Daily Archives: July 24, 2012

Can the US Post Office Be Fixed?

As chronicled in SI’s winter post that decided it was Too Bad the US Post Office Did Not Follow Royal Mail’s lead (before we got wind of the Royal Mail Fiasco), it’s old news that the US Post office is in dire straits. (No, no, not this Dire Straits. The US Post office definitely are not The Sultans of Swing.)

When you have more debt than 50+ countries have capita, that’s a bad thing, and not something a single (barrel) of sourcing projects is going to fix overnight. (Any operation hemorrhaging cash that bad should have hemorrhaged management years ago!) A drastic Supply Management-led transformation is required, but what should it look like? Obviously, Saturday service can be eliminated (as we Canucks do without it just fine), and obviously the sorting centres should be more efficient, but that’s a small drop in the labour and overhead categories relative to the 20 Billion the US Post Office needs to save (if it doesn’t want a good excuse to be shuttered).

Where should it start? Damn good question. Obviously, a technological transformation is a great place to start, but even the doctor is at a loss at how you cut 15 Billion when the bigger problem is obviously that you lost it in the first place! However, a few people are taking stabs at it, and this recent piece over in Progressive Railroading, on how Intermodal rail [is] a ‘sensible’ transportation option for U.S. Postal Service, that quoted a report recently issued by the U.S. Postal Service Office of Inspector General‘s Risk Analysis REsearch Office, showed someone has a head on their shoulders.

In Strategic Advantages of Moving Mail by Rail, shifting a portion of mail volume from tuck to intermodal rail could yield $100 Million in annual cost savings without requiring changes to the postal service’s network. Wow! Imagine how much could be saved if the network was optimized. I’m guessing double that, or more. If I’m right, that could yield 1 Billion in five years. With almost no effort!

They have to do something. As CNN notes, it’s a summer of discontent at [the] Postal Service. But given that it’s on the verge of defaulting on a $5.5 billion payment covering retiree health care due August 1, what can we expect?

At this point, I have to agree with Bob Ferrari, who, in his recent Friday Rant*, said that solving the problems of this agency involves a number of structural changes as well as an infusion of modern supply chain management practices related to efficiency and productivity. We have been clear that the U.S. needs a vibrant and efficient postal service and that may not necessarily equate to wholesale privatization. And, most important, there is an obvious need for a non-partisan, independent commission to oversee the process of re-structuring the USPS. Instead of audit agencies reacting to the obvious and pointing to required management changes, an independent commission should be tasked with a comprehensive look at how the USPS can be transformed to a highly efficient agency that instills modernized physical distribution and information management practices. Hear, hear! Let’s face it — 3.3 Billion is an awful lot for highway transportation contracts, even if you are the USPS.

* What’s with S.M. bloggers and Friday Rants anyway? Haven’t they figured out yet that any day is a good day for a rant!