the subject and putting forth their ideas,” said Anita Pursley, vice president of postal affairs at Quebecor World Logistics, who has been involved in the redesign since its inception.

The USPS said it is working to change this perception.

“There has been a paucity of communication [from the USPS], which led to people feeling that less was happening than there has been,” said Don O'Hara, manager of product redesign at the USPS. “We have been doing a lot of costing work, without having much to communicate about. But we are moving ahead … and working to solve this communication problem in a variety of ways.”

For starters, the USPS explained its latest plans at a steering committee meeting in Washington last week. The committee consists of postal management and postal industry players.

Passage of the CSRS legislation prompted the postal service to cancel plans to file one Product Redesign reclassification case, it said at the meeting, because some changes that were considered could affect rates, which the USPS has committed to keep steady until 2006.

Instead, initiatives will be split up. Some will be “options,” or non-classification changes. Others will be “niche classification” changes, which still must be filed with the Postal Rate Commission.

“We found that it might be better to file several class-specific cases rather than one large, classification-reform case,” O'Hara said. “To get the full benefit of Product Redesign, however, you have to get noticeable changes in the rate structure, and we can't do that immediately with some of the rate constrictions in the current environment. But we are doing everything we can to provide mailers with incentives to take costs out of the system within the constraints.”

The postal service expects to publish two such initiatives with the Federal Register in late June or early July. One will let mailers combine Periodicals and Standard mail bundles on Sectional Center Facility pallets.

“The benefit is that we get Periodical and Standard mail on one pallet, which means fewer pallets to handle,” he said. “In addition, mailers may be able to get deeper drop-ship discounts with existing rates.”

The second will raise the number of mail pieces at which Standard mail flat five-digit bundles are permitted from 10 to 15 pieces. This change also has no rate implications, so it can proceed.

The benefit of this initiative, Pursley said, is “that it will reduce bundle-handling costs for both the postal service and the mailers. If we can reduce costs now, then when we get into another rate-case scenario, we can deal with a lower cost structure.”

The USPS plans a joint meeting with Product Redesign work groups sometime in July, O'Hara said, where “we will have a more extensive presentation of where we are, what we've been doing and what we plan to do.”

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