U.S. Postal Service
Delivery Performance Standards, Measurement, and Reporting Need Improvement Gao ID: GAO-06-733 July 27, 2006U.S. Postal Service (USPS) delivery performance standards and results, which are central to its mission of providing universal postal service, have been a long-standing concern for mailers and Congress. Standards are essential to set realistic expectations for delivery performance and organize activities accordingly. Timely and reliable reporting of results is essential for management, over-sight, and accountability purposes. GAO was asked to assess (1) USPS's delivery performance standards for timely mail delivery, (2) delivery performance information that USPS collects and reports on timely mail delivery, and (3) progress made to improve delivery performance information.
USPS has delivery standards for its major types of mail, but some have not been updated in a number of years to reflect changes in how mail is prepared and delivered. These outdated standards are unsuitable as benchmarks for setting realistic expectations for timely mail delivery, measuring delivery performance, or improving service, oversight, and accountability. USPS plans corrective action to update some standards. Also, some delivery standards are not easily accessible, which impedes mailers from obtaining information to make informed decisions. USPS does not measure and report its delivery performance for most types of mail. Therefore, transparency with regard to its overall performance in timely mail delivery is limited. Representative measures cover less than one-fifth of mail volume and do not include Standard Mail, bulk First-Class Mail, Periodicals, and most Package Services. Despite recent disclosures on its Web site, USPS's reporting is more limited than the scope of measurement. Without sufficient transparency, it is difficult for USPS and its customers to identify and address delivery problems, and for Congress, the Postal Rate Commission, and others to hold management accountable for results and conduct independent oversight. Progress to improve delivery performance information has been slow and inadequate despite numerous USPS and mailer efforts. Some impediments to progress include USPS's lack of continued management commitment and follow through on recommendations made by joint USPS/mailer committees, as well as technology limitations, data quality deficiencies, limited mailer participation in providing needed performance data, and costs. Although USPS has initiatives to improve service and better track mail through its mail processing system, USPS has no current plans to implement and report on additional representative measures of delivery performance. USPS's leadership and effective collaboration with mailers is critical to implementing a complete set of delivery performance measures.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-733, U.S. Postal Service: Delivery Performance Standards, Measurement, and Reporting Need Improvement
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
July 2006:
U.S. Postal Service:
Delivery Performance Standards, Measurement, and Reporting Need
Improvement:
USPS Delivery Performance Information:
GAO-06-733:
GAO Highlights:
Highlights of GAO-06-733, a report to Congressional requesters
Why GAO Did This Study:
U.S. Postal Service (USPS) delivery performance standards and results,
which are central to its mission of providing universal postal service,
have been a long-standing concern for mailers and Congress. Standards
are essential to set realistic expectations for delivery performance
and organize activities accordingly. Timely and reliable reporting of
results is essential for management, over-sight, and accountability
purposes. GAO was asked to assess (1) USPS‘s delivery performance
standards for timely mail delivery, (2) delivery performance
information that USPS collects and reports on timely mail delivery, and
(3) progress made to improve delivery performance information.
What GAO Found:
USPS has delivery standards for its major types of mail, but some have
not been updated in a number of years to reflect changes in how mail is
prepared and delivered. These outdated standards are unsuitable as
benchmarks for setting realistic expectations for timely mail delivery,
measuring delivery performance, or improving service, oversight, and
accountability. USPS plans corrective action to update some standards.
Also, some delivery standards are not easily accessible, which impedes
mailers from obtaining information to make informed decisions.
USPS does not measure and report its delivery performance for most
types of mail. Therefore, transparency with regard to its overall
performance in timely mail delivery is limited. As shown in the table
below, representative measures cover less than one-fifth of mail volume
and do not include Standard Mail, bulk First-Class Mail, Periodicals,
and most Package Services. Despite recent disclosures on its Web site,
USPS‘s reporting is more limited than the scope of measurement. Without
sufficient transparency, it is difficult for USPS and its customers to
identify and address delivery problems, and for Congress, the Postal
Rate Commission, and others to hold management accountable for results
and conduct independent oversight.
Table: USPS Delivery Standards, Measurement, and Reporting:
Type of Mail: Standard Mail;
Delivery Standards: 3-10 days;
Mail Volume (percent): 48;
Representative measurement: None;
Reporting on USPS Web site: None.
Type of Mail: First-Class Mail: bulk mail; Delivery Standards: 1-3
days;
Mail Volume (percent): 25;
Representative measurement: None;
Reporting on USPS Web site: None.
Type of Mail: First-class Mail: single-piece; Delivery Standards: 1-3
days;
Mail Volume (percent): 22;
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of Mail: Periodicals;
Delivery Standards: 1-7 days;
Mail Volume (percent): 4;
Representative measurement: None;
Reporting on USPS Web site: None.
Type of Mail: Package Services;
Delivery Standards: 1-9 days;
Mail Volume (percent): 1;
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of Mail: Priority Mail;
Delivery Standards: 1-3 days;
Mail Volume (percent): [A];
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of Mail: International Mail;
Delivery Standards: 2 days to 6 weeks;
Mail Volume (percent): [A];
Representative measurement: Partial;
Reporting on USPS Web site: None.
Type of Mail: Express Mail;
Delivery Standards: 1-2 days;
Mail Volume (percent): [A];
Representative measurement: Full;
Reporting on USPS Web site: Partial.
Source: GAO analysis of USPS information.
[A] Less than 0.5 percent.
[End of Table]
Progress to improve delivery performance information has been slow and
inadequate despite numerous USPS and mailer efforts. Some impediments
to progress include USPS‘s lack of continued management commitment and
follow through on recommendations made by joint USPS/mailer committees,
as well as technology limitations, data quality deficiencies, limited
mailer participation in providing needed performance data, and costs.
Although USPS has initiatives to improve service and better track mail
through its mail processing system, USPS has no current plans to
implement and report on additional representative measures of delivery
performance. USPS‘s leadership and effective collaboration with mailers
is critical to implementing a complete set of delivery performance
measures.
What GAO Recommends:
GAO recommends that USPS take actions to modernize its delivery
standards, implement delivery performance measures for major types of
mail by providing clear commitment and more effective collaboration,
and improve the transparency of delivery performance standards,
measures, and results. In commenting on a draft of this report, USPS
disagreed that its standards are outdated and detailed its vision to
improve service measures and transparency. USPS did not directly
comment on three of our four recommendations. On our transparency
recommendation, USPS said that its standards should be more visible and
is exploring providing more of this information.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-733].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Katherine Siggerud at
(202) 512-2834 or siggerudk@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Some USPS Delivery Standards Are Not Useful and Transparent and Do Not
Reflect Current Mail Operations:
USPS Measurement and Reporting Of Delivery Performance Information Is
Inadequate:
Progress In Developing Complete Delivery Performance Measurement Is
Unsatisfactory Due To Lack of Management Commitment and Effective
Collaboration:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: USPS Delivery Standards:
Appendix III: Comments from the U.S. Postal Service:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Summary of USPS Delivery Standards for Timely Delivery of
Mail:
Table 2: USPS Measurement and Reporting of Timely Delivery Performance:
Table 3: USPS Delivery Performance Measurement by Type of Mail:
Table 4: USPS Delivery Performance Reporting by Type of Mail:
Table 5: Timeline of Actions and Recommendations Related to Delivery
Performance Measurement:
Table 6: Basis for GAO Assessment of USPS Delivery Standards,
Measurement, and Reporting:
Table 7: USPS Delivery Standards by Class and Type of Mail:
Table 8: USPS's Approximate Overview of the Service Standard Ranges for
Standard Mail and Periodicals (not specifically required):
Figure:
Figure 1: Geographic Coverage of Delivery Performance Measurement for
First-Class Mail Deposited in Collection Boxes as Measured by EXFC:
Abbreviations:
APQC: American Productivity and Quality Center:
BMC: Bulk Mail Center:
DBMC: Destination Bulk Mail Center:
DDU: Destination Delivery Unit:
DSCF: Destination Sectional Center Facility:
EMS: Express Mail Service:
EXFC: External First-Class Measurement System:
GPRA: Government Performance and Results Act of 1993:
MTAC: Mailers' Technical Advisory Committee:
OCA: Office of the Consumer Advocate:
P&DC: Processing and Distribution Center:
PETE: Priority End-to-End:
POM: Postal Operations Manual:
PRC: Postal Rate Commission:
PSA: Parcel Shippers Association:
PTS: Product Tracking System:
SCF: Sectional Center Facility:
USPS: Postal Service:
United States Government Accountability Office:
Washington, DC 20548:
July 27, 2006:
The Honorable Susan M. Collins:
Chairman:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Tom Carper:
United States Senate:
The U.S. Postal Service's (USPS) mail delivery standards and
performance, which are central to its mission of providing postal
services to all communities, have been long-standing concerns for
mailers and customers who receive mail. Delivery performance standards
(delivery standards) for on-time delivery of mail enable USPS, mailers,
and customers to set realistic expectations for delivery performance,
such as the number of days mail takes to be delivered, and to organize
their activities accordingly. USPS and others rely on information about
delivery performance results to understand whether delivery standards
are being met and what is driving performance--that is, identifying
which factors are contributing to both successful and problem areas.
This information is vital for management, oversight, and accountability
purposes. Mailers' concerns revolve around whether standards,
measurement, and reporting are complete, transparent, and useful. These
concerns include whether USPS's delivery standards reflect its
operations and whether they can be used as a benchmark for measuring
performance for all major types of mail;[Footnote 1] whether delivery
performance measurement is adequate for USPS to set goals, manage its
operations, and improve its delivery performance; and whether the
reporting of delivery performance is adequate for various stakeholders,
such as mailers who need this information for business planning, as
well as USPS's Board of Governors and the Congress, who need this
information to fulfill their respective oversight and accountability
responsibilities. Delivery performance information also helps the
independent Postal Rate Commission (PRC) review proposed rates and
render advisory opinions on USPS proposals that USPS expects to affect
the quality of postal services nationwide or on a substantially
nationwide basis.
There is little statutory guidance on how USPS establishes delivery
standards. However, USPS is subject to statutory requirements related
to performance measurement and reporting. Since 1976, Title 39 of the
U.S. Code has required USPS to submit an annual Comprehensive Statement
to its congressional oversight and appropriations committees that must
include "data on the speed and reliability of service provided for the
various classes of mail and types of mail service," among other things.
In addition, the Government Performance and Results Act of 1993 (GPRA)
requires USPS to annually report to Congress and the public on its
goals and actual performance relative to these goals. Sponsors of
postal reform legislation have recognized concerns in the area of
delivery standards, measurement, and reporting; and the House and
Senate have passed postal reform legislation that would clarify USPS's
delivery standards and create a strong postal regulator who would
administer statutory obligations for USPS to annually report, for most
types of mail, the level of service provided "in terms of speed of
delivery and reliability."[Footnote 2] The regulator would be required
to annually determine compliance with this reporting requirement and
would have the authority to obtain court orders to enforce compliance
as well as to impose fines in cases of deliberate noncompliance.
This report assesses:
1. delivery standards for the timely delivery of mail that USPS has
established,
2. delivery performance information on timely delivery of mail that
USPS measures and reports, and:
3. progress USPS has made in improving its delivery performance
information.
To address these objectives, we based our assessment on applicable
laws--such as laws related to USPS's mission to provide prompt,
reliable, and effective universal postal service, including the prompt
and expeditious delivery of mail, and statutory reporting requirements
related to USPS's delivery performance. We also developed criteria
based on practices used by high-performing organizations, including
practices for performance management identified by the American
Productivity and Quality Center (APQC), a nonprofit organization that
studies the best practices of top-performing organizations and
benchmarks business performance to help organizations improve their
quality and productivity. In addition, we based our criteria for
practices used by high-performing organizations on our past work on
USPS and other leading organizations.
Our criteria focused on the completeness, transparency, and usefulness
of the delivery standards, measures, and results for various types of
mail. We obtained information primarily from USPS documentation,
including its current delivery standards and other material provided in
response to our requests, publicly available USPS reports, documents
filed in PRC proceedings, and other USPS material available on its Web
site. We also obtained documentation from other sources, such as
reports on joint USPS-mailer committees, articles, and material
provided to us by mailers. We interviewed USPS officials responsible
for USPS delivery performance information and postal stakeholders,
including representatives of mailer groups, individual mailers, PRC,
and PRC's Office of the Consumer Advocate, which is charged with
representing the interests of the general public. We conducted a data
reliability assessment of USPS delivery performance information that
was sufficient for the purposes of our review. More details about our
objectives, scope, and methodology are included in appendix I. Our work
was conducted from August 2005 to July 2006 in accordance with
generally accepted government auditing standards.
Results in Brief:
While USPS has developed delivery standards for its major types of
mail, the standards for several types of mail have not been updated in
a number of years to reflect significant changes in the way that mail
is prepared and delivered. As a result, these outdated standards are
unsuitable as benchmarks for setting realistic expectations for timely
mail delivery, measuring delivery performance, or improving service,
oversight, and accountability. For example, the delivery standards for
Standard Mail, USPS's largest volume mail category (48 percent of mail
volume), were established in the 1970s and are generally based on
distance. These standards do not take into account mailer activities,
such as presorting mail to the ZIP Code or carrier delivery route
level, and entering mail at a postal facility that generally is closer
to the destination, that have led to changes in USPS's mail processing
and transportation networks. Such activities became much more prevalent
after USPS began providing discounts to mailers for these activities
more than 25 years ago. For example, the degree of presorting alters
the amount of handling the mail receives by USPS and potentially speeds
or slows delivery. For similar reasons, delivery standards for some
Periodicals and most Package Services mail are outdated and do not
reflect changes in the way mailers and USPS process this mail. USPS
officials told us that because of the variety of ways these types of
mail are sorted and enter the postal system, developing standards to
reflect expected speed of delivery is challenging. Nevertheless, USPS
has received several recommendations over the past decade from
committees including USPS and mailers representatives to update its
delivery standards to reflect these trends, but has not implemented
them. Sponsors of postal reform legislation have recognized the need
for action in this area, and Senate and House reform bills passed in
this session of Congress would require USPS to, respectively, modernize
its service standards and report its standards annually. To its credit,
USPS has modernized its standards for some types of mail, such as
Parcel Select. With regard to First-Class Mail (46 percent of mail
volume), USPS has occasionally updated its standards to reflect changes
in operations and performance, but PRC criticized changes that
downgraded some of these standards. In addition, USPS's existing
delivery standards for some major types of mail are not easily
accessible, which impedes mailers from obtaining such information to
make informed decisions about different mailing options with varying
rates and service.
USPS does not measure and report its delivery performance for most
types of mail--less than one-fifth of total mail volume is measured--
therefore, transparency with regard to its overall performance in
timely mail delivery is limited. No representative measures of delivery
performance--measures that can be generalized to an entire class or
major type of mail--exist for Standard Mail (48 percent of volume),
bulk First-Class Mail (25 percent of volume), Periodicals (4 percent of
volume), and most Package Services (less than 1 percent of volume).
Similarly, USPS has only reported its delivery performance for a small
portion of its mail volume, concentrating primarily on the single-piece
First-Class Mail that is measured. Further, single-piece First-Class
Mail volume has been declining over the past 15 years and is expected
to continue declining. Since 1976, USPS has been required to provide
"data on the speed and reliability of service provided for the various
classes of mail and types of mail service" in its annual Comprehensive
Statement that is submitted to USPS's oversight and appropriations
committees.[Footnote 3] However, USPS has focused again only on single-
piece First-Class Mail in reporting delivery performance in the
Comprehensive Statement. Such limited measurement also appears to fall
short of proposed requirements in the House-and Senate-passed bills for
USPS to report annually on the level of service provided for most types
of mail "in terms of speed of delivery and reliability." In April 2006,
USPS improved its reporting on its Web site by posting delivery
performance information on a newly created page, including selected
results for the past quarter for the timely delivery of some Express
Mail, Priority Mail, First-Class Mail, and Package Services. The
information was provided as a result of an agreement with PRC's Office
of the Consumer Advocate.[Footnote 4] Nevertheless, USPS's measurement
and reporting gaps are an impediment to diagnosing delivery problems
and assessing the extent to which USPS is meeting its statutory
requirements to provide prompt and reliable service to patrons in all
areas of the United States.
USPS's rate of progress in developing a set of delivery performance
measures for all major types of mail has been slow and inadequate, as
has its progress in reporting its performance for these types of mail.
In recent years, USPS has implemented additional delivery performance
measures for some low-volume types of mail that collectively comprise
less than 1 percent of total mail volume. USPS also tracks some mail
for diagnostic purposes. However, several impediments continue to
hinder USPS's ability to develop representative delivery measures for
all of its major types of mail against USPS delivery standards, which
specify the maximum number of days from entry to delivery for mail to
be delivered in a timely manner. Impediments to measure end-to-end
delivery time (i.e., the time from entry to delivery) include:
* The lack of adequate and continued management commitment and
effective collaboration with the mailing industry to follow through on
recommendations for improvements and to resolve issues between USPS and
mailers is an overall theme in understanding the slow progress being
made in developing and implementing methods of measuring performance.
* USPS has partially implemented technology that would allow it to
track barcoded mail through its mail processing and transportation
networks. Implementation of this technology is a multi-year project and
could play a part in measuring delivery performance when completed.
* There has been limited mailer participation in applying unique
barcodes to mail pieces for tracking purposes.
* Incomplete and inaccurate data from USPS and mailers about when USPS
receives bulk mail make it difficult to know when to "start the clock"
on measuring delivery performance for this mail.
While USPS has taken a number of positive steps to transform its
operations over the years, it has not implemented several key
recommendations that have been made since the early 1990s to improve
its delivery standards and measure delivery performance for all major
types of mail, particularly for high-volume types of mail, such as
Standard Mail and bulk First-Class Mail. These recommendations were
made in 1992, 1997, 1999, and 2004 by committees consisting of
representatives of USPS and the mailing industry. Further, USPS has no
current plans to implement additional representative measures of
delivery performance. Senior USPS officials told us that it would be
too costly for USPS to measure delivery performance by tracking all 210
billion pieces of mail every year. However, these concerns about cost
could be addressed by exploring sampling options or other approaches in
collaboration with mailers to determine how best to measure delivery
performance at much less cost than attempting to track every mail
piece. Such collaboration would also allow the parties to determine
their information needs, explore cost trade-offs associated with
various options, and resolve associated data quality issues. We
recognize that it will take time to resolve impediments to implementing
additional delivery performance measures. However, USPS's leadership,
commitment, and effective collaboration with mailers are critical
elements to implementing a complete set of delivery performance
measures that will enable USPS and its customers to understand the
quality of delivery services, identify opportunities for improvement,
and track progress in achieving timely delivery.
We are making recommendations to USPS that include:
* modernizing delivery standards for all major types of mail to reflect
USPS operations;
* providing a clear commitment to develop a complete set of
representative delivery performance measures;
* implementing representative delivery performance measures for all
major types of mail by providing more effective collaboration with
mailers and others; and,
* improving the transparency of delivery performance standards,
measures, and results by publicly disclosing more information,
including in its Comprehensive Statement and other annual performance
reports to Congress, as well as providing easily accessible information
on its Web site.
In commenting on a draft of this report, USPS disagreed that some of
its delivery standards are outdated. However, we did not make changes
to the report because USPS's outdated standards do not reflect changes
in how major types mail are prepared and delivered. Further, USPS
recognized that its delivery performance measurement and reporting are
not complete and provided detailed information about its ongoing and
planned efforts to ultimately measure service performance and provide
transparency for all classes of mail. USPS stated that it intends to
lead the efforts required to reach this goal by working collaboratively
with others in the mailing industry. USPS's letter also emphasized
improving service--an emphasis we agree with--but we continue to have
questions about whether USPS's measurement efforts will result in
representative delivery performance measures for all major types of
mail. For most major types of mail, USPS's vision of service
performance measurement is generally limited to tracking mail through
its mail processing and transportation networks, which is not the same
as measuring end-to-end delivery performance against USPS delivery
standards. USPS did not directly comment on three of our four
recommendations. On our fourth recommendation concerning improving the
transparency of delivery performance standards, measures, and results,
USPS commented that its standards should be more visible and stated
that it is exploring making information related to its standards
available through additional channels, including its Web site.
Background:
USPS is an independent establishment of the executive branch mandated
by law to provide postal services to "bind the nation together through
the personal, educational, literary, and business correspondence of the
people."[Footnote 5] Established by the Postal Reorganization Act of
1970,[Footnote 6] USPS is a vital part of the nation's communications
network, delivering more than 200 billion pieces of mail each year.
USPS is required to provide "prompt, reliable, and efficient services
to patrons in all areas" and "postal services to all communities,"
including "a maximum degree of effective and regular postal services to
rural areas, communities, and small towns where post offices are not
self-sustaining."[Footnote 7] In determining all policies for postal
services, USPS is mandated to "give the highest consideration to the
requirement for the most expeditious collection, transportation, and
delivery of important letter mail."[Footnote 8] Also, in selecting
modes of transportation, USPS is mandated to "give highest
consideration to the prompt and economical delivery of all
mail."[Footnote 9] More generally, USPS is mandated to provide adequate
and efficient postal services that meet the needs of different
categories of mail and mail users.[Footnote 10]
USPS has designated improving service as one of its four goals in its
Strategic Transformation Plan.[Footnote 11] USPS's strategy to improve
service is to "provide timely, reliable delivery, and improved customer
service across all access points." Specifically, USPS plans to improve
the quality of postal services by continuing to focus on the end-to-end
service performance of all mail. The quality of mail delivery service
has many dimensions, including the delivery of mail to the correct
address within a time frame that meets standards USPS has established
for timely delivery. USPS also plans to ensure that postal products and
services meet customer expectations and that all customer services and
forms of access are responsive, consistent, and easy to use. USPS has
long recognized the importance of customer satisfaction and measures
the satisfaction of its residential and business customers on a
quarterly basis. USPS reports that its customer satisfaction
measurement, which is conducted by the Gallup Organization, provides
actionable information to USPS managers by identifying opportunities to
improve overall customer satisfaction. In addition to gauging overall
customer satisfaction, USPS measures customer satisfaction related to
specific postal functions such as mail delivery and retail service. As
USPS recognizes, dissatisfied customers can seek and find alternatives
to using the mail. USPS faces growing competition from electronic
alternatives to mailed communications and payments as well as private
delivery companies. In this challenging environment, establishing and
maintaining consistently high levels of delivery service are critical
to success.
Recognizing the importance of the timely delivery of mail, USPS has
integrated performance targets and results for some types of mail into
its performance management system. This system is used to establish pay-
for-performance incentives for postal management employees. As we have
reported, high-performing organizations use effective performance
management systems as a strategic tool to drive change and achieve
desired results. Among the key practices used is aligning individual
performance expectations with organizational goals[Footnote 12] by
seeking to create pay, incentive, and reward systems that clearly link
employee knowledge, skills, and contributions to organizational
results. Further, high-performing organizations often must
fundamentally change their cultures so that they are more results
oriented, customer focused, and collaborative in nature. As we have
reported, the benefit of collecting performance information is only
fully realized when this information is actually used by managers to
make decisions oriented toward improving results. Performance
information can be used to identify problems and take corrective
action; develop strategy and allocate resources; recognize and reward
performance; and identify and share effective approaches. Practices
that can contribute to greater use of performance information include
demonstrating management commitment; aligning agencywide goals,
objectives, and measures; improving the usefulness of performance
information; developing capacity to use performance information; and
communicating performance information clearly and effectively.[Footnote
13]
Some USPS Delivery Standards Are Not Useful and Transparent and Do Not
Reflect Current Mail Operations:
Some USPS standards for timely mail delivery are inadequate because of
limited usefulness and transparency. In general, these standards have
not kept up with changes in the way that USPS and mailers prepare and
process mail for delivery. Outdated standards are unsuitable as
benchmarks for setting realistic expectations for timely mail delivery,
measuring delivery performance, or improving service, oversight, and
accountability.
According to USPS, service standards represent the level of service
that USPS strives to provide to customers. These standards are
considered to be one of the primary operational goals, or benchmarks
against which service performance is to be compared in measurement
systems. USPS has established standards for the timely delivery of each
type of mail; these specify the maximum number of days for "on-time"
delivery based on the time of day, the location at which USPS receives
the mail, and the mail's final destination. For example, USPS standards
for 1-day delivery require the mail to be received by a specified
cutoff time on the day that the mail is accepted, which varies
depending on geographic location and where the mail is deposited (e.g.,
in a collection box, at a post office, or at a mail processing
facility). In most cases, 1-day mail deposited before the cutoff time
is considered to be delivered on time if it is delivered on the next
delivery day, which generally excludes Sundays and holidays. USPS
delivery standards vary according to the priority of delivery. Express
Mail has the highest priority, followed by Priority Mail, other First-
Class Mail, Periodicals, Package Services (e.g., packages sent via
Parcel Post), and Standard Mail.
Postal officials, including the Postmaster General, told us that
differences in postage rates for different types of mail reflect
differences in delivery standards and priority. The Postmaster General
noted that variability in the delivery standards and timing of delivery
is built into USPS's pricing structure. He noted that lower-priced mail
with lower delivery priority receives more variable delivery; this
includes mail such as Standard Mail which receives discounts for
presorting by ZIP Code and destination entry that is generally closer
to where the mail is delivered. For example, USPS can defer the
handling of Standard Mail as it moves through its mail processing,
transportation, and delivery networks. Thus, some pieces of a large
mailing of Standard Mail may be delivered faster than others. The
Postmaster General explained that this variability of delivery is
consistent with the relatively low rates afforded to mailers of
Standard Mail, who pay lower rates than mailers of First-Class Mail.
In addition, standards for types of mail within each class can vary.
For example, Parcel Select, a type of Package Service, has a faster
delivery standard than other Package Services because it is made up of
bulk shipments of packages entered into USPS's system close to the
final destination. Delivery standards for each class and type of mail
are summarized in table 1 and described in greater detail in appendix
II.
Table 1: Summary of USPS Delivery Standards for Timely Delivery of
Mail:
Type of mail: Standard Mail;
Mail volume (percent): 47.7;
Standards[A]: 3 to 10 days;
Highlights of standards and related policies and plans: These standards
have not been systemically changed since their inception in the 1970s
and are loosely based on distance. The standards are generally based on
the number of postal zones the mail must traverse from where it is
accepted to its destination.
Type of mail: Package Services;
Mail volume (percent): 0.6;
Standards[A]: 1 to 9 days[B];
Highlights of standards and related policies and plans: The concept for
most of these standards has remained constant since the 1970s. These
standards are loosely based on distance (i.e., on the number of postal
zones the mail must traverse) and on USPS's Bulk Mail Center (BMC)
network.
Type of mail: Periodicals;
Mail volume (percent): 3.2;
Standards[A]: 1 to 7 days;
Highlights of standards and related policies and plans: The concept for
these standards, which are loosely based on distance (i.e., on the
number of postal zones the mail must traverse), has not changed since
the 1980s.
Type of mail: Priority Mail;
Mail volume (percent): 0.4;
Standards[A]: 1 to 3 days;
Highlights of standards and related policies and plans: These standards
have existed since the inception of Priority Mail when it essentially
replaced Air Mail in the late 1970s. Most standards call for 1-day or 2-
day delivery.
Type of mail: First-Class Mail[C];
Mail volume (percent): 46.3;
Standards[A]: 1 to 3 days;
Highlights of standards and related policies and plans: Most First-
Class Mail is to be delivered in 1 day when it is sent within the local
area served by the destinating mail processing center; 2 days when it
is sent within the "reasonable reach" of surface transportation, which
is often within a 12-hour drive time; and 3 days for other mail, such
as mail transported over long distances by air.
Type of mail: Express Mail;
Mail volume (percent): 0.03;
Standards[A]: 1 to 2 days;
Highlights of standards and related policies and plans: These standards
are supported by a money-back guarantee. A 1-day standard generally
applies, with the rest to be delivered on the second calendar day or
the second delivery day.
Type of mail: International Mail;
Mail volume (percent): 0.4;
Standards[A]: 2 days to 6 weeks;
Highlights of standards and related policies and plans: Standards range
from 2 to 3 days for Global Express Guaranteed--which has date-
guaranteed shipping--to 4 to 6 weeks for Global Economy Mail.
Source: USPS.
Note: Mail volume data are for fiscal year 2005.
[A] The range of days shown in this table summarizes USPS delivery
standards for each class and type of mail, which vary depending on the
ZIP Codes where each mail piece enters the postal system and is
delivered.
[B] Standards range from 2 to 9 days for Package Services mail within
the continental United States, except for Alaska and Hawaii, for which
no Package Service standards exist, and except for Parcel Select, for
which standards range from 1 to 3 days.
[C] For purposes of this figure, First-Class Mail does not include
Priority Mail.
[End of table]
Some USPS Delivery Standards Have Limited Usefulness:
Some USPS delivery standards lack usefulness--notably, the delivery
standards for Standard Mail, Periodicals, and most Package Services
mail--because they have not been systematically updated in many years
and do not reflect USPS's operations or intended service. These
standards are loosely based on distance and have tended to remain
static despite changes in USPS networks, operations, and operational
priorities.
Delivery Standards for Standard Mail:
The delivery standards for Standard Mail are outdated. Although
delivery standards are supposed to represent the level of delivery
service USPS strives to provide to customers, differences between
delivery standards and operational policies and practices for delivery
service are evident for Standard Mail. For example, USPS operational
policies state that Standard Mail entered at the delivery unit, where
carriers pick up mail for final delivery, should be delivered in 2
days, whereas the standards call for such delivery in 3 days. Also,
depending on mail preparation, such as presorting and destination
entry, mail can be delivered faster than the standard. These
differences can impede clear communication to mailers concerned with
setting realistic expectations for when Standard Mail will be delivered
and determining how to maximize the value of their mail. Correctly
anticipating when advertising mail will be delivered is important to
business planning and profitability. For example:
* Local retailers, ranging from department stores to restaurants, need
realistic expectations as to when advertising mail will be delivered in
order to effectively promote sales and plan for the appropriate level
of staffing and inventory. To maximize customer response, retailers
send advertising mail so that it will be received shortly before a
sale--soon enough for potential customers to plan to shop during the
sale, but not so early that they will forget about the sale. Also, if
the advertising is delivered far in advance of a weekly sale, it can
generate demand that is difficult to meet with available resources.
* Catalog companies also need realistic expectations about when
catalogs will be delivered in order to plan for call center staffing
and inventory.
Thus, reliable and predictable delivery of advertising mail helps
businesses efficiently schedule staff and inventory to respond to
fluctuations in demand. Anticipating the level of inventory has become
more important over time with the trend toward just-in-time inventory
that helps minimize storage and financing costs. However, the delivery
standards for Standard Mail are not adequate for advertisers to set
realistic expectations for mail delivery, in part because these
standards do not reflect some operational policies and practices that
can lead to mail being delivered faster or slower than the standards
call for.
Substantial changes have occurred in how mailers prepare Standard Mail
and how USPS processes it, but these changes are not reflected in the
standards. Today, most Standard Mail is presorted and entered into the
postal system close to its destination. The degree of presorting and
destination entry alters the amount of handling it receives by USPS and
potentially speeds or slows delivery. For example:
* Presorting: Beginning in 1979, USPS provided discounts to mailers who
reduce USPS's processing costs by presorting their Standard Mail to the
level of carrier delivery routes--discounts extended in 1981 to
Standard Mail presorted to the level of individual ZIP Codes. In fiscal
year 2005, most Standard Mail was presorted by carrier routes (35
percent) or by individual ZIP Codes or ZIP Codes starting with the
first three digits (57 percent). Mail that is presorted by carrier
route can move through USPS's system faster than mail that is presorted
by groups of ZIP Codes because it does not need as much handling by
USPS. However, the delivery standards for Standard Mail do not take
presorting into account.
* Destination entry: Starting in 1991, USPS gave destination entry
discounts for mailers that deliver their Standard Mail to a postal
facility that generally is closer to the mail's destination, such as
the delivery unit facility where carriers pick up their mail or the
local mail processing center that forwards mail to these facilities.
Mail that is entered at a destination facility is delivered faster than
other Standard Mail because it avoids some USPS handling and USPS
assigns a low priority to handling Standard Mail. However, the impact
of destination entry is not reflected in the delivery standards. For
example, the delivery standards continue to call for delivering all
Standard Mail in 3 days or more, whereas the Postal Operations Manual
states that Standard Mail that mailers enter at delivery units should
be delivered in 2 days.
USPS also works with mailers to deliver their Standard Mail within a
range of dates that they request. Advertising mailers can request that
their advertising be delivered within this range--known as the "in
home" dates. As mentioned earlier, predictable delivery helps
advertisers to plan their resources and inventory. Requesting "in home"
dates may result in delivery that is faster or slower than the
standard. The Postal Operations Manual states that in such cases,
delivery units should attempt to meet the "in home" dates rather than
the delivery standards. According to USPS, its delivery standards are
supposed to be the benchmark against which delivery performance is
compared and reflects the level of service that USPS strives to
provide. In this case, however, the delivery standards for Standard
Mail would not be a suitable benchmark for measuring delivery
performance, because they do not reflect USPS operations.
USPS provided mailers with guidelines in 2000 that recognized that
Standard Mail can be delivered faster than the standard, depending on
its level of presorting, and on whether the mailers deliver it closer
to its destination. The guidelines presented a table for the speed of
Standard Mail delivery depending on how the mail was presorted and
where it entered the mail processing network. However, USPS did not
consider these guidelines to be part of its delivery standards for
Standard Mail, and according to USPS, these guidelines are now
obsolete. Nevertheless, USPS officials told us that USPS continues to
maintain internal guidelines for the desired delivery speed for
Standard Mail, depending on its level of presorting and where it enters
the postal network.
In 1992, 1997, and 1999, various committees composed of USPS officials
and mailers recommended that delivery standards be improved for
Standard Mail and other types of mail. In 1999, a working group of USPS
officials and mailers recommended that the delivery standards for
Standard Mail be updated to reflect how it is presorted and where the
mail enters the postal system. USPS did not implement these 1999
recommendations and offered no explanation on why it did not. Then,
when we met with Postmaster General in June 2006, he told us that it
would be difficult for USPS to update its standards to reflect the wide
variety of differences in mail preparation and processing, and that it
might have an impact on the rates for some types of mail, to which he
believes the mailers would object. In contrast, the Association for
Postal Commerce (PostCom), a major mailer group, wrote the following to
us in March 2006: "It is PostCom's belief that the development and
publication of service standards based on existing USPS operations and
networks is a critical first step toward the development of any service
performance measurement system. There is no barrier to moving forward
with defining service standards for all classes of mail." PostCom noted
it actively supported the efforts of the 1999 working group, and said
its recommendations--which included calling for standards based on
existing mail processing and transportation environments, which for
bulk mail would also reflect mail preparation and entry point--"largely
still apply."
Because outdated delivery standards are an impediment to measuring and
improving delivery performance, updating these standards could help
increase the value of Standard Mail to businesses that mail
advertising. As previously noted, understanding when Standard Mail will
be delivered helps mailers send this mail so it will be delivered at
what they consider to be the optimum time and helps them to plan for
staff and inventory. In addition, updating the delivery standards for
Standard Mail would provide an appropriate benchmark for measuring
Standard Mail delivery performance.
Delivery Standards for Package Services:
For some of the same reasons as Standard Mail, delivery standards are
likewise outdated for most Package Services mail. Delivery standards
for most Package Services also date to the 1970s and are generally
distance-based. These standards are predicated on USPS's national
network of Bulk Mail Centers (BMCs) that accept and handle packages.
USPS told us that the delivery standards for Package Services "are
changed infrequently since the BMC network has not been appreciably
altered since its inception in the 1970s." Since the 1970s, USPS has
implemented many changes regarding the handling of packages, including
discounts for presorting Package Services items to the carrier route or
ZIP Code, as well as discounts for destination entry. However, these
changes have not been reflected in changes to the Package Services
standards.
A noteworthy exception involves useful delivery standards that USPS
created for a specific type of Package Services mail called Parcel
Select, when it was introduced in 1999. These standards were updated in
2002. USPS's standards for Parcel Select differentiate speed of
delivery by point of entry, e.g., 1 day for entry at the destination
delivery facility or 2 days for entry at the mail processing center
that forwards the parcels to the delivery facility. These standards
were intended to provide an appropriate benchmark for delivery
performance measurement in order to facilitate efforts to improve the
delivery performance for this mail. USPS subsequently collaborated with
officials of the Parcel Shippers Association (PSA) to implement
delivery performance measurement for Parcel Select against these
standards, and the results are factored into individual pay-for-
performance incentives for many USPS managers.
Both USPS and PSA officials told us that incorporating delivery
performance results into these incentives--which was possible due to
useful performance standards and measures--was a primary reason why on-
time delivery performance has improved for Parcel Select. They said
that as a result of improved delivery performance, Parcel Select has
been able to maintain its viability as a low-cost alternative for
lightweight packages within the competitive packages market. In this
regard, we have also reported that both establishing and maintaining
consistently high levels of delivery service are critical to USPS's
success in an increasingly competitive marketplace.[Footnote 14]
Further, we have noted that USPS had lost Parcel Post business to
private carriers, who had come to dominate the profitable business-to-
business segment of the market because they offered cheaper and faster
service.
Parcel Select provides destination entry discounts for bulk mailings of
Parcel Post. Most of Parcel Select's volume is tendered to USPS by a
handful of third-party consolidators who receive packages from multiple
companies and consolidate their volume to enable cost-effective
destination entry. By entering parcels closer to their destination, the
consolidators speed delivery and narrow the delivery window. However,
prior to measuring and improving the delivery performance of Parcel
Select, mailers considered Parcel Select to be a low-cost service with
a reputation for low quality delivery. The delivery performance data
has been used to identify delivery problems in a timely manner, such as
problems in timely delivery of Parcel Select in specific geographic
areas, so that corrective action could be taken to maintain and improve
delivery performance. USPS actions to improve the performance of Parcel
Select are consistent with practices we have reported are used by high-
performing organizations: using performance information and performance
management systems to become more results oriented, customer focused,
and collaborative in nature; identify problems and take corrective
action; and improve effectiveness and achieve desired results.[Footnote
15]
Delivery Standards for Periodicals:
As with Standard Mail and most Package Services, delivery standards are
outdated for Periodicals that are delivered outside the local area from
which they are mailed. The distance-based concept for Periodicals
standards has remained the same since the 1980s and does not reflect
mailers presorting mail by carrier route or ZIP Code or destination
entry of mail at destination facilities. Like Standard Mail, USPS told
us that the Periodicals delivery standards are meant to represent the
maximum service standard targets for mail that is not presorted.
However, the impact of presorting has not been incorporated into the
Periodicals delivery standards.
In contrast, to USPS's credit, it has updated its 1-day delivery
standards for Periodicals delivered within the local area where they
are mailed. Further, it generally updates the standards at the same
time for Periodicals and First-Class Mail that originate and destinate
in the same local area so that the scope of 1-day delivery remains the
same for both types of mail.
Looking forward, USPS plans to change the way its mail processing and
transportation networks handle Periodicals mail this summer, which USPS
officials said will lead to changes in some Periodicals delivery
standards so that they reflect current operations. They said that
Periodicals that are moved via ground transportation, which make up a
majority of all Periodicals volume, will be combined with First-Class
Mail. As a result, these Periodicals should receive comparable handling
and faster delivery times than is currently the case. According to
Periodicals mailers, inconsistent delivery performance that does not
meet customer expectations causes renewal rates to decline and leads to
customer service calls that are costly to handle. According to USPS
officials, implementation of these planned changes to postal operations
and standards can be expected to result in updating many of the
specific standards for Periodicals mailed between specific pairs of ZIP
Codes.
Delivery Standards for Priority Mail:
Some of the specific delivery standards for Priority Mail may also need
to be updated because they do not reflect USPS's operations. According
to the Deputy Postmaster General, some Priority Mail delivery standards
call for on-time delivery of Priority Mail in 2 days, but it is often
physically impossible for USPS to meet these standards when that
requires moving the mail across the country. As we reported in 1993,
officials of the Postal Inspection Service questioned whether Priority
Mail could be delivered everywhere within the continental United States
within 2 days, which was then the delivery standard.[Footnote 16] USPS
has since established 3-day delivery standards for some Priority Mail,
but these standards cover less than 5 percent of Priority Mail volume.
USPS officials told us that USPS may make changes to some of the
specific Priority Mail standards for mail sent between specific pairs
of ZIP Codes so that the standards reflect USPS operations.
Delivery Standards for First-Class Mail:
USPS has updated its standards for First-Class Mail over the years with
the intent of reflecting its operations. However, questions have been
raised in PRC proceedings and advisory opinions about some of the
changes.[Footnote 17] By way of background, when USPS decides on a
change in the nature of postal services that will generally affect
service on a nationwide or substantially nationwide basis, USPS is
required by law to submit a proposal, within a reasonable time frame
prior to its effective date, to PRC requesting an advisory opinion on
the change. In 1989, USPS submitted a proposal to PRC for an advisory
opinion that involved a national realignment of the delivery standards
for First-Class Mail. This realignment involved downgrading the
delivery standards for an estimated 10 to 25 percent of First-Class
Mail volume, so that these standards would reflect actual operations or
planned changes to operations. In general, these delivery standards
were proposed to be downgraded by reducing the size of 1-day delivery
areas, thereby downgrading some mail to 2-day service, and likewise
reducing the scope of 2-day delivery, thereby downgrading some mail to
3-day service. USPS also stated that it would make changes to its
operations, including moving some First-Class Mail by truck instead of
by air, and that it expected to provide more reliable service as a
result.
PRC advised against adoption of USPS's proposed national realignment,
explaining that its review suggested the realignment may be an
excessive reaction to what may be localized problems on a limited
scale. PRC questioned if the proposed realignment could bring about
significant improvement in delivery service commensurate with its
effect on mail users. However, PRC agreed that existing delivery
standards could not be met in certain areas, such as the New York City
metropolitan area, and on that basis, said that some specific localized
changes to the service standards to correct anomalies and major problem
areas would be a sensible path for USPS to pursue. USPS proceeded to
implement a national realignment to its First-Class Mail standards from
1990 to 1992.
In 2000 and 2001, USPS again changed many of its First-Class Mail
standards in a manner that USPS said would have a nationwide impact on
service, including downgrading some standards from 2 days to 3 days in
the western United States and upgrading other standards. USPS reported
that these changes were intended to provide consistent and timely
delivery service for 2-day and 3-day mail. USPS also reported that the
changes reflected a general trend toward making 2-day zones more
contiguous, more consistent with the "reasonable reach" of surface
transportation from each originating mail processing facility, and
potentially less dependent on air transportation--which had lacked
reliability. USPS did not seek a PRC opinion on these changes in the
year before implementation.
After a lengthy proceeding regarding the 2000 and 2001 changes, PRC
issued an advisory report earlier this year that suggested that USPS
reconsider its First-Class Mail standards, stating that the service
resulting from the realignment cannot be said to be sufficient to meet
the needs of postal patrons in all areas as required by law and that
USPS did not consistently adhere to the statutory requirement to give
highest consideration to expeditious transportation of important letter
mail.[Footnote 18] PRC urged USPS to give more effective public notice
about First-Class Mail delivery standards, such as through Web-site
postings and collection box labels. More generally, PRC also urged USPS
to actively engage the public in major policy decisions and fully
inform the public about matters of direct interest that affect USPS
operations. PRC said that USPS, as a government monopoly, has a
positive obligation to learn the needs and desires of its customers and
to structure its products to meet them where doing so is not
inconsistent with reasonably feasible and efficient operations.
In February 2006, USPS sought a PRC advisory opinion, which is pending,
in connection with USPS's realignment of its mail processing and
transportation networks.[Footnote 19] USPS is currently planning and
implementing a nationwide realignment of its mail processing and
transportation networks. According to USPS, its long-term operational
needs will be met best if its mail processing network evolves into one
in which excess capacity is reduced and redundant operations and
transportation are eliminated. USPS stated that it is not proposing to
change the long-standing delivery standard ranges for any particular
mail class; however, any changes to delivery standards that affect the
expected delivery times from origin to destination between particular 3-
digit ZIP Code pairs will be made incrementally as USPS implements
changes to its networks.[Footnote 20] USPS also stated that the overall
magnitude and scope of potential service standard upgrades and
downgrades for any particular mail class cannot be known until numerous
feasibility reviews have been conducted and operational changes
implemented over the next several years. However, USPS stated that it
expected that changes to its delivery standards are likely to be most
pronounced for First-Class Mail and Priority Mail.
Delivery Standards for Express Mail:
USPS has also made changes to its delivery standards for Express Mail
to reflect changes in operations. Similar to the delivery standards for
First-Class Mail, those for Express Mail were discussed in a PRC
proceeding after USPS implemented changes to them. In April 2001, USPS
reduced the scope of the overnight delivery network for Express Mail
sent on Saturdays and the eve of holidays. According to USPS, it had
contracted with FedEx to provide more reliable air transportation for
Express Mail; but, because FedEx provided no service on Saturday or
Sunday nights and some federal holidays, USPS changed its delivery
plans for mail pieces accepted on Saturdays and the eve of holidays.
Earlier this year, PRC issued an advisory report that found the changes
to the Express Mail network had affected service on a substantially
nationwide basis in 2001. PRC criticized the lack of public notice
before the changes were made, but unlike its advisory opinions on
changes to First-Class Mail standards, did not criticize the changes
that USPS made to its Express Mail standards.[Footnote 21]
Proposed Postal Reform Legislation and Delivery Standards:
Over the past year, the House and Senate have passed postal reform
legislation that would clarify USPS's delivery standards. The House-
passed legislation would require USPS to annually report its delivery
standards for most types of mail and the level of delivery service
provided in terms of speed and reliability. The Senate-passed
legislation included more detailed requirements regarding delivery
service standards.[Footnote 22] This bill would require USPS to
establish "modern service standards" within 1 year after the bill is
enacted. These standards would have four statutory objectives: (1) to
enhance the value of postal services to both senders and recipients;
(2) to preserve regular and effective access to postal services in all
communities, including those in rural areas or where post offices are
not self-sustaining; (3) to reasonably assure USPS customers of the
reliability, speed, and frequency of mail delivery that is consistent
with reasonable rates and best business practices; and (4) to provide a
system of objective external performance measurements for each market-
dominant product (e.g., mail covered by the postal monopoly) as a basis
for measuring USPS's performance. In addition, USPS would be required
to take into account eight statutory factors in establishing or
revising its standards: (1) the actual level of service that USPS
customers receive under any service guidelines previously established
by USPS or service standards established under the new statutory
system; (2) the degree of customer satisfaction with USPS's performance
in the acceptance, processing, and delivery of mail; (3) the needs of
USPS customers, including those with physical impairments; (4) mail
volume and revenues projected for future years; (5) the projected
growth in the number of addresses USPS will be required to serve in
future years; (6) the current and projected future costs of serving
USPS customers; (7) the effect of changes in technology, demographics,
and population distribution on the efficient and reliable operation of
the postal delivery system; and (8) the policies of Title 39 (i.e., the
postal laws) and such other factors as USPS determines appropriate.
Like the House-passed bill, the Senate-passed bill would require USPS
to annually report on the speed and reliability of delivery of most
types of mail.
In explaining the rationale for these requirements regarding delivery
standards and service, sponsors of the Senate bill stated that the new
standards would improve service, be used by USPS to establish
performance goals, and continue to ensure daily delivery to every
address, thereby preserving universal service. A Senate committee
report on an earlier version of these requirements stated that they
were intended to ensure that the service USPS provides is consistent
with the statutory definition of universal service, as well as
preserving and enhancing the value of postal products. In this regard,
the report expressed concern that USPS may be tempted to erode service
quality in an effort to cut costs, and stated that the reporting
requirements would provide information to enable the postal regulator
and all interested parties to evaluate the provision of service, with
the service standards serving as a benchmark for measuring USPS's
performance.[Footnote 23]
USPS Delivery Standards Lack Adequate Transparency:
Although USPS has recently provided information related to its delivery
standards in ongoing PRC proceedings, USPS has not made all of this
information easily accessible to all business mailers and the public.
As a result, some customers are hindered from making informed decisions
about different mailing options with varying rates and service, as well
as from assessing USPS's delivery performance. Although USPS does have
a CD-ROM with information about its delivery standards that is freely
available to those who are aware of its existence, information about
how to order the CD-ROM is not easily accessible on its Web site. The
CD-ROM contains delivery standards for some types of mail, such as
Standard Mail and Periodicals, which are not available on its Web site.
Looking forward, USPS has the opportunity to further expand the
accessibility of information on its delivery standards, much as USPS
has done to improve the transparency of its financial information in
recent years. For example, in an ongoing PRC proceeding, USPS provided
new narrative summaries that explain its detailed standards; these
summaries are posted on the PRC Web site, but not on the USPS Web site.
USPS Measurement and Reporting Of Delivery Performance Information Is
Inadequate:
USPS's delivery performance measurement and reporting is inadequate--in
part because its delivery performance information is incomplete, since
representative measures of delivery performance do not cover most mail,
and in part because its reporting of this delivery performance
information is deficient (see table 2). USPS tracks some mail pieces
for diagnostic purposes, and plans to have more data available as it
deploys automated equipment to sort flat-sized mail into the order it
is delivered. However, a number of impediments have limited USPS's
ability to track mail. The diagnostic data is not representative and
does not amount to delivery performance measurement. Although USPS
recently added a section on domestic delivery performance to its Web
site, it does not provide complete performance information for some
types of mail. Without complete information, USPS and mailers are
unable to diagnose delivery problems so that corrective action can be
implemented. In addition, stakeholders cannot understand how well USPS
is fulfilling its basic mission, nor can they understand delivery
performance results and trends. Deficiencies in measurement and
reporting also impair oversight and accountability by PRC and Congress.
Table 2: USPS Measurement and Reporting of Timely Delivery Performance:
Type of mail: Standard Mail;
Mail volume (percent): 47.7;
Mail revenue (percent): 28.4;
Representative measurement: None[A];
Reporting on USPS Web site: None.
Type of mail: First-Class
Mail: bulk; Mail volume (percent): 24.6;
Mail revenue (percent): 23.7;
Representative measurement: None[A];
Reporting on USPS Web site: None.
Type of mail: First-Class Mail: single-piece;
Mail volume (percent): 21.7;
Mail revenue (percent): 30.4;
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of mail: Periodicals;
Mail volume (percent): 4.3;
Mail revenue (percent): 3.2;
Representative measurement: None[A];
Reporting on USPS Web site: None.
Type of mail: Package Services;
Mail volume (percent): 0.6;
Mail revenue (percent): 3.3;
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of mail: Priority Mail;
Mail volume (percent): 0.4;
Mail revenue (percent): 7.0;
Representative measurement: Partial;
Reporting on USPS Web site: Partial.
Type of mail: International Mail;
Mail volume (percent): 0.4;
Mail revenue (percent): 2.6;
Representative measurement: Partial;
Reporting on USPS Web site: None.
Type of mail: Express Mail;
Mail volume (percent): 0.03;
Mail revenue (percent): 1.3;
Representative measurement: Full;
Reporting on USPS Web site: Partial.
Source: GAO analysis of USPS information.
[A] No representative measure of delivery performance exists for this
mail. Some mailers pay an additional fee to obtain data on the progress
of their mail through USPS's mail processing system. However, these
data are not representative, cover less than 2 percent of total mail
volume, and do not include data on the date of delivery.
Note: Timely delivery performance is measured based on comparing the
time for USPS to deliver mail against USPS's delivery standards.
Reporting includes material on USPS's Web site. For purposes of this
table, First-Class Mail does not include Priority Mail. Volume and
revenue data are for fiscal year 2005 and do not add up to 100 percent
because they do not include some small and unrelated types of mail.
[End of table]
USPS Delivery Performance Measurement Is Not Complete:
USPS has not established a complete set of quantitative measures for
delivery performance, largely because its delivery performance
measurement covers less than one-fifth of its total mail volume--that
is, only Express Mail and parts of First-Class Mail, Priority Mail,
Package Services, and International Mail. USPS does not measure
delivery performance for the remaining volume, which includes Standard
Mail, bulk First-Class Mail, Periodicals, and most Package Services. In
addition, the External First-Class Measurement System (EXFC) is limited
to single-piece First-Class Mail deposited in collection boxes in
selected areas of the country (see fig. 1). Thus, as USPS has reported,
EXFC is not a systemwide measurement of all First-Class Mail
performance. USPS has stated that it has strong business and
operational reasons for using this EXFC methodology and that the areas
selected for testing ensure coverage of its highest-volume areas. These
reasons include EXFC covering areas from which most First-Class Mail
originates and destinates, the ability of EXFC to provide results for
specific geographic areas, and practical advantages for collecting data
from fewer areas of the nation.
Figure 1: Geographic Coverage of Delivery Performance Measurement for
First-Class Mail Deposited in Collection Boxes as Measured by EXFC:
[See PDF for image]
Source: USPS.
Note: Areas covered by EXFC are shaded. Boundaries within states are
for 3-digit ZIP Code areas.
[End of figure]
Similarly, delivery performance data for Priority Mail are limited
because they only cover Priority Mail volume entered at post offices
and other retail facilities, and for which mailers purchase Delivery
Confirmation Service.[Footnote 24] Such mail constitutes only 4 percent
of all Priority Mail volume. According to USPS officials, USPS expects
the volume of this Priority Mail to increase, which would increase the
scope of delivery performance measurement. They said that this measure,
which replaced the former Priority End-to-End (PETE) measurement system
at the beginning of fiscal year 2006, covers all types of Priority
Mail, including letters, flat-sized mail, and parcels. However, USPS
officials also told us that USPS cannot currently measure the delivery
performance for bulk quantities of Priority Mail with Delivery
Confirmation, such as business mailings of merchandise, because USPS
does not have accurate data on when the mail entered into its system.
On the positive side, USPS has implemented delivery performance
measurement for Parcel Select and some types of International Mail,
both of which operate in a highly competitive marketplace. It has used
this measurement to establish targets and identify opportunities to
improve service. Although these products are a small fraction of mail
volume, USPS has developed delivery performance measures to address
customer needs for timely delivery. Highlights for measurement of major
types of mail are listed in table 3.
Table 3: USPS Delivery Performance Measurement by Type of Mail:
Type of mail: Standard Mail;
How USPS measures timely delivery performance: USPS does not measure
delivery performance. This is the largest single class of mail,
representing nearly half of total mail volume.
Type of mail: First-Class Mail;
How USPS measures timely delivery performance: The External First-Class
Measurement System (EXFC), administered by a contractor, measures when
test mail pieces are deposited in collection boxes and received at
various addresses. EXFC covers 463 3-digit ZIP Code areas judgmentally
selected based on geographic and volume density. It does not cover bulk
mail that comprises more than half of First-Class Mail volume.
Type of mail: Periodicals;
How USPS measures timely delivery performance: USPS does not measure
delivery performance. This mail volume and revenue is declining but is
important to USPS's business and universal postal service.
Type of mail: Package Services;
How USPS measures timely delivery performance: USPS does not measure
the timely delivery of most Package Services. An exception is Parcel
Select, which is tracked by scanning unique barcodes.
Type of mail: Priority Mail;
How USPS measures timely delivery performance: USPS tracks Priority
Mail volume when mailers use Delivery Confirmation Service, which
enables USPS to scan unique Delivery Confirmation barcodes. Such mail,
when entered at postal retail locations, constitutes 4 percent of all
Priority Mail volume.
Type of mail: International Mail;
How USPS measures timely delivery performance: International Express
Mail is tracked through the scanning of barcodes. Some letter mail is
measured by a system similar to EXFC that also uses technology to track
the movement of mail.
Type of mail: Express Mail;
How USPS measures timely delivery performance: USPS tracks virtually
all pieces of Express Mail from acceptance through delivery by scanning
a unique barcode on each mail piece.
Source: GAO analysis of USPS information.
[End of Table]
As a result of the measurement gaps listed above, measurement is not
sufficiently complete to understand how well USPS is achieving the
following:
* performing its statutory mission of providing prompt and reliable
service to patrons in all areas, including prompt delivery of all mail;
* delivering mail with different delivery standards, which helps
fulfill the requirement that USPS provide mail service to meet the
needs of different categories of mail and mail users;
* providing expeditious handling of important letter mail, such as
bills and statements sent via First-Class Mail;
* fulfilling its statutory requirement to provide a maximum degree of
effective and regular postal services to rural areas, communities, and
small towns where post offices are not self-sustaining; and:
* identifying delivery problems, understanding the causes, and
improving performance.
The lack of any representative delivery performance data for most mail
volume increases the financial risk to USPS, which faces increasing
competition. If mailers are not satisfied with USPS's delivery service,
they could take their business elsewhere. For example, Standard Mail
and bulk First-Class Mail are the largest segments not measured,
collectively accounting for close to three-quarters of mail volume and
half of mail revenues. Standard Mail is USPS's key growth product, but
it must compete against multiple advertising media in a dynamic and
highly competitive marketplace. Bulk First-Class Mail covers a
significant share of USPS's overhead costs--including maintaining the
retail and delivery networks--but is vulnerable to electronic
communications and payment alternatives. In addition, USPS does not
have representative delivery performance measures for Periodicals,
which help USPS fulfill its statutory mandate to provide postal
services to "bind the nation together" through business, educational,
and literary correspondence; and for Package Services, such as Parcel
Post, which provides the public with a low-cost option for sending
packages.
Incomplete information also impedes USPS's potential for holding its
managers accountable for delivery performance of all types of mail and
for balancing increasing financial pressures with the need to maintain
quality delivery service. Because delivery performance is measured for
only some types of mail, and individual performance incentives are
linked to the results, some mailers are concerned that in practice,
this may skew delivery priorities and performance so that timely
delivery is more important for the mail whose performance is measured
than mail whose performance is not measured. For example, as we have
reported, soon after USPS implemented its EXFC measurement system for
First-Class Mail deposited into collection boxes, USPS increased its
emphasis on timely First-Class Mail service.[Footnote 25] USPS managers
at the local post office level were instructed to concentrate on
particular activities that could improve EXFC scores, and more emphasis
was placed on picking up mail from collection boxes on schedule.
Conversely, measurement gaps may impede effective collaborative efforts
with mailers to quickly identify and resolve delivery problems, because
both USPS officials and mailers have limited information for diagnostic
purposes. In addition, measurement gaps impede the ability of external
stakeholders, including Congress and PRC, to monitor accountability and
exercise oversight. Measurement gaps cause PRC to consider proposed
postal rates without adequate information on the actual value of the
service provided for each class of mail, which PRC by law must consider
when recommending postal rates. In addition, PRC is hindered in
considering USPS's proposals for changes in the nature of postal
services that are nationwide or substantially nationwide in scope,
including the ongoing proceeding related to USPS's network realignment.
USPS Reporting of Delivery Performance Lacks Adequate Transparency:
USPS's limited performance measurement also affects USPS's reporting of
its delivery performance and does not provide adequate transparency so
that customers can understand performance results and trends. Although
USPS recently made additional delivery performance information
available on its Web site, it still does not communicate its delivery
performance for all of its major types of mail, particularly those
covered by its statutory monopoly to deliver letter mail.
The main gap in USPS's reporting of delivery performance results, as
shown in table 4, continues to be for mail entered in bulk quantities,
including Standard Mail and bulk First-Class Mail, which collectively
constitute most of USPS's mail volume and revenues. USPS also does not
report delivery performance results for Periodicals and most Package
Services. As previously discussed, USPS generally does not collect
information on delivery performance results for these types of mail.
Table 4: USPS Delivery Performance Reporting by Type of Mail:
Type of mail: Standard Mail and Periodicals;
USPS reporting practices: USPS has not reported delivery performance
data for this mail because it does not collect representative
performance data.
Type of mail: First-Class Mail;
USPS reporting practices: USPS has reported results for First-Class
Mail measured by EXFC, which does not cover bulk First-Class Mail and
does not measure delivery performance in all areas of the country. For
these reasons, EXFC covers less than half of First-Class Mail volume.
USPS reports national EXFC results on its Web site for the most recent
quarter. More complete quarterly data for each USPS Area and
Performance Cluster[A] is posted in a section of the USPS Web site
devoted to Mailers' Technical Advisory Committee (MTAC),b but not on
www.usps.com, which is the primary Web site for public use. USPS
reports annual EXFC results in such publications as its annual
Comprehensive Statement on Postal Operations, its Annual Report, and
its Strategic Transformation Plan. Some of these publications provide
useful trend data, but they contain little explanation of results and
trends.
Type of mail: Package Services;
USPS reporting practices: USPS reports only partial delivery
performance results for some specific types of Package Services on its
Web site for the most recent quarter. Results are reported for packages
entered at retail locations (8 percent of Package Services volume) and
are further limited to packages for which the mailer purchased Delivery
Confirmation Service (1.2 percent of Package Services volume). In
addition, results are reported for Parcel Select, which is a type of
Package Services.
Type of mail: Priority Mail;
USPS reporting practices: USPS has reported partial delivery
performance results on its Web site for the most recent quarter. These
results are limited to mail entered at postal retail locations for
which the mailer purchased Delivery Confirmation. Such mail constitutes
4 percent of all Priority Mail volume.
Type of mail: International Mail;
USPS reporting practices: USPS has not publicly reported delivery
performance results. Such data are not provided to PRC, which does not
review international mail rates in postal rate cases.
Type of mail: Express Mail;
USPS reporting practices: USPS has reported only partial delivery
performance results on its Web site for the most recent quarter. These
results are limited to mail entered at postal retail locations, such as
post offices. USPS has not reported complete results for Express Mail
in its Comprehensive Statement, although this is the only class of mail
for which USPS collects delivery performance data for all pieces of
mail. However, USPS has publicly provided such results in rate cases in
response to requests by interested parties participating in those
proceedings.
Source: GAO analysis of USPS information.
[A] USPS manages its field operations by dividing the nation into nine
geographic areas and 80 performance clusters.
[B] [Hyperlink, http://ribbs.usps.gov/files/mtac/exfc/].
[End of table]
USPS's Delivery Performance Reporting Is Not Adequate to Meet Oversight
Needs:
USPS's reporting of delivery performance information has not adequately
met information needs for congressional oversight purposes. Notably,
USPS's practices for reporting delivery performance information in its
annual Comprehensive Statement on Postal Operations fall short of the
longstanding statutory requirement for "data on the speed and
reliability of service provided for the various classes of mail and
types of mail service."[Footnote 26] This requirement was enacted due
to "the need for effective oversight of postal operations to ensure
that the postal services provided the public shall continue at an
effective level and at reasonable rates."[Footnote 27] Specifically,
USPS has not included data on the speed and reliability of any entire
class of mail in its annual Comprehensive Statement on Postal
Operations. Instead, USPS has presented only national EXFC data, even
though it collected data on timely delivery performance for all Express
Mail, as well as some Priority Mail. The 2005 Comprehensive Statement
on Postal Operations stated "while Express Mail and Priority Mail
performance is tracked and has improved during the past 5 years,
because these products are competitive, the data was considered
proprietary and not published." However, USPS reached an agreement with
the PRC's Office of Consumer Advocate last year to end this restriction
and recently began reporting some delivery performance data on a newly
created page on its Web site for some Express Mail, Priority Mail,
First-Class Mail, and Package Services.
Moreover, USPS's reporting practices under the Government Performance
and Results Act (GPRA) of 1993 have provided less and less performance
information for oversight purposes.[Footnote 28] USPS's latest GPRA
report, which was included in its 2005 Comprehensive Statement on
Postal Operations, provided delivery performance targets (also referred
to as performance goals) and results only for First-Class Mail measured
by EXFC at the national level, with little accompanying explanation.
For example, USPS reported that 87 percent of 3-day EXFC mail was
delivered on time in fiscal year 2005, which did not meet its GPRA
target of 90 percent, but USPS did not explain, as required by GPRA,
why this specific target was not met. USPS also did not explain whether
it considers the 90-percent goal--which remains unchanged for fiscal
year 2006--impractical or unfeasible, or, alternatively, what plans
USPS has for achieving this goal.
Delivery Performance Information Has Recently Improved but Remains
Incomplete:
USPS's reporting of delivery performance information on its Web site
has recently improved but is still incomplete because it does not
include performance results for all major types of mail. In April 2006,
USPS posted delivery performance information on a newly created page of
its Web site, including selected results for the timely delivery of
some Express Mail, Priority Mail, First-Class Mail, and Package
Services. This information is oriented to members of the general public
who make decisions on how to mail parcels and other items that can be
sent using different types of mail. To facilitate such use, the
information is linked to USPS's Postage Rate Calculator and is
accompanied by brief summaries of the applicable delivery standards for
each type of mail. The new information addresses USPS's written
agreement with PRC's Office of the Consumer Advocate[Footnote 29] in
the 2005 rate case, which was implemented after further discussions
between the two parties. USPS's recent disclosures are a good step
toward providing easily accessible information on delivery performance
results on its Web site for key types of mail used by the public.
The information on delivery performance results, however, did not cover
major types of mail that are not measured--Standard Mail, bulk First-
Class Mail, Periodicals, and most Package Services. Further, the
information provided to the public was limited. First, performance
results covered only the most recent quarter, although results for some
types of mail have varied by 7 percentage points or more from one
quarter to another within the same fiscal year. Second, only partial
information was provided for Priority Mail and Package Services. For
example, the results for Priority Mail covered only 4 percent of total
Priority Mail volume. This limited scope of measurement was not
disclosed on USPS's Web site. Without more complete reporting of
delivery performance information, Congress and the American public do
not have adequate information to determine how well USPS is
accomplishing its mission of providing prompt and reliable delivery
services.
For the future, a possible model to enhance the completeness and
usefulness of USPS's reporting of delivery performance information
would be to provide some information similar to the financial
information that USPS already provides on its Web site. In the
financial area, USPS has instituted a dedicated USPS Web page that has
links to its financial reports, related reports and data, and timely
disclosure of important developments. USPS also improved the quarterly
financial reports that provide explanations for results and trends, as
well as its financial outlook.
Progress In Developing Complete Delivery Performance Measurement Is
Unsatisfactory Due To Lack of Management Commitment and Effective
Collaboration:
USPS has made slow and inadequate progress in modernizing its delivery
standards and in implementing delivery performance measurement for all
major types of mail. USPS's limited progress has left major gaps in
each of these areas, despite numerous recommendations for improvements
that have been made in these areas over the years, including those by
USPS-mailer task forces and working groups, as well as some USPS
initiatives to develop delivery performance measurement. Without
management commitment and effective collaboration with mailers, it will
be difficult for USPS to overcome technical challenges and achieve
progress and results that are in the interest of both USPS and its
customers in today's competitive marketplace.
Key Recommendations from Collaboration Efforts Involving USPS and
Mailers Have Not Been Implemented:
Some of USPS's and the mailers' collaboration efforts over the years
have resulted in successes; but key recommendations from these efforts
have yet to be realized. A broad cross section of mailer groups and
mailers who met with us shared their concerns about delivery standards
and related information; delivery performance measurement and
reporting; and implications of delivery performance information and
gaps in this area. They expressed frustration with the slow pace of
USPS's progress in improving delivery performance information. As one
mailers' association recently wrote, "We do not expect the USPS to move
tomorrow to the ultimate service performance measurement system, but
the total lethargy to take any step forward is unacceptable." Also,
"the Postal Service's lack of clockwork-like predictability is the
number one reason for repeated industry calls for standards and
measurements."
Many recommendations for improving performance information were made by
committees that comprised USPS and mailers, as noted in table 5 below.
Some notable examples include the 1992 Competitive Services Task Force,
the 1997 Blue Ribbon Committee, and the 1999 follow-up effort by a USPS-
mailer working group. We asked USPS what actions, if any, it had taken
on the 1999 recommendations, but we did not receive a response.
Table 5: Timeline of Actions and Recommendations Related to Delivery
Performance Measurement:
Year: 1990; Actions and recommendations: USPS began to implement EXFC
to measure delivery performance for some First-Class Mail in 86 cities
covering 271 3-digit ZIP Code areas. This system has been expanded and
revised over the years, including expanding its coverage to 463 3-digit
ZIP Code areas.
Year: 1992;
Actions and recommendations: The Competitive Services Task Force,
composed of more than 50 postal executives and industry
representatives, recommended that; USPS improve its delivery standards
and performance measurement for Standard Mail, First-Class Mail,
Periodicals, and Package Services. These and other recommendations were
intended to stimulate the growth in mail volume and to support USPS's
financial viability by improving the quality of service and customer
satisfaction, especially in areas where customers have choices.
Year: 1993;
Actions and recommendations: USPS awarded a contract to implement
delivery performance measurement for Standard Mail and Periodicals by
measuring delivery performance for test pieces of mail. These efforts
were discontinued in 1996.
Year: 1997;
Actions and recommendations: The Blue Ribbon Committee, formed at the
request of Postmaster General Runyon and included USPS and industry
representatives, recommended that; USPS should work closely with its
customers to define its service standards, publish these standards for
each class of mail, and report on a regular basis its performance
against those measures.
Year: 1998;
Actions and recommendations: USPS implemented Delivery Confirmation
Service, which is critical to delivery performance measurement for
Express Mail, Priority Mail, and some types of Package Services mail,
including Parcel Select.
Year: 1999;
Actions and recommendations: A USPS-mailer working group followed up on
the Blue Ribbon Committee, and after nearly 2 years of effort, the
group made more extensive recommendations for improving delivery
standards, measurement, and reporting. These included; defining service
commitments and standards for all classes of mail based on existing
mail processing and transportation environments, which for bulk mail
would also reflect how the mail is prepared (e.g., how it is presorted
by ZIP Code and whether it is organized in trays or in sacks) and the
type of mail processing facility where it enters the postal system;;
using multiple technologies or measurement tools to measure service
performance for all mail classes;; creating a database to provide
actionable measurement data in a user-friendly fashion and in real-
time, or close to real-time, so that mailers and USPS managers could
determine the impact of various elements on its performance goals; and;
providing aggregate data that compares actual performance with
standards and goals, which would then be presented with breakdowns
according to the delivery standards; The group recognized that USPS
could take interim steps toward implementing the recommended database,
stressed the need for mailer involvement in implementing the
recommendations, and asked USPS to begin working on them immediately.
Year: 2001;
Actions and recommendations: USPS began to fund implementation of its
"information platform" to track mail in its processing and
transportation networks. USPS officials said that Confirm Service,
which provides tracking data on the progress of mail through USPS's
processing network, would be the "centerpiece of the information
platform" and would provide data for "performance measurement" for
letters and flat-sized mail. They said the "objective is to measure it
so we can improve it."; However, the Confirm program had implementation
difficulties, some of which have persisted despite years of study by
working groups with USPS and mailer representatives. According to USPS,
it does not use Confirm data for delivery performance measurement, in
part because of continuing issues with the validity of mailer-provided
information on bulk mailings.
Year: 2003;
Actions and recommendations: According to mailer newsletters, the USPS
Chief Operating Officer, who is the current Deputy Postmaster General,
told mailers that he would like them to join USPS in a commitment to
implement delivery performance measurement, based on Confirm
technology, for Standard Mail, bulk First-Class Mail, and Periodicals
within a year and that USPS needed to redouble its efforts to resolve
Confirm issues.
Year: 2004;
Actions and recommendations: After several years of effort by multiple
USPS-mailer working groups, an MTAC working group recommended that;
USPS implement delivery performance measurement and reporting for bulk
First-Class Mail using Confirm technology, and; a follow-up group be
formed to work on implementation issues; No follow- up ensued, however.
USPS told us it took no action because of continuing Confirm data
quality issues and related cost issues.
Year: 2005;
Actions and recommendations: Another MTAC working group dealing with
service performance measurement asked that the MTAC Leadership
Committee, which includes USPS and mailer representatives, address
continuing Confirm issues.
Source: GAO analysis of USPS information and other sources, such as
reports of the above committees.
[End of table]
Impediments Remain to Implementing Performance Measurement for all
Major Types of Mail:
Multiple impediments have contributed to USPS's slow progress toward
implementing delivery performance measurement for all major types of
mail. The most important impediment is the lack of management
commitment and effective collaboration with the mailing industry to
follow up on recommendations for improvements and to resolve issues
between USPS and mailers. Additional impediments include technological
limitations, limited mailer participation in providing information
needed to facilitate performance measurement, data quality
deficiencies, and costs.
Lack of Management Commitment and Effective Collaboration:
USPS has not provided management commitment and effectively
collaborated with mailers to develop delivery performance measures for
all major types of mail. To achieve effective collaboration, it is
necessary to build consensus among diverse mailers with different
information needs, as well as between mailers and USPS. Such a
challenge requires leadership and an effective process for follow up,
particularly given the complexity of measurement issues and the time
frame that likely will be required to overcome longstanding issues.
Based on our discussions with mailers and postal officials, some of the
commitment and collaboration challenges have included:
* USPS has lacked commitment to implementing delivery performance
measurement and reporting for all major types of mail; particularly, as
some mailers told us, USPS has tended to resist greater transparency,
oversight, and accountability. A USPS senior vice president told us
that USPS had no plans for implementing additional measures of delivery
performance. A second USPS senior vice president explained that
although some pieces of mail may be tracked as automated equipment
reads barcodes on the mail, enabling more information for management
and diagnostic purposes, these pieces are unrepresentative, and USPS
has no plans for using mail tracking data to develop representative
measures of delivery performance. As for major types of mail that are
not measured, USPS has publicly reported that it has no system in place
for measuring service performance for Standard Mail on a systemwide
basis and currently has no plans for the development of such a
system.[Footnote 30] Similarly, USPS officials told us that it has no
plans to develop representative measures of delivery performance for
bulk First-Class Mail, which, after Standard Mail, is the second-
largest volume of mail that is not measured.
Further, USPS stated in its Strategic Transformation Plan that it would
be prepared to extend performance measurement and reporting to
additional mail classes as it achieves high levels of delivery service
performance. A USPS vice president told us that USPS agreed in 2005 to
begin reporting delivery performance results on its Web site for
Express Mail and Priority Mail because USPS had already improved
delivery performance for these types of mail to high levels, and
therefore the results could help USPS promote these types of mail. This
statement contrasts with a general performance principle that a major
use, if not the major use, of regularly collected outcome information
should be by program managers themselves to improve the effectiveness
of their programs.[Footnote 31] As we have reported, the benefit of
collecting performance information is only fully realized when this
information is actually used by managers to make decisions oriented
toward improving results.[Footnote 32]
* Although many groups have issued recommendations to USPS, follow-
through on key recommendations did not occur. USPS often did not
officially respond to the recommendations at the time they were made
and did not implement the recommendations, so it was not clear whether
USPS agreed or intended to implement the recommendations. Moreover,
once a group completed its report with recommendations to USPS, it
disbanded, which limited the continuity that otherwise could have been
helpful for follow-up.
* Effective collaboration has been impeded by USPS's resistance to
sharing some diagnostic data it collected with mailers. In general,
USPS has maintained that delivery performance data below the national
level are proprietary, such as data on performance related to any
particular mail processing facility or transportation segment.
Therefore, according to USPS, it should not be required to publicly
disclose these data in PRC proceedings in response to requests by any
interested party. However, voluntarily sharing diagnostic delivery
performance information with mailers experiencing delivery problems
could be useful for both USPS and mailers to collaboratively develop an
understanding of whether the problems are limited to particular
mailings or are systemic--resulting from specific USPS operational
problems. Such an understanding can help in identifying the cause of
delivery problems and in implementing corrective action. Although USPS
representatives may communicate with mailers about these problems, the
mailers told us they often lack sufficient timely and actionable data
on delivery problems. They have called for USPS to share more aggregate
delivery performance information.
The absence of management commitment and effective collaboration
matters for the future because give-and-take by both USPS and mailers
will be required to achieve consensus on designing measurement systems
that meet different information needs, finding ways to cover the
associated USPS costs, increasing mailer participation in providing
information needed to facilitate performance measurement, and
overcoming remaining impediments to implementing valid measurement
systems. In this regard, we are encouraged that USPS has engaged in
collaborative efforts to improve performance measurement for Parcel
Select, starting with the Deputy Postmaster General reaching out to the
Parcel Shippers Association (PSA), which represents major Parcel Select
mailers, and offering to engage in collaborative efforts. The Deputy
Postmaster General assigned responsibility to a single manager for
follow-up. USPS followed through by reaching consensus on standards,
performance measurement, and the sharing of aggregate data, which
required actions by both USPS and mailers to successfully implement.
According to PSA officials, the standards, measures, and performance
incentives have led to a marked improvement in delivery performance for
Parcel Select; and, as a result, USPS has been able to maintain its
viability within the competitive package services market. The USPS
official with responsibility in this area made similar comments. In
addition, USPS recently proposed requiring mailers to barcode some
Parcel Select items; if this increases barcoding, it will facilitate
delivery performance measurement. USPS's Parcel Select provides a
successful model for updating the delivery standards for other types of
mail, implementing delivery performance measurement, and holding USPS
accountable for results.
Similarly, USPS worked with other stakeholders to implement delivery
performance measurement for Global Express Mail, which is managed by an
international organization called the Express Mail Service (EMS)
Cooperative.[Footnote 33] Timely delivery of EMS items, including
Global Express Mail, has reportedly improved since delivery standards
and measurement were implemented.
Other Impediments for Measuring Delivery Performance:
Several other impediments have limited the development of delivery
performance measures for all major types of mail. Two key impediments
involve limitations in technology, which limited USPS's ability to
track mail from entry to delivery; and limited mailer participation in
providing information needed to facilitate performance measurements,
which limited the representativeness of the performance data collected.
In addition, data quality deficiencies and cost concerns have impeded
progress.
Technological limitations. USPS has not fully implemented technology
that will enable it to track barcoded mail through its mail processing
and transportation networks that could play a part in measuring
performance when completed. Although some implementation, such as
upgrading barcodes for individual mail pieces and mail containers, is
under way, full implementation will take years. According to the Deputy
Postmaster General, USPS expects to make substantial progress in
resolving these technological limitations over the next 5 years. For
example, near the end of this decade, USPS is planning to install new
automated equipment to sort flat-sized mail, such as large envelopes
and catalogs, into the order it is delivered, which promises to greatly
expand the automatic scanning of barcodes on mail pieces. More
generally, USPS officials said that USPS is working toward tracking
mailings from acceptance (which they said will depend on mailers
providing accurate data) through USPS's mail processing and
transportation networks. Such information is a step toward additional
delivery performance measurement. In the interim, however, major gaps
remain in USPS's ability to track most types of mail.
Limited mailer participation. Mailer participation is low in applying
unique barcodes to mail pieces for tracking purposes, which means that
the tracking data cannot be considered representative of overall
performance. Using USPS's Confirm Service, mailers can apply unique
barcodes to Standard Mail, First-Class Mail, and Periodicals, when the
mail is letter or flat-sized and can be sorted on USPS automation
equipment. Although these types of mail constitute most of the total
mail volume, less than 2 percent of total mail volume is tracked by the
Confirm program. Participation in Confirm is limited, in part because
its use is voluntary, mailers must pay a fee to participate, and
mailers also incur additional expenses related to their participation,
such as for mail preparation. Although USPS officials expect mailer
participation to increase as improved technology is implemented, they
expect participation to continue to be unrepresentative, with some
mailers more likely to participate than others. They explained that
Confirm will continue to be of greatest interest to large mailers with
well-developed capabilities to use tracking data. These mailers include
large companies that track bills and remittance mail and large
advertisers that track mailed catalogs in order to efficiently schedule
staff and inventory.
Another factor in low participation is the mailers' continuing use of
non-USPS delivery performance measurements that they have established
or paid third parties to do so, such as "seeding" their mailings with
mail sent to persons who report when it is received.[Footnote 34] As
long as a nonrandom group of mailers participates in Confirm--which is
likely to be the case for the foreseeable future--the aggregate results
will not be representative as a measure of overall systemwide
performance. Thus, the main options for obtaining representative
results for any given type of mail (such as bulk First-Class Mail)
would appear to be (1) obtaining sufficient participation by all
mailers who send that type of mail or (2) obtaining information on mail
that is sent by a representative sample of mailers. For either option,
USPS, mailer groups, and mailers would need to collaborate to achieve
the level of mailer participation necessary to generate representative
performance data that could be useful to all parties.
Data quality. According to USPS, data quality deficiencies have been
another problem in measuring delivery performance, because USPS has no
way to determine when it receives bulk mail, such as Standard Mail and
Periodicals, which is commonly referred to as obtaining a valid "start
the clock" time. At present, USPS relies on mailer-provided information
submitted with each mailing, which USPS officials told us does not
always include accurate information on when and where the mail was
submitted. Based on their experience, USPS officials do not consider
mailer-provided information to be sufficiently accurate for measuring
delivery performance.
The issue of inaccurate data has persisted for years despite repeated
efforts by working groups composed of USPS and mailer representatives.
In this regard, USPS officials told us that resolving this issue would
likely entail additional costs for mailers, which they said mailers
have not been willing to pay; however, some mailers disagree with this
view. On the positive side, the USPS Senior Vice President for
Intelligent Mail and Address Quality told us that USPS has initiatives
under way that should help ameliorate data quality deficiencies.
Costs. Senior USPS officials told us that currently, it would be too
costly for USPS to create new representative performance measures for
any major type of mail. They said that given current technology, USPS
would incur substantial costs to implement delivery performance
measurement for all major types of mail if USPS were to use bar codes
to track every mail piece from when it enters the postal system to when
it is delivered. A senior USPS official told us that delivery
performance measurement for all mail--which would have involved
tracking more than 210 billion pieces of mail in fiscal year 2005--
would cost hundreds of millions of dollars and expressed doubt that
mailers would want to pay those additional costs even in return for
performance data. In this regard, sampling approaches could be used to
obtain representative data on delivery performance that would likely be
much less costly than seeking to measure delivery performance for every
piece of mail.
A related cost issue is how USPS would recover the associated
measurement costs from mailers and the impact of this decision on
mailer participation that would be needed for USPS to measure delivery
performance. As the Confirm program illustrates, a fee-based program
creates a disincentive for mailers to participate. In contrast, USPS
chose to build its tracking costs into the rate base for Parcel Select,
so that the costs would be shared by all Parcel Select mailers. USPS
officials told us they had rejected this approach for other types of
mail for several reasons, including the uncertain benefits to USPS and
mailers' preference for lower rates, particularly for mailers who would
not wish to pay the costs associated with collecting delivery
performance data.
However, some major mailer groups disagree with USPS's perspectives of
mailer willingness to cover costs as a key impediment to implementing
representative measures of delivery performance for all major types of
mail. The Mailers Council, a coalition of over 50 major mailing
associations, corporations, and nonprofit organizations, told us that
its members would be willing to pay additional USPS costs, within
reason, for delivery performance measurement, stating that such costs
would be small compared to total postal costs. Until USPS commits to
developing additional representative measures of delivery performance
for all major types of mail and considers various approaches for
measuring the delivery performance of its major types of mail,
discusses their usefulness and feasibility with mailers, and estimates
the associated costs, it will be difficult to get beyond USPS's
assertion that measurement is cost-prohibitive and mailers' assertions
that the costs could be relatively low and that they would be willing
to bear them.
USPS Plans to Improve Service Performance, But Not to Implement
Representative Measures of Delivery Performance Across All Product
Lines:
Although USPS plans to improve its service performance, it has no
current plans to implement additional representative measures of
delivery performance. USPS states in its latest Strategic
Transformation Plan that it plans to improve the quality of postal
services by continuing to focus on the end-to-end service performance
of all mail. Further, it states that "customers expect timely, reliable
mail service, and the Postal Service has delivered. Under the 2002
Transformation Plan, the Postal Service successfully improved service
performance across all product lines." We acknowledge and agree with
USPS's emphasis on improved service performance. However, we do not
know whether service has improved across all product lines, nor does
USPS, because as we noted earlier, USPS does not collect or provide
representative delivery performance information that would be needed to
support this statement. USPS has information from various operational
data systems, but this information does not amount to delivery
performance measurement. Gaps in delivery performance measurement
information are hindering USPS and mailers in identifying opportunities
to improve service across all product lines, as well as effectively
addressing these opportunities by understanding whether problems are
specific to a particular mailer or systemic problems in USPS's mail
processing and transportation networks. Without complete delivery
performance information that is regularly reported, stakeholders must
rely on the publicly available information that USPS chooses to
provide, which often highlights only positive results. For example, in
discussing its strategy for providing timely, reliable end-to-end
delivery service, the Strategic Transformation Plan states "customer
satisfaction scores have never been higher." Although customer
satisfaction information is valuable and useful to USPS and other
organizations that provide products and services, it does not measure
delivery performance.
USPS's currently available delivery performance information does not
provide sufficient context to determine (1) actual delivery performance
results for all of its product lines, (2) how performance is changing
over time through the assessment of trend information, and (3) whether
USPS's delivery performance is competitive. Timeliness is a critical
factor in today's competitive business environment, where many
companies operate with just-in-time inventories and rely on timely
delivery to meet their needs. It is likely to become even more
important in the future. Thus, reliable delivery performance
information reported in a timely manner is critical for high-performing
organizations to be successful in this environment. USPS's Strategic
Transformation Plan discusses strategies for providing timely, reliable
mail delivery, which include plans to improve the quantity and accuracy
of service performance information collected through passive scanning
and improved start-the-clock information, provide customers with
information about their own mailings, and create better diagnostic data
so that bottlenecks can be eliminated throughout the system. These are
all positive steps needed to improve delivery performance information.
However, the Plan falls short of committing to developing end-to-end
delivery performance information that could be used to measure how well
USPS is achieving its strategy of improving service performance across
all product lines. Further, the Plan does not discuss what delivery
performance information USPS plans to report publicly.
Pending legislation does address what delivery performance information
Congress would like to see USPS report in the future. However, USPS
could demonstrate that it wants to provide leadership in this area by
not waiting for the legislation to be enacted. Instead, USPS could
clearly commit to developing representative end-to-end delivery
performance measures for all of its product lines. USPS could also take
the lead in collaborating with mailers to implement such performance
measures. As we previously stated, effective collaboration with mailers
is needed to resolve the impediments that hinder progress in this area,
such as data quality issues involving how to improve the accuracy of
start-the-clock information. Concerns about cost could be addressed by
exploring options such as sampling in collaboration with the mailers to
determine how best to measure delivery performance at much less cost
than attempting to track every mail piece. Such collaboration would
also allow the parties to determine their information needs, explore
cost trade-offs associated with various options, and resolve associated
data quality issues. In its letter to us, PostCom noted that delivery
performance measurement could be implemented in many ways that would
not be costly. PostCom said that measurement costs could be affected by
multiple factors, such as whether all mail pieces or a sample are
tracked; whether tracking is to the point of delivery vs. the last
automated scan plus a "predicted" time for delivery; whether data is
collected automatically by equipment in a passive scan vs. other
methods requiring USPS employees to scan mail; and whether USPS
technology developments will be used exclusively to measure performance
or primarily for processing the mail.
We recognize that it will take time to resolve impediments to implement
additional delivery performance measures. However, USPS's leadership,
commitment, and effective collaboration with mailers are critical
elements to implementing a complete set of delivery performance
measures that will enable USPS and its customers to understand the
quality of delivery services, identify opportunities for improvement,
and track progress in achieving timely delivery.
Conclusions:
USPS delivery standards are not as useful and transparent as they
should be. Standards for key types of mail--including Standard Mail,
USPS's main growth product--are largely static, and do not fully
reflect current operations. Thus, they cannot be used to set realistic
expectations for mail delivery, to establish benchmarks for measuring
performance, or to hold individuals accountable through pay-for-
performance incentives tied to measurable results. USPS's delivery
performance measurement and reporting is not complete, because it does
not cover key types of mail--including Standard Mail, bulk First-Class
Mail, Periodicals, and most Package Services. Further, despite recent
disclosures on its Web site for some types of mail, USPS's reporting
remains limited and has fallen short of statutory requirements to
include specified delivery performance information. Because of gaps in
delivery performance measurement and reporting, stakeholders, including
the Congress, cannot understand how well USPS is fulfilling its basic
mission, nor can they understand delivery performance results and
trends. As a result, USPS and mailers are hindered in identifying and
diagnosing delivery problems so that corrective action can be
implemented. This situation increases the financial risk to USPS, which
faces increasing competition. If mailers are not satisfied with USPS's
delivery service, they could take their business elsewhere.
Prospects for progress continue to be uncertain, in part because USPS
has not committed itself to modernizing its delivery standards or
developing representative performance measures for all major types of
mail. USPS management commitment and more effective collaboration with
mailers will be critical for resolving impediments to delivery
performance measurement and reporting. Give-and-take by both parties
will be required to achieve consensus on designing measurement systems
that meet different information needs, increasing mailer participation
in providing information needed to facilitate performance measurement,
addressing data deficiencies, finding ways to cover the associated
costs, and overcoming impediments.
Recommendations for Executive Action:
To facilitate greater progress in developing complete delivery
performance information, we recommend that the Postmaster General take
the following four actions:
1. modernize delivery standards for all major types of mail so that
they reflect USPS operations and can be used as benchmarks for
understanding and measuring delivery performance;
2. provide a clear commitment in USPS's Comprehensive Statement on
Postal Operations to develop a complete set of delivery performance
measures for each major type of mail that is representative of overall
delivery performance;
3. implement representative delivery performance measures for all major
types of mail by providing more effective collaboration with mailers
and others to ensure effective working relationships, follow-through,
accountability, and results; and:
4. improve the transparency of delivery performance standards,
measures, and results by publicly disclosing more information,
including in its Comprehensive Statement on Postal Operations and other
annual performance reports to Congress, as well as providing easily
accessible information on its Web site.
Agency Comments and Our Evaluation:
USPS provided comments on a draft of this report in a letter from the
Postmaster General dated July 14, 2006. These comments are summarized
below and included as appendix III. In addition, the Postmaster General
provided oral comments in a meeting on June 26, 2006, with suggestions
for further clarifying information, which were incorporated where
appropriate.
USPS's letter recognized that its delivery performance measurement and
reporting are not complete and provided detailed information about its
ongoing and planned efforts to ultimately measure service performance
and provide transparency for all classes of mail. USPS stated that it
intends to lead the efforts required to reach this goal by working
collaboratively with others in the mailing industry. USPS's letter
further stated that ultimately, "the core issue is service--and
according to all indicators, we are succeeding in our goal of
continuous service improvement. We are not satisfied with maintaining
the status quo." USPS stated that although it recognizes the desire for
aggregate service performance results for all mail categories, it
believes that it serves mailers best by focusing first on providing
service measurement and diagnostics to individual customers, then
looking to provide aggregate results. Regarding the draft report's
findings related to service standards, USPS disagreed that some of its
delivery standards are outdated and stated that its service standards
are modern and up-to-date. USPS did not directly comment on three of
our four recommendations. On our fourth recommendation concerning
improving the transparency of delivery performance standards, measures,
and results, USPS commented that its service standards should be more
visible and stated that it is exploring making information related to
its service standards available through additional channels, including
its Web site.
We are encouraged by USPS's commitment to ultimately measure service
performance and provide transparency for all classes of mail and its
intention to take the lead in working with mailers to achieve this
goal. Further, we recognize in our report USPS's ongoing efforts to
implement technology that will track mail throughout USPS's mail
processing system, which is a step toward improved delivery performance
measurement. We also agree, as we noted in our report, that mailer
participation is necessary to generate representative delivery
performance measures for all mail categories. USPS's letter details
many ongoing and planned efforts necessary to improve performance
measurement, as well as specific actions that USPS calls on mailers to
take to enable its vision of measurement. We agree with USPS's emphasis
on improving service, but we continue to have questions about whether
USPS's efforts will result in representative delivery performance
measures for all major types of mail. For most major types of mail,
USPS's vision of service performance measurement is generally limited
to tracking mail through its mail processing and transportation
networks, which is not the same as measuring end-to-end delivery
performance against USPS delivery standards. Considering USPS's lack of
commitment to implementing a complete set of delivery performance
measures, as well as the lack of timeframes in USPS's letter, we also
have questions about how long it will take to achieve this goal. We
recognize that it will take time to implement many of the ongoing and
planned initiatives described in USPS's letter. Thus, USPS's sustained
leadership is critical to ensure that effective collaboration with
mailers takes place so that USPS implements and reports on
representative delivery performance measures for all major types of
mail. We also believe that USPS should establish specific timeframes so
that timely progress can be made in this area.
USPS's letter states that it will first provide individual mailers with
delivery information before working to provide aggregate delivery
performance information, stating that aggregate information on average
performance may be irrelevant to mailers. We do not believe that these
are mutually exclusive goals that have to be addressed sequentially,
because both aggregate and individual performance information have
benefits that would meet varying needs of different postal
stakeholders. We recognize and agree that mailers want to have
performance information related to their own mailings to determine the
status of their mail as it moves through USPS's system. However,
appropriate aggregate information is needed to put mailer-specific
information into context so that USPS and mailers can understand
whether any delivery problems that occur are specific to particular
mailers or reflect systemic issues within USPS's processing and
transportation networks. Appropriate aggregate information may need to
be more specific than the average performance for a general type of
mail, so that comparisons can take geographic and other variations in
performance into account and thereby provide useful diagnostic
information to USPS and mailers. USPS has recognized this principle in
its EXFC measure of First-Class Mail deposited into collection boxes,
which provides aggregate data that can be broken down by geographic
area, delivery standard (e.g., results for 1-day, 2-day, and 3-day
mail), and other subgroups of this mail. Moreover, USPS's diagnostic
data is not representative and does not amount to delivery performance
measurement. USPS's letter does not fully recognize the critical
importance of aggregate delivery performance measurement for
accountability purposes, by parties both inside and outside USPS. As
USPS's letter demonstrates, where USPS has delivery performance
measures, it can report on how well it is achieving one of its primary
goals to improve delivery services. However, USPS is not in a position
to make such assessments for more than four-fifths of its mail volume,
because it does not measure and report its delivery performance for
most types of mail.
USPS's letter also states that "we share the mutual goal of complete
network transparency to provide mailers with a comprehensive view of
the service they receive." Our view of transparency is broader than
providing mailers with data on their own mail. As a federal government
entity with a monopoly on some delivery services, USPS is accountable
to the American public, Congress, PRC, USPS's Board of Governors, and
postal customers for the delivery services it provides. However, as
noted earlier, stakeholders cannot understand how well USPS is
fulfilling its basic mission due to gaps in delivery performance
measurement and reporting, nor can they understand delivery performance
results and trends. USPS's letter does not address what actions USPS
plans to take to improve the transparency of publicly available
delivery performance information. Without sufficient transparency,
oversight and accountability are limited.
We disagree with USPS's comments that its service standards are modern
and up-to-date. Consistent with the input we received from numerous
mailers, we believe that these standards do not work for the mailers
and for USPS. As we noted in our report, some of USPS's delivery
standards, including those for Standard Mail, some Periodicals and most
Package Services, do not reflect changes in how mail is prepared and
delivered. These standards are unsuitable as benchmarks for setting
realistic expectations for timely mail delivery, for measuring delivery
performance, or improving service, oversight, and accountability.
Specific comments in the USPS letter were organized into the following
six sections: (1) "Focus on Service," (2) "Service Performance
Results," (3) "Some Areas of Concern," (4) "Modern Service Standards,"
(5) "Measurement Systems and Diagnostic Tools," and (6) "Customer
Collaboration and Reporting." These comments are summarized below with
our analysis.
Focus on Service: USPS commented that one of its primary goals in its
Strategic Transformation Plan 2006-2010, is to improve service. USPS
said this goal is supported by strategies that include a "balanced
scorecard" that uses service performance metrics to support personal
and unit accountability. Goals for these metrics, which include
delivery performance measures as well as operational indicators that
USPS said are critical to on-time service performance, are incorporated
into USPS's pay-for-performance incentives for its managers. We agree
with USPS's focus on improving service and holding its managers
accountable for results. Our draft report noted that USPS had
recognized the importance of the timely delivery of mail and integrated
performance targets and results for some types of mail into its
performance management system. However, USPS has not yet achieved its
aim of a "balanced scorecard" for delivery performance because its
delivery performance measures cover less than one-fifth of mail volume,
and these measures do not cover Standard Mail, bulk First-Class Mail,
Periodicals, and most Package Services mail. This gap impedes USPS's
potential for holding its managers accountable for delivery performance
of all types of mail and for balancing increasing financial pressures
with the need to maintain quality delivery service.
Service Performance Results: USPS stated that its focus on service has
resulted in "record performance across all mail categories," adding
that its measurement systems for First-Class Mail, Priority Mail, and
Express Mail show that USPS had met or exceeded the performance targets
it set for them. However, we do not know whether service has improved
across all mail categories, nor does USPS, because as we noted earlier,
USPS does not collect or provide representative delivery performance
information that would be needed to support this statement. Further, in
fiscal year 2005, USPS did not achieve record delivery performance for
all categories of mail that it measured, and did not meet all of the
delivery performance targets it had set. For example, the 2005 Annual
Performance Report included within the 2005 Statement on Comprehensive
Operations reported that on-time performance for First-Class Mail with
a 3-day delivery standard, as measured by EXFC, was 87 percent in
fiscal year 2005, down 2 percentage points from the previous fiscal
year and falling short of USPS's goal of 90 percent. On-time delivery
scores for Priority Mail also declined over the same period.
With respect to reporting on its delivery performance, USPS commented
in its letter that it has posted delivery performance results on its
Web site, including for some of its competitive products. As our draft
report stated, USPS improved its reporting of delivery performance
results by starting to post information on its Web site in April 2006,
including selected results for the past quarter for the timely delivery
of some Express Mail, Priority Mail, First-Class Mail, and Package
Services. We stated that USPS's recent disclosures are a good step
toward providing easily accessible information on delivery performance
results on its Web site for key types of mail used by the public.
However, we also found that the information is incomplete because it
does not include delivery performance results for all major types of
mail. Some major types of mail are not measured, while the information
on the Web site provided limited information for mail that is measured,
and did not fully disclose the limited scope of this measurement. We
continue to believe that without more complete reporting of delivery
performance information, Congress and the American public do not have
adequate information to determine how well USPS is accomplishing its
mission of providing prompt and reliable delivery services.
Some Areas of Concern: USPS stated that our draft report did not fully
consider some important issues related to performance measurement. USPS
commented that although our draft report did discuss data quality
issues, it had not accounted for some relevant factors, including the
completeness, accuracy, and validity of mailer information submitted
when mail is entered. However, our draft report included a discussion
of the major impediments that have contributed to USPS's slow progress
toward implementing delivery performance measures for all major types
of mail, including impediments relating to the quality of mailer
information submitted when mail is accepted into USPS's system, which
is needed for "start the clock" delivery information. Our draft report
provided USPS's view that mailers do not provide accurate information
on its mailings that would be needed to "start the clock" for delivery
performance measurement and noted that this issue has been persistent
despite repeated efforts by USPS-mailer committees. In discussing
measurement issues, USPS further commented that the mailing industry
must embrace changes such as improved address quality and increased
presort accuracy. We believe that although these outcomes would
facilitate USPS handing of mail, this should not be a reason to delay
measurement of delivery performance. Other federal entities routinely
set performance goals and measure results for important activities that
are partly outside their control, and use the results to work with
their partners to improve their performance.
On another matter, USPS stated that our report's discussion of USPS
attempts to measure performance did not account for complexities unique
to Standard Mail and Periodicals. USPS also stated that its experience
has demonstrated that it is particularly difficult to design a broad
and effective measurement system for Standard Mail and Periodicals,
explaining that its previous attempts were unsuccessful for reasons
including lack of information on the acceptance of this mail into
USPS's system and complexities relating to different types of mail
preparation and entry. We disagree that our draft report did not
adequately account for these complexities and believe USPS can address
these complexities to successfully implement delivery performance
measures for Standard Mail and Periodicals. As noted above, our draft
report discussed issues in obtaining information needed to "start the
clock" on delivery performance measurement. We also recognized that
Standard Mail and Periodicals have complexities in mail preparation and
entry that USPS should incorporate into its delivery performance
standards so that they can serve as suitable benchmarks for
measurement. Further, our draft report provided a detailed discussion
of attempts to measure performance by task forces and working groups
comprised of USPS and mailer representatives, who were well versed in
the complexities of Standard Mail and Periodicals. These groups
repeatedly recommended that USPS measure the delivery performance of
Standard Mail and Periodicals, including the 1997 recommendations of
the Blue Ribbon Panel and the 1999 recommendations of a follow-up USPS/
mailer working group that were made years after USPS's short-lived
attempt to measure delivery performance of Standard Mail and
Periodicals. The 1999 recommendations stated that USPS should implement
performance measurement for Standard Mail, Periodicals, and other
classes of mail in a manner that would provide aggregate performance
data with breakdowns according to delivery standards, which for bulk
mail such as Standard Mail and Periodicals would reflect how the mail
is prepared and the type of postal facility where it enters USPS's
system. The working group asked USPS to begin working on implementing
these recommendations immediately. As we concluded, gaps in performance
measurement mean that stakeholders cannot understand how well USPS is
fulfilling its basic mission, nor can they understand results and
trends--a situation that also increases the financial risk to USPS,
which faces increasing competition.
Modern Service Standards: USPS stated that our draft report did not
fully acknowledge its long history of establishing and revising
delivery standards. We disagree because our report provides a detailed
history of delivery standards, noting that USPS has updated its
standards for some mail, such as First-Class Mail and Parcel Select.
Our draft report also stated that delivery standards are outdated for
several types of mail, including Standard Mail, some Periodicals, and
most Package Services, because they have not been updated in many years
to reflect significant changes in the way mail is prepared and
delivered. In addition, USPS commented that the concept of modernized
delivery standards may, for some, denote upgrading service levels,
warning that upgrading service would result in increased costs and
prices. However, our draft report does not discuss whether service
needs to be upgraded and focuses instead on the need for USPS delivery
standards to reflect current USPS operations including presorting and
destination entry.
Measurement Systems and Diagnostic Tools: USPS commented that the
description of USPS performance measurement systems in our draft report
was incomplete and unintentionally misleading. USPS commented that the
draft report overlooked "the fact" that EXFC, which measures First-
Class Mail deposited into collection boxes, is reflective of delivery
performance for all First-Class Mail including bulk First-Class Mail.
USPS stated that bulk First-Class Mail is handled in the same manner as
collection box mail. USPS's comment about EXFC is contradicted by years
of USPS reporting, including in its annual Comprehensive Statement on
Postal Operations and its quarterly press releases, that "EXFC is not a
systemwide measure of all First-Class Mail performance." USPS has
repeatedly used this statement in response to a recommendation made in
a report issued in 2000 by the USPS Office of Inspector General, which
also found that EXFC does not consider the delivery performance of bulk
First-Class Mail.[Footnote 35]
Customer Collaboration and Reporting: USPS commented that many of its
service measurement systems and diagnostic tools were designed jointly
or in collaboration with its customers. Our draft report discusses
USPS's many collaborative efforts with mailers, but, as noted
previously, our concern is that USPS has not implemented key
recommendations that have been made since the early 1990s by numerous
USPS/mailer committees. Further, our work found that the lack of
adequate and continued management commitment and effective
collaboration with the mailing industry to follow through on
recommendations for improvements and to resolve issues is an overall
theme in understanding the slow progress being made in developing and
implementing methods of measuring delivery performance. Thus, while we
are encouraged that USPS presented several initiatives to develop the
ability to track mail through its mail processing and transportation
networks, as outlined in our report and our analysis of USPS's comment
letter, we continue to believe that there needs to be greater progress
in implementing representative measures of end-to-end delivery
performance.
We are sending copies of this report to the Ranking Minority Member of
the Senate Committee on Homeland Security and Governmental Affairs, the
Chairman and Ranking Minority Member of the House Committee on
Government Reform, Rep. John M. McHugh, Rep. Danny K. Davis, the
Chairman of the USPS Board of Governors, the Postmaster General, the
Chairman of the Postal Rate Commission, the USPS Inspector General, and
other interested parties. We also will provide copies to others on
request. In addition, the report will be available at no charge on the
GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions regarding this report, please
contact me at siggerudk@gao.gov or by telephone at (202) 512-2834.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. GAO staff who
made key contributions to this report are listed in appendix IV.
Signed by:
Katherine A. Siggerud:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to assess (1) the delivery standards for the timely
delivery of mail that the U.S. Postal Service (USPS) has established,
(2) the delivery performance information on the timely delivery of mail
that USPS measures and reports, and (3) the progress USPS has made in
improving its delivery performance information.
We based our assessment of USPS's delivery standards, measures, and
reporting using the concepts of completeness, transparency, and
usefulness of delivery standards, measures, and reporting (see table
6). We identified applicable laws related to USPS's mission,
ratemaking, and reporting; statutes and practices used by high-
performing organizations related to delivery standards, measurement,
and reporting, including practices identified through our past work.
The basis of our assessment is described in greater detail in table 6.
Table 6: Basis for GAO Assessment of USPS Delivery Standards,
Measurement, and Reporting:
Assessment criteria: Completeness: Completeness of delivery performance
information provided internally and externally so that USPS and other
stakeholders understand how well USPS is fulfilling its statutory
mission and specific statutory requirements for mail delivery;
Basis for criteria: Statutory criteria; USPS has as its basic function
the obligation to provide postal services to bind the nation together
through the personal, educational, literary, and business
correspondence of the people. It shall provide prompt, reliable, and
efficient services to patrons in all areas and shall render postal
services to all communities.[A];
USPS must provide a maximum degree of effective and regular postal
services to rural areas, communities, and small towns where post
offices are not self-sustaining.[B];
In selecting modes of transportation, USPS must give the highest
consideration to the prompt and economical delivery of all mail.[C];
USPS must give the highest consideration to the expeditious collection,
transportation, and delivery of important letter mail.[D];
Modern methods of transporting the mail by containerization and
programs designed to achieve overnight transportation to the
destination of important letter mail to all parts of the nation shall
be a primary goal of postal operations.[E];
USPS operations include delivering mail with different standards for
speed of delivery, which addresses the requirement that USPS provide
types of mail service to meet the needs of different categories of mail
and mail users.[F] Varying types of mail have been established in
accordance with the importance of establishing classifications with--
and without-extremely high degrees of reliability and speed of
delivery.[G];
GAO postal-related work;
Without complete and reliable performance data, USPS and other
stakeholders cannot determine USPS's progress towards meeting its
intended performance results.[H];
The Government Performance and Results Act of 1993 (GPRA) requires USPS
to prepare strategic plans and annual performance plans, which are to
include performance goals related to its mission, and are to be similar
to those developed by executive branch agencies.[I];
Practices used by high-performing organizations;
Key attributes of successful performance measures include, among other
things, (1) core program activities, so that measures cover the
activities that an entity is expected to perform to support the intent
of the program and (2) balance, which exists when a suite of measures
ensures that an organization's various priorities are covered.[J];
According to the American Productivity and Quality Center (APQC), best-
practice companies are using performance measurement results to
identify areas for improvement and consider the application of
performance measurement data to be their competitive advantage. The
ultimate purpose of performance measurement is the compilation and
analysis of strategically aligned data from which decision makers and
teams can make decisions and implement actions to improve business
performance and achieve strategic objectives. These companies view the
analysis of performance data, and the subsequent use of these data in
changing processes, as what gives them a competitive edge.[K].
Assessment criteria: Transparency: Availability of transparent
information on delivery performance internally and externally,
including to USPS managers and employees, the USPS Board of Governors,
mailers, PRC, Congress, and the public;
Basis for criteria: Statutory criteria;
USPS is required to annually report data on the speed and reliability
of service provided for the various classes of mail and types of mail
services to its congressional oversight committees.[L];
GPRA requires USPS to annually report to Congress and the public on its
goals and actual performance relative to these goals.[M] USPS is
required to review the success of achieving its goals, and, for any
goals not met, explain and describe (1) why the goal was not met, (2)
plans and schedules for achieving the established goal, or, if the
performance goal is impractical or infeasible, (3) why that is the case
and what action is recommended. USPS may report any proprietary goals
to Congress in a non-public annex.[N];
GAO postal-related work; USPS is a governmental entity with a monopoly
to deliver letter mail[O] and has a vital role in communications and
commerce; thus, the transparency of its delivery performance
information is important to assessing how well it is achieving its
basic mission.[P];
Given the vital role of the nation's postal system, it is imperative
that USPS, its stakeholders, and the public have adequate information
available to them to assess USPS's progress toward meeting its
performance goals and future plans.[Q];
Practices used by high-performing organizations; The demand for
transparency and accountability is a fact that needs to be accepted in
any public sector transformation.[R].
Assessment criteria: Usefulness: Usefulness of information on delivery
performance to enable effective oversight, and accountability--
including by USPS managers, the USPS Board of Governors, PRC, and the
Congress--as well as effective USPS performance;
Basis for criteria: Statutory;
USPS Board of Governors: The Board is required to direct the exercise
of the power of USPS, including directing and controlling USPS
expenditures and reviewing its policies and practices. Governors are
required to be chosen to represent the public interest generally.[S];
Postal Rate Commission (PRC): When considering USPS proposals to change
postal rates and fees, PRC is required to consider the value of mail
service actually provided for each class of mail,[T] which PRC has
interpreted to include actual results for timely mail delivery[U]. When
considering changes to mail classification, which USPS or PRC can
initiate, PRC is required to consider the importance of providing
classifications with and without high degrees of reliability and speed
of delivery[V]. When USPS proposes changes that will have a nationwide
or substantially nationwide effect on service, PRC is required to
review the proposals and render an advisory opinion[W]. When interested
parties believe that they are not receiving postal services in
accordance with the policies of Title 39, they may lodge a complaint
with PRC. If PRC considers a complaint regarding delivery service to be
justified, it is required to issue a public report to USPS that is
advisory[X].
Congress: USPS is required to annually report information to its
congressional oversight committees, including data on the speed and
reliability of service provided for the various classes of mail, trends
in postal operations, and analyses of the impact of various internal
and external factors on USPS. USPS is also required to annually submit
such information as the committees may determine necessary to ensure
that Congress is fully and currently consulted on postal operations,
plans, and policies.[L];
GAO postal-related work; Timely, accurate, and relevant performance
data will be critical for effective management as well as
communications with customers, Congress, and other stakeholders.[H];
Practices used by high-performing organizations;
For planning and performance measurement to be effective, federal
managers need to use performance information to identify performance
problems and look for solutions, develop approaches that improve
results, and make other important management decisions.[Y];
The benefit of collecting performance information is only fully
realized when this information is actually used by managers to make
decisions oriented toward improving results. Performance information
can be used to identify problems and take corrective action; develop
strategy and allocate resources; recognize and reward performance; and
identify and share effective approaches. Practices that can contribute
to greater use of performance information include demonstrating
management commitment; aligning agencywide goals, objectives, and
measures; improving the usefulness of performance information;
developing the capacity to use performance information; and
communicating performance information clearly and effectively.[Y];
A major use, if not the major use, of regularly collected outcome
information should be by program managers themselves to improve the
effectiveness of their programs.[Z];
High-performing organizations often must fundamentally change their
cultures so that they are more results oriented, customer focused, and
collaborative in nature.[BB] These organizations use effective
performance management systems as a strategic tool to drive change and
achieve desired results. Among the key practices used is to align
individual performance expectations with organizational goals[BB] by
seeking to create pay, incentive, and reward systems that clearly link
employee knowledge, skills, and contributions to organizational
results[CC];
In defining and articulating a common outcome, where appropriate,
federal agencies should involve nonfederal partners, key clients, and
stakeholders. In doing so, federal agencies can better address their
interests and expectations and gain their support in achieving the
objectives of the collaboration. The ability to work collaboratively
requires mutual trust among the respective parties--a shared belief
that the partners will carry out their part of the joint agreement[AA].
Source: Criteria developed by GAO based on laws, practices used by high-
performing organizations, and past GAO work.
[A] 39 U.S.C. §101(a).
[B] 39 U.S.C. §101(b).
[C] 39 U.S.C. §101(f).
[D] 39 U.S.C. §101(e).
[E] 39 U.S.C. §101(f).
[F] 39 U.S.C. §403(b)(2).
[G] Types of domestic mail are established in the Domestic Mail
Classification Schedule, which is incorporated into the PRC subpart of
the Code of Federal Regulations (Appendix A to Subpart C of 39 C.F.R.
Part 3001, following 39 C.F.R. §3001.68). Statutory guidance for
domestic mail classification is specified in 39 U.S.C. §3623.
[H] GAO, Major Management Challenges and Program Risks: U.S. Postal
Service, GAO-01-262 (Washington, D.C.: Jan. 2001).
[I] GAO, The Results Act: Observations on the Postal Service's
Preliminary Annual Performance Plan, GAO/GGD-98-144 (Washington, D.C.:
July 10, 1998).
[J] GAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing
Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22,
2002).
[K] APQC, Achieving Organizational Excellence Through the Performance
Measurement System: Consortium Benchmarking Study: Best Practice Report
(Houston, Texas: 1999).
[L] 39 U.S.C. §2401(e).
[M] 39 U.S.C. §2803-2804.
[N] 39 U.S.C. §2803(d).
[O] Laws restricting private delivery of letters include 39 U.S.C. §601-
606 and 18 U.S.C. §1693-1699.
[P] GAO, U.S. Postal Service: Key Elements of Comprehensive Postal
Reform, GAO-04-397T (Washington, D.C.: Jan. 28, 2004), U.S. Postal
Service: Bold Action Needed to Continue Progress on Postal
Transformation, GAO-04-108T (Washington, D.C.: Nov. 5, 2003); Major
Management Challenges and Program Risks: U.S. Postal Service, GAO-03-
118 (Washington, D.C.: Jan. 2003).
[Q] GAO-03-118.
[R] GAO, Results-Oriented Cultures: Implementation Steps to Assist
Mergers and Organizational Transformation, GAO-03-669 (Washington,
D.C.: July 2, 2003).
[S] 39 U.S.C. §202(a) and §205(a).
[T] 39 U.S.C. §3622(b)(2).
[U] PRC, Presiding Officer's Ruling No. R2000-1/51, Docket No. R2000-1
(Washington, D.C.: Apr. 26, 2000).
[V] 39 U.S.C. §3623.
[W] 39 U.S.C. §3661.
[X] 39 U.S.C. §3662.
[Y] GAO, Managing for Results: Enhancing Agency Use of Performance
Information for Decision-Making, GAO-05-927 (Washington, D.C.: Sept. 9,
2005).
[Z] National Academy of Public Administration and IBM Endowment for the
Business of Government, How Federal Programs Use Outcome Information:
Opportunities for Federal Managers (Washington, D.C.: May 2003).
[AA] GAO, Results-Oriented Government: Practices That Can Help Enhance
and Sustain Collaboration among Federal Agencies, GAO-06-15
(Washington, D.C.: Oct. 21, 2005).
[BB] GAO, Results-Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, GAO-03-488
(Washington, D.C.: Mar. 14, 2003).
[CC] GAO, Human Capital: Observations on Final Regulations for DOD's
National Security Personnel System, GAO-06-227T (Washington, D.C.: Nov.
17, 2005).
[End of table]
To address the first objective, assessing delivery standards USPS has
established, we obtained information from USPS on its delivery
standards for the timely delivery of mail. Information consisted of
USPS's narrative description of its standards; documentation of its
standards included in the Domestic Mail Manual and related policies
included in the Postal Operations Manual; and written responses
provided to us by USPS. We also obtained material on delivery standards
that USPS provided in Postal Rate Commission (PRC) proceedings and that
were posted to the PRC Web site. These proceedings included postal rate
cases and "nature of service" proceedings that considered the USPS
proposals expected to have an effect on the nature of postal services
on a nationwide or substantially nationwide basis. We reviewed publicly
available material that USPS reported on its delivery standards, which
was posted on the USPS Web site, including the section of the USPS Web
site devoted to the Mailers' Technical Advisory Committee (MTAC). Our
assessment of USPS's delivery standards was also informed by the views
of mailing organizations, mailers, PRC, and PRC's Office of the
Consumer Advocate (OCA), which is charged with representing the
interests of the general public and the views of other postal
stakeholders. Some of these views were provided in written material
issued by the stakeholders, including material provided directly to us,
material provided in PRC proceedings, and articles in the trade press.
Other views were provided to us in interviews we conducted with these
organizations.
To address the second objective, delivery performance information USPS
measures and reports, we obtained documentation and related written
material on USPS's delivery performance measurement systems, which
included the External First-Class Measurement System (EXFC), the
Product Tracking System (PTS), the now-discontinued Priority End-to-End
System (PETE), and other measurement systems for international mail. We
obtained documentation on the data collection procedures and internal
controls for these systems and obtained detailed explanations of these
systems in interviews with USPS officials. In addition, we obtained
publicly available information on these systems from USPS reports,
material that USPS provided PRC in past rate cases, and published
articles about these systems. We conducted a limited data reliability
assessment of EXFC, PTS, and PETE. Our assessment was informed by
obtaining the views of USPS officials, mailing groups, mailers, and
other stakeholders, both in writing and in interviews.
To address the third objective, assessing the progress USPS has made in
improving its delivery performance information, we obtained information
from a variety of sources on the progress USPS has made and its
opportunities for improving delivery performance information. We
obtained information on the history of studies that recommended USPS
improve its delivery standards, measurement, and/or reporting. These
studies included joint USPS-mailer committees, some of which were ad
hoc efforts and some of which were sponsored by MTAC. Information on
these studies included written reports by the committees, documentation
on these groups provided to us by USPS and mailers, and interviews of
USPS, mailer committees, and mailers. More generally, we obtained the
views of USPS officials, mailing groups, mailers, and other
stakeholders on USPS's progress and remaining opportunities in this
area, both in writing and in interviews.
We requested comments on a draft of this report from USPS; these are
reproduced in appendix III. We conducted our review from August 2005 to
July 2006 in accordance with generally accepted government auditing
standards.
[End of section]
Appendix II: USPS Delivery Standards:
Table 7: USPS Delivery Standards by Class and Type of Mail:
Type of mail: Standard Mail;
Number of days[A]: 3 to 10 days to all valid ZIP Codes;
Explanation of delivery standards and available information: These
standards have not been systemically changed since their inception in
the 1970s. As an "approximate overview," the number of days is loosely
based on the number of postal zones that mail must travel, which in
turn are loosely based on a mileage radius to the destinating Sectional
Center Facility (SCF).[B];
Usually, 3 days for mail within the same SCF, depending on the size of
the Intra-SCF area. All other non-Intra-SCF destinations are 4 days or
greater;
While the 3-to 10-day range outlines the official USPS standards, USPS
sometimes does have independent "programs," or "guidelines," outside of
the Service Standards, which attempt to facilitate the delivery of
Standard Mail (sometimes directly in concert with mailers). In some
cases, these time frames are more ambitious or differ from the official
Service Standards;
For example, the Postal Operations Manual (POM)[C] specifies that;
some Standard Mail is to be delivered 2 delivery days after it is
entered into the postal system. This applies to mailer- prepared
carrier-route presort mail that mailers dropship to delivery units
(including post offices, branches, and stations) where letter carriers
pick up their mail for delivery.[D];
delivery units should make every effort to adhere to mailer-requested,
in-home delivery dates. Mail should not be delivered earlier than the
date the mailer has requested.[E] If delivery units receive Standard
Mail with a mailer-requested delivery date later than the USPS-
scheduled delivery day, the USPS-scheduled date should be changed to
match the last requested in-home delivery date, to comply with the
mailer's request[F]. If delivery units receive Standard Mail with a
mailer-requested delivery that has already been passed, the decision
regarding delivery or disposition of this mail (including disposal
without delivery) must be consistent with the current national policy
on this subject[G];
If Standard Mail is mixed with a higher class of mail (e.g., First-
Class Mail) in USPS's mail processing system in such a manner as it
loses its identity, it must be considered upgraded and treated as the
higher class of mail.[H] Technically, such commingled items do not
become the higher mail class. However, USPS enacts this policy in order
to not slow down the ultimate delivery of such pieces by not requiring
that they be re-isolated and "extracted" from the higher mail class and
subsequently re-entered with their "correct" mail class, a process
which could possibly slow down delivery and provide worse service than
was originally intended (although the re-segregation of such commingled
mail, by mail class, is always an option, if operationally feasible);
There are no prohibitions against making USPS management agreements
below the national level, which accelerate the delivery expectations
for any Standard Mail versus national policy.[I].
Type of mail: Periodicals;
Number of days[A]: 1 to 7 days to all valid ZIP Codes;
Explanation of delivery standards and available information: Delivery
standards are 3-digit-to-3-digit ZIP Code based. Periodicals mail is a
"preferential" product that travels normally by surface to all valid
ZIP Codes. The standard range of 1 to 7 days is loosely equivalent to
the eight Postal Zones (which are also based on a Mileage Radius),
minus 1, as shown in Table 8.[J];
In accordance with policies adopted in 1990 after the conclusion of a
PRC proceeding that began in 1989,[K] the 1-day delivery area should
normally be adjusted to be the same as the overnight area for First-
Class Mail, with exceptions subject to regional and headquarters
concurrence;
2 to 3 day standards can be as fast as First-Class Mail but are not
usually intended to be faster. Nearly all of the Service Standard pairs
meet this "Mail Class Hierarchy" guideline;
The concept for these standards has not changed since the 1980s. Newly
activated ZIP Codes (or ZIP Code areas that have been revised due to an
Area Mail Processing Plan implementation) are "cloned" to have the same
Periodical delivery standards as the other originating or destinating
ZIPs served out of the same processing plant.
Type of mail: Package Services Includes Parcel Post (except Parcel
Select), Bound Printed Matter, Media Mail, and Library Mail;
Number of days[A]: 2 to 9 days to most ZIP Codes;
Explanation of delivery standards and available information: 2 to 9
days to all valid ZIP Codes within the contiguous 48 states;
There are no established Package Services delivery standards to Alaska,
Hawaii, or offshore destinations (e.g., Guam, Puerto Rico, Virgin
Islands).[J];
The delivery standards are 3-digit-to-3-digit ZIP Code based. Package
Services mail is a product that travels normally by surface to all ZIP
Codes. The standards are therefore predicated on the Bulk Mail Center
(BMC) network. Normally, the standards would change only if the Area
Mail Processing (AMP) Plan resulted in the origin or destination ZIP
Code moving to within a new BMC area because the gaining facility was
located in a different BMC area than the previous facility. The concept
for Package Services service standards has remained constant since the
1970s. Newly activated ZIP Codes (or revised ZIP Codes areas due to an
AMP Plan implementation) are "cloned" to have the same Package Services
service standards as the other originating or destinating ZIPs served
out of the same BMC or Auxillary Service Facility.
Type of mail: Parcel Select;
Number of days[A]: 1 to 3 days;
Explanation of delivery standards and available information:
Parcel Select comprises Parcel Post items that are mailed in bulk
quantities; are entered by mailers at USPS facilities, including
Destination Bulk Mail Centers (DBMCs), Destination Sectional Center
Facilities (DSCFs), or Destination Delivery Units (DDUs); and meet
other rules for mail preparation and entry. The delivery standards
include:
* 1 day for DDU entry by 4 p.m;
* 2 days for DSCF entry by 3 p.m;
* 2 to 3 days (generally 2 days) for DBMC entry by 3 p.m;
2-day versus 3-day for DBMC entry is based on the Parcel Post standard
for the 3-digit ZIP where the DBMC is physically located and the
destination 3-digit ZIP of the parcel. These standards were determined
as part of the Parcel Select product creation. Originally, all BMC
entry was 3-day. This change to most 2-day was made in 2002.[J].
Type of mail: Priority Mail;
Number of days[A]: 1 to 3 days;
Explanation of delivery standards and available information:
Delivery standards have existed for Priority Mail since its inception,
when it essentially replaced Air Mail in the late 1970s. The standards
currently range from 1 to 3 days to all valid ZIP Codes. However,
Priority Mail is primarily a product that is targeted for delivery
within 2 days. (Over 93 percent of Priority ZIP Code pairs currently
have either a 1-day or 2-day standard.) These standards are determined
on a case-by-case basis, depending on processing times and available
transportation. Priority Mail service standards are usually equal to,
or faster than, First-Class Mail standards to/from the same domestic
ZIP Code pairs.[J];
Newly activated ZIP Codes (or revised ZIP Codes areas due to an Area
Mail Processing Plan implementation) are cloned to have the same
Priority Service standards as the other originating or destinating ZIPs
served out of the same processing plant.
Type of mail: First-Class Mail;
Number of days[A]: 1 to 3 days;
Explanation of delivery standards and available information:
First- Class Mail other than Priority Mail: 1 to 3 days, depending on
the 3- digit ZIP Code of acceptance and the destination address.
Standards do not vary by shape, size, or weight.[J];
The same standard applies to all mail originating or destinating in the
same 3-digit ZIP Code area;
USPS policies for First-Class Mail Service Standards are as follows:
1-day (Overnight) Delivery Standard: Overnight delivery standards must
include all of the intra-SCF area. Other areas may be considered for
overnight delivery if significant business/mail volume relationships
exist and they are within the reasonable reach of surface
transportation;
2-Day Delivery Standard: Two-day delivery standards must include all
areas that currently have an overnight standard but will not, as
proposed, be in the new overnight area. Two-day delivery standards must
also include all SCFs with the home state and nearby states that are
within the reasonable reach of surface transportation (as defined by
the USPS Office of Transportation and International Services). In
addition, 2-day delivery standards may include other 3- digit areas
outside of the reach of surface transportation if significant
business/mail volume relationships exist and if dependable and timely
air transportation is available.[L];
3-Day Delivery Standard: Three-day delivery standards should include
all remaining destinations;
Service standard changes reflecting the new overnight definition were
implemented in 1990 to 1992. In 2000 to 2001, in order to increase the
2-day reach but make it achievable at a consistently appropriate level,
USPS expanded the 2-day reach to include non- overnight offices that
were as far away as a 12-hour drive from the originating "parent"
Processing and Distribution Center (P&DC) to the destinating Area
Distribution Center (ADC) via surface transportation;
At the same time, the USPS determined that the existing commercial air
transportation network had deteriorated and had become too unreliable
for maintaining the 2-day service standard for First-Class Mail beyond
the reasonable reach of surface transportation. Accordingly, USPS
changed the service standards for this mail from 2 days to 3 days;
Although this deterioration and resulting unreliability of commercial
air service made it infeasible for USPS to continue to apply the 2-day
standard to destinations beyond the reasonable reach of surface
transportation, the overall number of origin-destination pairs with 2-
day standards increased in 2000-01 because of the adoption of the 12-
hour drive time definition.
Type of mail: Express Mail;
Number of days[A]: 1 to 2 days to designated locations[M];
Explanation of delivery standards and available information:
Overnight and second-day service to designated areas and post offices,
supported by a money-back guarantee.[M];
* Next- day Service provides overnight service to designated 3-digit
and 5- digit ZIP Code delivery areas, facilities, or locations,[N]
based on the time of acceptance and available service-response air and
surface transportation;
* Second-day Service is offered for areas not on the next-day network,
including any 3-digit or 5-digit ZIP Code destination not listed in the
Express Mail Next Day Service directory, but may not be available at or
between all post offices or at all times of deposit.[O];
* Second Delivery Day is not a distinct service but applies to mailings
to those ZIP Codes where postal delivery is not provided on Sundays or
federal holidays, and delivery is guaranteed on the next regular
delivery day. This typically applies only to mailings made on Friday to
a destination that lacks Sunday/holiday delivery. In that case, the
piece is guaranteed for delivery on the next regular delivery day,
which is a Monday, or Tuesday if Monday is a federal holiday.[P];
Unlike most other types of mail, Express Mail service may involve
delivery on Sundays.[Q];
At the point of sale, each customer is notified of the specific service
standard for the mailed item. This standard is based on information in
an electronic and/or hardcopy directory containing detailed information
about local and destination ZIP Code acceptance and delivery
capabilities. The clerk who accepts the mail annotates the customer
receipt to indicate whether the mailed item was accepted for next-or
second-day delivery;
Further, customers can obtain the guaranteed delivery commitments for
some individual pieces of mail through the USPS Web site by entering
their originating and destinating 5-digit ZIP Codes.
Type of mail: International Mail;
Number of days[A]: 2 days to 6 weeks[R];
Explanation of delivery standards and available information: USPS and
its overseas delivery partners establish delivery standards in
conjunction with international organizations including the Universal
Postal Union and the International Post Corporation.
Type of mail: International Express Mail;
Number of days[A]: 2 to 5 days;
Explanation of delivery standards and available information: Global
Express Mail Guaranteed: 2 to 3 days with date-certain shipping to over
200 countries;
Global Express Mail: 3 to 5 days to over 190 countries with date-
certain shipping to selected countries.
Type of mail: Global Priority Mail;
Number of days[A]: 4 to 6 days;
Explanation of delivery standards and available information: Global
Priority Mail includes single-piece mail under 4 pounds sent from the
United States to over 50 countries.
Type of mail: International Priority Air Mail;
Number of days[A]: 4 to 7 days;
Explanation of delivery standards and available information:
International Priority Air Mail includes mailings of items under 4
pounds, virtually worldwide, sent in bulk quantities at lower rates
than Global Priority Mail.
Type of mail: International letter-class mail (single-piece);
Number of days[A]: 4 days to 6 weeks;
Explanation of delivery standards and available information: Global Air
Mail letters: 4 to 7 days, including 5 days to Europe; 4 days to
Canada; and 1 to 3 days for transit within the United States. Global
Economy Mail letters: 4 to 6 weeks.
Type of mail: International parcels;
Number of days[A]: 4 to 6 weeks;
Explanation of delivery standards and available information: Global Air
Mail parcels: 4 to 10 days to virtually all countries; Global Economy
Mail parcels: 4 to 6 weeks.
Type of mail: International Business Reply Service;
Number of days[A]: 4 to 7 days;
Explanation of delivery standards and available information: Prepaid
business reply postcards and letters to virtually all countries.
Source: USPS.
[A] The number of delivery days after acceptance of the mail, which
generally does not include Sundays or holidays.
[B] USPS, Direct Testimony of Pranab M. Shah on Behalf of the United
States Postal Service, USPS-T-1, PRC Docket N2006-1 (Washington, D.C.:
Feb. 14, 2006). See Table 8 for more detail.
[C] The Postal Operations Manual (POM) is incorporated in its entirety
into the Code of Federal Regulations, but is not available on the USPS
Web site.
[D] POM 458.341d.
[E] POM 458.2h.
[F] POM 458.341f.
[G] POM 458.341h. Also see USPS, Postal Bulletin 22110, p. 19
(Washington, D.C.: Sept. 4, 2003), Postal Bulletin 22045, p. 18
(Washington, D.C.: Mar. 8, 2001).
[H] POM 458.2b.
[I] POM 458.2e.
[J] USPS-T-1, PRC Docket N2006-1.
[K] PRC Docket No. N89-1.
[L] USPS policies call for consideration of 2-day standards (as opposed
to 3-day standards) in some circumstances, such as when mail flows
reach specified thresholds. For example, 2-day standards are to be
considered when a destinating mail processing facility called an Area
Distribution Center receives more than 0.5 percent of its incoming mail
volume from an originating mail processing facility.
[M] The Domestic Mail Manual (DMM) 113.4, [Hyperlink,
http://pe.usps.com/text/dmm300/113.htm]. (The entire DMM is
incorporated by reference into the Code of Federal Regulations.) See
USPS Quick Service Guide 110, Express Mail, [Hyperlink,
http://pe.usps.gov/cpim/ftp/manuals/qsg300/q110.pdf], for a summary.
[N] DMM 113.4.1.1, [Hyperlink, http://pe.usps.com/text/dmm300/113.htm],
and POM 674.
[O] DMM 113.4.3.1, [Hyperlink, http://pe.usps.com/text/dmm300/113.htm],
POM 675.
[P] More detailed information is available at [,
http://www.usps.com/serviceperformance/dayofmailing.htm].
[Q] POM 126.43.
[R] [Hyperlink, http://www.usps.com/global/sendpackages.htm] and
[Hyperlink, http://www.usps.com/global/sendmail.htm].
[End of table]
Table 8: USPS's Approximate Overview of the Service Standard Ranges for
Standard Mail and Periodicals (not specifically required):
Number of zones from origin to destination: 1;
Distance: Non local zones within 50 miles radius;
Approximate standard (Days): Standard Mail: 3[A];
Approximate standard (Days): Periodicals: 1[B].
Number of zones from origin to destination: 2;
Distance: 50 to 150 mile radius;
Approximate standard (Days): Standard Mail: 4;
Approximate standard (Days): Periodicals: 1[B].
Number of zones from origin to destination: 3;
Distance: 150 to 300 mile radius;
Approximate standard (Days): Standard Mail: 5;
Approximate standard (Days): Periodicals: 2[B].
Number of zones from origin to destination: 4;
Distance: 300 to 600 mile radius;
Approximate standard (Days): Standard Mail: 6;
Approximate standard (Days): Periodicals: 3[B].
Number of zones from origin to destination: 5;
Distance: 600 to 1,000 mile radius;
Approximate standard (Days): Standard Mail: 7;
Approximate standard (Days): Periodicals: 4.
Number of zones from origin to destination: 6;
Distance: 1,000 to 1,400 mile radius;
Approximate standard (Days): Standard Mail: 8;
Approximate standard (Days): Periodicals: 5.
Number of zones from origin to destination: 7;
Distance: 1,400 to 1,800 mile radius;
Approximate standard (Days): Standard Mail: 9;
Approximate standard (Days): Periodicals: 6.
Number of zones from origin to destination: 8;
Distance: 1,800 miles and over;
Approximate standard (Days): Standard Mail: 10;
Approximate standard (Days): Periodicals: 7.
Source: USPS.
Note: USPS divides the United States into eight zones. The approximate
delivery standard for Standard Mail is equal to the number of postal
zones from origin (i.e., where the mail is accepted by USPS) to
destination (i.e., where the mail is delivered), plus 2 days. The
approximate delivery standard for Periodicals that traverse at least
two postal zones is equal to the number of zones from origin to
destination, minus 1 day. The specific delivery standards are defined
for each combination of origin and destination 3-digit ZIP Codes and
may differ from the approximate overview in this table.
[A] Usually, ZIP Codes within the same Sectional Center Facility (SCF)
are targeted for 3 days. Depending on the size of the Intra-SCF area,
all other Non-Intra-SCF destinations are 4 days or greater.
[B] This can be equal to First-Class Mail delivery standards between
ZIP Code Pairs, but is not intended to ever be faster.
[End of table]
[End of section]
Appendix III: Comments from the U.S. Postal Service:
John E. Potter Postmaster General, CEO:
United States Postal Service:
July 14, 2006:
The Honorable David M. Walker:
Comptroller General of the United States:
United States Government Accountability Office:
441 G Street, NW:
Washington, DC 20548-0001:
Dear Mr. Walker:
The U.S. Postal Service appreciates the opportunity to review and
comment on the draft report titled U.S. Postal Service: Delivery
Performance Standards, Measurement, and Reporting Need Improvement,
which assessed delivery standards, associated performance measurements,
and reporting systems.
We are encouraged by the fact that the Government Accountability Office
(GAO) shares our ultimate goal of maximum transparency throughout our
network. Our current efforts and our vision are focused on the
development of systems that provide individual mailers with the ability
to determine the status of their mail as it moves through all steps of
our system. Beyond this, we envision a time when individual systems are
linked from the beginning to the end of the entire mail supply chain-
from mailpiece conception, through all aspects of production,
acceptance, processing, and delivery by the Postal Service.
In preparing our response, we are grateful for the one-week extension
provided to us for comment. While we recognize the GAO's interest in
the prompt completion of a final report, the issues raised are complex
and, accordingly, are best addressed by a response that examines our
delivery performance standards from the perspectives of their history
and development, their ongoing adjustment, their limitations, as well
as our current activities and plans for the future. We believe these
subjects would benefit from additional dialog, and we offer full
cooperation in exploring them further with you.
Certainly, the details of service standards, performance measurement
systems, diagnostic tools, and customer collaboration related to these
subjects are important to the Postal Service, as attested to by our
efforts over more than three decades. Ultimately, however, the core
issue is service-and according to all indicators, we are succeeding in
our goal of continuous service improvement. We are not content with
maintaining the status quo.
To most effectively convey our position on the issues raised in the
report, our response is organized into six sections: Focus on Service,
Service Performance Results, Some Areas of Concern, Modern Service
Standards, Measurement Systems and Diagnostic Tools, and Customer
Collaboration and Reporting. Relevant supplementary material is
included in appendices.
Focus on Service:
Postal employees are committed to providing the best possible service
every day, for every customer, in every location, and for all mail. We
recognize that our products must continue to provide maximum value in
an increasingly competitive marketplace. Maintaining and increasing
that value is fully dependent on providing timely and reliable
delivery.
Our commitment to service is demonstrated by the many activities
designed to improve performance. One of the four primary goals defined
in our Strategic Transformation Plan. 2006-2010, is to improve service,
a goal supported by a number of specific, actionable strategies. We
have also implemented a "balanced scorecard" that bases 40 percent of
our organizational success on achievement of defined service
performance metrics, supporting personal and unit accountability. The
recent introduction of the concept of the "24-Hour Clock" identifies
specific performance indicators for timely completion of key
operational activities that are critical to on-time service
performance. Additional information about these initiatives is in
Appendix A.
Service Performance Results:
Our focus on service has resulted in record performance across all mail
categories. Our measurement systems for First-Class, Priority Mail, and
Express Mail show that we have met or exceeded the performance targets
we have set for them. These results and others are posted on our Web
site, although some of these products are competitive and similar data
generally is not provided by other carriers. In addition, an externally
conducted measurement system, the Phoenix-Hecht Postal Survey indicates
that speed of delivery for First-Class remittance mail continues to
accelerate. And, while not a direct measure of service performance, our
Customer Satisfaction Measurement shows sustained high levels of
overall customer satisfaction. More detail of our service performance
results is contained in Appendix B.
Some Areas of Concern:
Clearly, we share the mutual goal of complete network transparency to
provide mailers with a comprehensive view of the service they receive.
However, our efforts to achieve this goal must be considered within the
context of a number of important issues that are not fully considered
in the draft report:
1. Visibility: As we noted, visibility must extend through the entire
mail value chain, not solely the activities performed by the Postal
Service once mail has been entered into our system.
Our vision, contained in the Strategic Transformation Plan, 2006-2010,
is to ultimately measure service performance and provide transparency
for all classes of mail through the entire mail supply chain. The
benefits would be inestimable, providing customers with a single window
that offers critical information about the status of their mail at
every step of the chain. This would be a fully transparent system that
tells the person or organization paying for the mail the status of a
mailing, whether there were delays or problems, at what point in the
process they occurred, and how those problems were resolved.
We intend to lead this effort by implementing a variety of
technological solutions, such as the 4-State Customer Barcode and
enhancements to our bulk mail acceptance systems. Our vision requires
an equal commitment from our customers. It is not our intention to
unilaterally demand that mailers comply, but, rather, to work
collaboratively with others throughout the supply chain to balance
needs with their capabilities.
To make this vision a reality, our customers must be willing to improve
and perfect all of their mail preparation processes. All members of
that supply chain-from the printers, to address list providers,
software vendors, presort houses, transportation consolidators, and the
Postal Service, need to provide the person paying for the mail, as well
as oversight bodies, with a clear view of successes and failures. We
are encouraged that the GAO report recognizes that "mailer
participation (is) necessary to generate representative performance
data . . ."
The mailing industry must embrace changes such as improved address
quality, increased presort accuracy, and effective service performance
measurement processes. This visibility will allow for informed
decisions about which supplier of each and every service along that
chain offers the best value, resulting in a competitive advantage for
quality suppliers. We recognize that our ultimate vision will not
happen overnight; it will take time and resources to accomplish. More
on our future vision is contained in Appendix C.
2. Individual Customer Diagnostics: While we recognize the desire for
aggregate service performance results for all mail categories, we
believe we serve mailers best by focusing first on providing service
measurement and diagnostics to individual customers, then looking to
aggregate results.
As in any business, customization is a growing trend. We believe our
customers want to know what happens with their particular mailings-the
average performance for their general type of mail may be irrelevant to
them. This is why we choose to begin at a more granular level and to
build up. A variety of diagnostic tools are used to detect service
concerns for specific mailings of most major mail types. While some
tools monitor mailings from larger customers, which can account for
significant percentages of mail volume, any resulting improvements
benefit all customers. We will work to aggregate those data to derive
average service performance measurements. A more complete description
of systems and diagnostic tools are in Appendix D.
3. Choice-the Value Equation between Service and Price: Customer needs
and expectations can vary, resulting in the selection of products that
provide the optimum combination of price and service for a specific
application. We cannot lose sight of the basic value equation between
service and price as we focus on improving and measuring service. There
is a clear balance of these factors for each of our products. Each
product's price is based on a combination of speed of service, cost,
and value-added services, such as forwarding.
Mailers have the choice of services that can weigh more heavily toward
economy or speed. Those whose primary concern is speed and
predictability of delivery have the option of choosing -and do choose-
First-Class Mail®, Express Mail®, or Priority Mail. The price of these
products is based on these features. Standard mailers, on the other
hand, are opting for a lower price, which is a direct result of the
operational deferability and flexibility inherent in that service.
Standard Mail was designed to be deferrable to allow processing and
delivery during non-peak times and to maximize productivity as filler
mail. Today Standard Mail, Periodicals, and Parcel Select mailers
presort and use destination entry both to manage service expectations
and achieve better service at lower rates.
Today the Postal Service allows bulk mailers flexibility to presort
within a 5 percent tolerance, have barcode readability within a 10
percent tolerance, choose from a range of dropship appointment windows,
overspray dates on mail presorted for others, and to update mailing
lists a minimum of every 180 days. Choices to improve all of these
aspects have clear positive implications for service. However,
customers balance these with the cost of making changes.
Also, any steps to improve service through enhanced or new delivery
performance measurement systems will, of necessity, be reflected in our
pricing. The Postal Service is committed to providing the best possible
service and, at the same time, maintaining reasonable prices and clear
product differentiation. We strive to continue to hold all price
increases within the Consumer Price Index (CPI), as we have done, on
average, since 1971. The value equation is further detailed in Appendix
E.
4. The Complexities of Standard Mail and Periodicals Mail: The levels
of complexity inherent in Standard and Periodicals Mail, given the wide
range of presort and entry options, create a significant range of
variables-often within the same mailing-that would not necessarily be
reflected in aggregate scores for these products, diminishing the value
of those scores.
Our experience has demonstrated that it is particularly difficult to
design a broad and effective measurement system for Standard and
Periodicals Mail. Our previous attempts were unsuccessful for several
reasons. Standard Mail lacks a postmark or other reliable measure of
acceptance into our system. Also, a single Standard mailing can be
entered at multiple facilities, presort levels, container levels, and
on different days. These same complexities exist for Periodicals Mail,
a situation compounded by various publication frequencies, ranging from
daily, with same-day delivery, to quarterlies.
In examining our attempts to measure performance, the draft report
contends that there are data-quality issues affecting our ability to
measure some types of mail. Our experience indicates that this does not
account for other relevant factors. These include the completeness,
accuracy, and validity of information submitted when mail is entered,
as well as the complexities unique to Standard Mail and Periodicals
Mail.
Modern Service Standards:
The Postal Service has a long history of establishing and revising
service standards, a point not fully acknowledged by the draft report.
Our efforts include developing and implementing service performance
measurement systems, developing diagnostic tools to monitor service
performance and resolve service issues, and collaborating with our
customers in all of these efforts.
Although the report recommends that we modernize our service standards,
our standards are modern and up-to-date. For over three decades, we
have established, monitored, and refined our standards, as appropriate,
based on operational changes. The fact that some standards have
remained consistent over time cannot and should not be interpreted to
mean that those standards have not been reviewed or that they are
outdated. Rather, it means we have determined that they still work for
the mailers and for the Postal Service.
In large part, our service standards are based on and designed around
three factors-transportation, our sortation capacities, and the way in
which our customers conduct their business. As operational capabilities
and customer needs change, our standards are reviewed and, as
appropriate, adjusted to reflect those changes. A complete review of
all service standards is currently under way as part of the
Evolutionary Network Development case filed with the Postal Rate
Commission in February, in which, mailers have an opportunity to
participate in the proceedings.
We recognize that the concept of "modernized service standards" may,
for some, denote upgrades of service, particularly for Standard Mail
and Periodicals Mail. By design, these products offer less expeditious
service than First-Class Mail, and this is reflected in their pricing.
Following a call for modernizing service standards along these lines
would result in upward revisions of service levels, increasing our
costs, which would have to be offset by appropriate price adjustments.
In essence, this would be a surreptitious pricing and classification
change, without the benefit of review through our statutory regulatory
process. This approach would blur service and product distinctions,
shift mail volumes from higher contribution to lower contribution
products, and, through the combination of increasing costs and
decreasing revenue, have a negative effect on the financial well-being
of the Postal Service. Where there may be the potential for upward
adjustment to service standards, they must be carefully considered,
developed, and implemented-consistent with actual operational
capabilities and in a fiscally prudent manner. Further descriptions of
current service standards are contained in Appendix F.
Measurement Systems and Diagnostic Tools:
We also believe that the GAO description of our performance measurement
systems is incomplete and unintentionally misleading. The Postal
Service has a number of robust delivery service measurement systems for
First-Class Mail, Priority Mail, Express Mail, and Parcel Select. Some
of our earlier systems have been totally replaced; others have been
enhanced. The report overlooks the fact that our External First-Class
measurement system (EXFC), while measuring end-to-end performance,
beginning with mailer deposit in a collection box and ending with
delivery to a recipient's mailbox, is reflective of service performance
for all First-Class Mail. Bulk First-Class Mail is deposited at various
points within that end- to-end system, and is processed, transported,
and delivered the same as all mail within that end-to-end system
measured by EXFC. As previously mentioned, we are committed to the cost-
effective measurement of all mail classes. Appendix D contains a
description and a chart illustrating these First-Class Mail streams.
Customer Collaboration and Reporting:
The Postal Service has a solid track record of working with customers
to improve the entire value chain of mail preparation, transportation,
induction, mail processing, and delivery. This is founded in the shared
objective of a strong postal system. Joint efforts have touched on all
aspects of mailing, from making mail easy and affordable to improving
service. Many of our service measurement systems and diagnostic tools
were designed jointly or in collaboration with our customers. We view
the Mailers Technical Advisory Committee (MTAC), the Mailing Industry
Task Force (MITF), the Postal Customer Councils (PCCs), the Business
Service Network (BSN), and the National Postal Forum (NPF) as
invaluable to our efforts to engage customers in an ongoing dialog and
to constantly receive their feedback to help us improve service
performance. Appendix G contains a summary of customer collaborating
venues.
With regard to GAO's recommendation concerning transparency, we agree
in principle that our service standards should be made more visible.
Currently customers can query applicable service standards between
particular origins and destinations on usps.com for Express Mail, First-
Class Mail, Priority Mail, and Package Services. A comprehensive
compact disc of service maps is provided to customers upon request. We
are exploring making this information available through other channels,
including our Web site.
If you or your staff wishes to discuss any of these comments further, I
am available at your convenience.
Sincerely,
Signed by:
John E. Potter:
Attachments:
Table of Contents:
* Appendix A - Focus on Service:
* Appendix B - Service Performance Results:
* Appendix C - Visibility - The Future Vision:
* Appendix D - Measurement Systems and Diagnostic Tools:
* Appendix E - Choice - The Value Equation between Service and Price:
* Appendix F - Modern Service Standards:
* Appendix G - Customer Collaboration:
Trademarks:
The following are among the trademarks owned by the United States
Postal Service: APCO, Automated Postal Center, Carrier CASS, Certified
Mail, Click-N-Ship, CMM, CONFIRM, Customized MarketMail, Delivery
Confirmation, DMM, EPM. Express Mail, FASTforward, First-Class Mail,
Intelligent Mail, LACS, MASS, MERLIN, Mover's Guide, NCOALink, Netpost,
Netpost Mailing Online, OneCode Vision, Parcel Post, Parcel Select, PC
Postage, PLANETO, PLANET Code, Post Office, Post Office Box,
PostalOne!, Postal Service, Priority Mail, Quick, Easy, Convenient,
RDI, ReadyPost, REDRESS, Registered Mail, Signature Confirmation,
Simple Formulas, Stamps by Mail, Standard Mail, The Postal Store,
United States Postal Service, U.S. Mail, U.S. Postal Service, USPS,
USPS Electronic Postmark, www.usps.com, ZIP+4, and ZIP Code. This is
not a comprehensive list of all Postal Service trademarks.
Year References:
All references to a specific year or "the year" refer to the government
fiscal year ending September 30. However, specific month and year
references pertain to the calendar date.
Appendix A Focus on Service:
Overview:
The Postal Service has always focused on providing the best possible
service to our customers in every location, every day, for all mail,
and we are not content with maintaining service at today's high levels.
We intend to aim even higher, and have taken concrete steps to drive
continuous service performance improvement.
Service Improvement Efforts:
We fully understand that all of our product lines face ever-increasing
avenues of competition. We know that to remain relevant and competitive
in tomorrow's marketplace, we must provide timely and reliable delivery
for every customer, every day. Our commitment to outstanding service
performance is demonstrated by the many policies, strategies and
procedures we have adopted, which are targeted at improving service
performance. These include:
* Identifying service improvements as one of the four major goals of
the Strategic Transformation Plan, 2006-2010. As we stated, our goal is
to "[i]mprove the quality of postal services by continuing to focus on
the end to-end service performance of all mail."
* Establishing a "balanced scorecard" to keep track of the Postal
Service's success in meeting its corporate goals and objectives. Our
corporate success is measured by a number of performance-related
metrics, 40 percent of which are based on achieving on-time service for
Express Mail, and within two-day Priority Mail both surface and air
performance, as well as First-Class Mail overnight, two-and three-day.
In addition, non-bargaining operational employees have a service
component as part of their individual goals and objectives.
* Tracking and disseminating operational performance throughout the
organization on a daily basis, serving as a constant reminder of how we
are doing and where there are opportunities for improvement.
* Keeping all processing plants and delivery units focused on the "24
hour clock," which sets performance indicators for completion of
various mail processing and delivery activities throughout the day,
every day. National, area, district and plant performance is tracked
and reported on a daily and weekly basis.
* Refining sort plans on our mail processing equipment to minimize
handlings. We developed a standardized naming convention for all sort
plans that are used to process mail on all of our mail processing
equipment. This allows us to differentiate between classes of mail and
selected service levels. The next step will be to incorporate the sort
plan dynamics into an optimization program. This will decrease
handlings and reduce cycle times, continuing to improve service while
reducing costs.
* To improve our air transportation service, a pay-for-performance
system for commercial airlines was instituted. We also entered into an
historic transportation contract with FedEx, which was motivated by
service concerns and which has contributed to improved service. We just
awarded an expanded domestic air contract to United Parcel Service
(UPS), which calls for UPS to transport primarily First-Class and
Priority Mail to and from 98 U.S. cities. Service under the contract
began July 1. The contract is for three years, with the possibility of
a two-year extension.
* Using daily counts of on-hand and delayed mail volumes from our Mail
Condition Reporting System to examine the performance of processing
plants.
* Using our PLANET Code technology to seed test mailpieces and analyze
the resulting scans from various sortation operations to identify
service issues and develop corrective actions.
* Receiving and monitoring feedback from our customers consistently,
using CONFIRM, Delivery Confirmation, and other diagnostic services.
These are just some examples of our ongoing efforts to improve service.
We are constantly looking for, considering, and implementing further
opportunities to enhance our service performance, particularly low-cost
opportunities that will allow us to maintain reasonable prices for our
customers.
Appendix B Service Performance Results:
Overview:
Throughout our history, we have regularly reviewed our service
standards to align with our network and have worked to develop enhanced
measurement capabilities and diagnostic tools. We think the real focus
of our customers, however, is on results. We have concentrated on
achieving service results and have succeeded. Our measurement systems
for First-Class, Priority and Express Mail all show results that meet
or exceed the service targets we have set for ourselves. We continue to
enhance those targets to measure service at more detailed levels and to
make those targets more challenging. In addition, the Phoenix-Hecht
Postal Survey, shows improved delivery times for remittance mail, the
result of improved service. And, while not a direct measure of service
performance, the Customer Satisfaction Measurement shows sustained high
scores for overall customer satisfaction with the Postal Service.
Quarterly results from our First-Class Mail and Customer Satisfaction
Measurement systems are shared at open Postal Service Board of
Governors' meetings, included in press releases, and published in our
annual reports.
Service Performance:
The Postal Service's commitment to providing excellent service to both
domestic and international customers has achieved results. Our service
significantly improved over the past five years, reaching record
delivery performance levels. We continue to deliver 95 percent of
overnight committed First-Class Mail on time. Service performance also
improved for First-Class two-and three-day service. Both Express and
Priority Mail continue to meet or exceed their targets.
In 1990, the Postal Service moved to First-Class Mail service
performance measurement. The External First Class Measurement System
(EXFC) measures service performance from a customer perspective and
produces accurate, independent, externally generated results. For
eleven consecutive quarters, the Postal Service achieved 95 percent or
better in overnight service. All time high levels of service were
achieved in Fiscal Year (FY) 2005. We experienced a minor decline in
service performance in the beginning of FY 2006. Service performance
has since returned to 95 percent for overnight service.
The following EXFC overnight service performance chart shows quarterly
performance from Quarter 1 FY 1995 through Quarter 2 FY 2006.
EXFC Overnight Service Performance National QT 1 FY 1995 thru QT 2 FY
2006:
[See PDF for image]
[End of figure]
Impacts to Service Results:
The ability to achieve outstanding service results depends on a wide
variety of factors, many of which are beyond the Postal Service's
control. Service is affected by how our customers prepare the mail.
Address and barcode quality, the types of containers used, and
container integrity can work equally to improve service or slow it
down. Equipment malfunctions, poor address quality, weather conditions
and transportation failures - all factors over which we either have
only limited or no control - also have an impact on service
performance.
Service Target Enhancements:
As explained in our FY 2005 Comprehensive Statement on Postal
Operations, over the past several years, service measurements have been
enhanced and more specifically identified. The First-Class Mail two-and
three-day target was changed from a combined overall target to
individual day-specific measurements, contributing to improved service
in both categories. Priority Mail delivered within two days was a
single measurement. Several years ago we separated the measurement into
two categories, mail traveling by surface and mail traveling by air
transportation, given that we are exclusively dependant on third
parties to provide air transportation. This provided additional focus
and diagnostic information used to monitor and improve service
performance.
Priority Mail service measurements were also enhanced in FY 2006 by
changing from Priority End-To-End (PETE), a test piece sample method,
to an actual piece measurement system using customer-purchased Priority
Mail Delivery Confirmation at postal retail units nationwide. The
unique Delivery Confirmation number provides accurate acceptance and
delivery dates and times, and measures the actual customer experience.
Results of the change are that this new method provides a more
representative mail mix and provides the actual service seen by
customers on their individual mail pieces.
International Express Mail service was incorporated into our domestic
mail service measurements, resulting in improved International Express
Mail service performance. Starting in FY 2007, International First-
Class Mail will be incorporated into our domestic mail service
measurements. We expect similar improvements in service attained with
International Express Mail.
All of our internal service performance targets for each measured mail
class are reviewed each year with the Board of Governors based on the
Malcolm Baldridge National Quality Award process criteria - the
Establish, Deploy and Review processes. The targets for service
performance increased several times over the past few years, each time
making the targets more challenging. The target-setting review is based
on demonstrated service performance and the Postal Service's
expectation of continuous improvement, as well as network changes.
More details on the measurement systems are in Appendix D.
The Phoenix-Hecht Postal Survey:
The Phoenix-Hecht Postal Survey is an objective, carefully monitored,
statistically validated measurement of remittance processing
performance. It is conducted by an independent firm and provides a
service measurement of First-Class business remittance mail for lockbox
customers. This service report measures transit times from originating
offices to destinating lockbox offices. The report identifies service
improvements and slippage, and ranks major metropolitan office
performance. The results of this survey are used by both mailers and
the Postal Service to improve remittance mail service performance.
Remittance mail service improvement is critical to our lockbox
customers, whose businesses are heavily dependant on the float received
from bill payments.
The Phoenix-Hecht Postal Survey reports that since 2001, the average
time for delivery of this type of mail has improved by more than 8
hours. Much of this results from collaboration between remittance
mailers and local, area and Postal Service Headquarters operations
personnel.
The following graph shows the 10 year trend of average time for
delivery.
10-Year Trend of Average Site in Nationwide Hours Mail:
[See PDF for image]
Source: Phoenix-Hecht Postal Summary:
[End of figure]
Customer Satisfaction Measurement (CSM) System:
Our Customer Satisfaction Measurement (CSM) system is an ongoing,
independent assessment of both residential and business customer
experience with the Postal Service. CSM is administered by an
independent firm, The Gallup Organization. Delivery service performance
is one of many elements of that experience. CSM information collected
from customers is used to: determine customer satisfaction with
performance of postal products and services; improve performance and
customer satisfaction; and provide summary results to the Congress,
GAO, and the Postal Rate Commission. Data are used to assess customer
satisfaction nationwide and to assist Post Office, district and area
managers in determining which improvements in their operations would
most benefit customers. Survey results have been used for development
of corporate success indicators. A total of 1.1 million residential and
400,000 business responses are received annually. CSM response rates
for business accounts are over 50 percent since FY 2001, and CSM
residential is 20 percent. These rates are consistent with industry
response rate standards of 10 to 30 percent. From Quarter I, FY 2002 to
Quarter 4, FY 2005, customers have rated overall satisfaction with the
Postal Service at 93 percent or better.
[See PDF for image]
Source: CSM Residential Survey:
[End of figure]
As with EXFC overnight service performance, CSM performance also
declined in FY 2006. CSM performance was 91 percent in Quarter 2, FY
2006. This was the first time in 18 quarters that residential
satisfaction levels were below 92 percent. Historically, after a drop
in EXFC service performance, such as in Quarter 1, FY 2006, changes in
the level of customer satisfaction tend to follow in the next quarter
as in CSM for Quarter 2, FY 2006. EXFC performance improved in Quarter
2, achieving 95%; overall customer satisfaction is expected to show
improvement as well.
Commitment to Service:
An example of our commitment to service was recently highlighted by the
Louisiana Legislature with the adoption of resolutions authorized by
the Speaker of the House and President of the Senate recognizing the
dedication and commitment Postal Service employees have shown since
Hurricanes Katrina and Rita. The Postal Service also worked closely
with the Louisiana Secretary of State's Election Division to make
certain that absentee ballots were distributed nationwide and received
in a timely manner. A Postal Service news release describing these
resolutions is attached as Exhibit A.
Exhibit A:
Postal News:
FOR Immediate Release
June 2, 2006:
Contact:
Joanne Veto:
U.S. Postal Service:
301-325-1960:
Jennifer Marusak:
Louisiana Secretary of State's Office:
225-342-4479:
Release No. 06-039:
www.usps.com:
Louisiana Legislature declares June 2 'United States Postal Service
Day':
Resolutions in state House, Senate cite 'exemplary service' in New
Orleans elections:
Washington - Encouraging the citizens of Louisiana to show the U.S.
Postal Service "the respect and honor befitting them and their service"
to the state, the Louisiana Legislature has declared today as "United
States Postal Service Day" in the state.
In separate actions Thursday, the state House and Senate adopted
resolutions authored by Speaker of the House Joe Salter and President
of the Senate Don Hines, respectively, establishing the day,
recognizing the dedication and commitment Postal Service employees have
shown since hurricanes Katrina and Rita devastated much of the state.
The resolutions specifically acknowledge successful efforts in the
recent elections in New Orleans.
"The state of Louisiana should honor the United States Postal Service
as an outstanding group of individuals in recognizing their exemplary
service," the Senate Resolution states.
The Postal Service worked closely with the Louisiana Secretary of
State's Election Division to make certain that absentee ballots were
distributed and received in a timely manner. Postal Service outreach
efforts included placing posters in all 38,000 Post Offices publicizing
absentee ballot mailing deadlines; lifting the embargo on bulk rate for
campaign and political mailings, making it easier for candidates to
mail campaign pieces; meeting regularly with Louisiana Secretary of
State Al Ater and his staff to support them in the absentee ballot
effort; and contacting every candidate with information explaining
mailing options, stressing deadlines and explaining available services
and options available to them.
Both resolutions acknowledge this collaboration.
"We are very thankful for the special assistance that the U.S. Postal
Service provided our displaced voters during this very critical
election cycle," Secretary Ater said. "It was extremely important that
we let our voters know that their requests for ballots, the mailing of
their ballots, and receipt of their ballots would be done in a timely
manner to insure that they were counted in the elections."
The resolutions also thank the Postal Service for introducing Confirm®,
a mail tracking system used on each of the absentee ballots,
recognizing the efforts to "ensure that voters displaced as a result of
the hurricanes received their mail."
About 12,000 absentee ballots were processed with Confirm by the Postal
Service for the May 20 New Orleans mayoral run-off election. All but
one ballot were turned over to the Secretary of State's Office by the
deadline. That lone ballot arrived the next day. Confirm service
provides near real-time tracking information about First-Class Mail©,
Periodicals, and Standard Mail. Confirm service takes advantage of
existing technologies that provide enhanced mail tracking and
visibility. With Confirm, each piece of mail is identified with an
additional barcode. As these barcodes are processed, electronic records
are created and sent to the Postal Service.
Both resolutions also acknowledge the tireless efforts of Postal
Service employees and the Postal Inspection Service involved in the
processing and delivery of election-related materials: "All made
significant, meaningful contributions to the success of both historic
elections in New Orleans."
"We are honored by this recognition of the work we do every day in
cities and towns across the country but are especially thankful for
these two resolutions as they acknowledge the partnership with the
state of Louisiana that we deeply value," said Delores Killette, Vice
President and Consumer Advocate.
Since 1775, the Postal Service and its predecessor, the Post Office
Department, have connected friends, families, neighbors and businesses
by mail. It is an independent federal agency that visits more than 144
million homes and businesses every day and is the only service provider
delivering to every address in the nation. The Postal Service receives
no taxpayer dollars for routine operations, but derives its operating
revenues solely from the sale of postage. products and services. With
annual revenues of $70 billion, it is the world's leading provider of
mailing and delivery services, offering some of the most affordable
postage rates in the world. The U.S. Postal Service delivers more than
46 percent of the world's mail volume-some 212 billion letters,
advertisements, periodicals and packages a year-and serves seven
million customers each day at its 37,000 retail locations nationwide.
Overview:
Appendix C Visibility - The Future Vision:
We will make changes that will improve service and allow for enhanced
delivery service performance measurement. The Postal Service intends to
lead this effort, with plans to implement a variety of technological
advancements and solutions. This will require a similar commitment from
customers who want to participate. Our vision is to eventually measure
every mailpiece that enters our mailstream. To make this vision a
reality, our customers must be willing to improve their mail
preparation processes. The GAO report recognizes that "give-and-take by
both USPS and mailers will be required to achieve consensus on
designing measurement systems that meet different information needs,
finding ways to cover the associated USPS costs, increasing mailer
participation in providing information needed to facilitate performance
measurement, and overcoming remaining impediments to implementing valid
measurement systems." In addition, we believe that all of the steps in
the overall mail value chain, from the creation of a mail piece to its
ultimate delivery, must be totally transparent to the person paying for
the mail to sustain a real commitment to service and to improve that
service. As we stated in our Strategic Transformation Plan, 2006-2010:
Efforts will be focused on all components of the mail value chain, from
mail creation through delivery. The Postal Service will continue to
work closely with mailers to improve address quality, to maximize
barcoding on all mail, and to improve the accuracy of information about
their bulk mailings. New service measurement approaches will be
developed to allow for an even more open and transparent mail system.
More data will become available to help target processing bottlenecks
and untimely or inconsistent distribution or transportation handoffs.
The following sections are organized under three major topics. First,
we discuss the Postal Service's future plans for improved service
performance measurement, including the technological advancements that
will make this possible. Next, we discuss the part that mailers will
play in the value chain, including improved mail quality and
preparation. Finally, we discuss our vision of a transparent value
chain, extending from mail creation through delivery.
Postal Service Future Plans for Improved Service Performance
Measurement:
The Postal Service will continue to use EXFC to track First-Class Mail
performance. As explained in other sections, this provides
statistically reliable results for single-piece First-Class Mail, but
its usefulness extends beyond that. It also reflects the service
received by bulk First-Class Mail, since bulk volume enters the system
and is processed within the same end-to-end processes covering single-
piece mail.
As indicated in the Strategic Transformation Plan, 2006-2010, the
future plan also includes using data from PostalOne!, Delivery
Confirmation, CONFIRM, and transportation tracking, by integrating and
reviewing the data to improve service for commercial products. The
Postal Service believes that it will ultimately be possible to measure
service performance for all classes of mail by combining passive
scanning of barcodes with enhanced "start-the-clock" information
resulting from improved bulk acceptance systems. The Postal Service is
committed to working with our customers to make this a reality.
These plans and other means to enhance service performance and
measurement will become possible through a variety of technological
changes, some of which are discussed below. The Postal Service will
provide customers with convenient electronic payment solutions and
seamless electronic acceptance. We will promote barcodes on key mailing
assets, from mailpieces to containers, in order to track mail
throughout the network. A performance-based verification approach will
recognize high-quality mailers and focus support on mailers that have
opportunities for mail-quality improvements. Furthermore, operational
improvements will be identified through analysis of scan data of
mailpieces processed on automated equipment. Technology-enabled
solutions will provide customers and the Postal Service with greater
visibility into the postal supply chain enabling near real-time
reporting on postage expenditures, account status, and mailing
information.
Improving barcode intelligence:
The barcode strategy will enable unique identification of containers
and pieces. Individual mail pieces will use new barcodes, such as the 4-
State Customer Barcode (4-CB) to uniquely identify the mail piece. The
4-CB is a new information-rich barcode designed to identify individual
mail pieces, particularly letters and flats. The barcode will contain
the ZIP Code information and allow the customer access to services such
as CONFIRM. The current Delivery Confirmation barcode will also be
modified to expand tracking capabilities for packages. Individual mail
pieces will be nested into containers that contain barcodes to
facilitate tracking. These barcodes, when affixed to mail components,
will be scanned during processing operations to provide an enriched
platform for automating verification, processing and visibility
throughout the system.
To appreciate the implications of improved barcode intelligence,
consider the 4-CB, used on letters and flats. The 4-CB eliminates the
separate barcodes used for sorting and identifying different services.
The Postal Service, in partnership with the mailing industry, developed
the 4-CB to increase the amount of information carried on letter and
flat mail pieces to allow for expanded tracking capability, creating
greater visibility into the mailstream.
The 4-CB combines the routing information used for sortation currently
carried by the POSTNET barcode and the tracking information carried by
the PLANET Code barcode into one single unique barcode. Moreover, the 4-
CB provides longer field lengths for customer and mail piece
identification to meet the need of high-volume mailers to uniquely
identify their mailings. The 4-CB includes a 3-digit service type code
that can be used to specify various combinations of special services.
When fully implemented, mailers will be able to use one single barcode
on a mailpiece to convey routing and tracking information and request
multiple special services. For example, instead of applying a POSTNET
barcode, a PLANET Code barcode, the Participant Code and Keyline
Information for Address Change Service, and a Certified Mail barcode
label on a mail piece, mailers simply apply one single 4-CB, as
illustrated below.
[See PDF for image]
Multiple barcodes and identification data replaced by a single 4-State
Customer Barcode:
[End of figure]
As the processes and technology are employed, measurement systems will
be enhanced to measure and improve service. A combination of accurate
measurement of a mailpiece acceptance and transparency through uniquely
identified barcodes gives the Postal Service the capability to monitor
bulk letter and flat mail.
Integrated Mail Management for Payment, Induction, and Verification:
The Postal Service has deployed the PostalOne! system, a new technology
that facilitates convenient centralized payment capabilities and
electronic postage reporting. We will be integrating other systems and
functions with PostalOne! to create an integrated mail management
approach to accept electronic documentation and payment, forward
advance notification to pertinent processing and support functions,
automatically schedule appointments to enter the mail, and utilize
barcodes to automate processing and provide valid "start-the-clock"
information, enhancing visibility through the supply chain. Electronic
documentation will eliminate paperwork for both the Postal Service and
the mailer, making the acceptance process quick, easy, and convenient.
An in-process verification approach is envisioned and will analyze mail
as it arrives and flows through the mailstream. Seamless verification
entails analyzing mail at induction and as it flows through postal
automated processing equipment.
The Facility Access and Shipment Tracking system (FAST) is an
electronic appointment system that enables mailers to provide mailing
information ahead of time, and enables the Postal Service to align
resources in anticipation of upcoming mailing activities. Customers can
integrate their supply chain management software with FAST. The FAST
system was designed to consider mail shape (e.g., letters, flats,
parcels) and pallet presort level information to maximize the capacity
offered at each facility. Information regarding mail redirections has
also been included in FAST. Redirections information is available to
all customers on FAST and is updated daily as changes occur to ensure
that the appointment is scheduled for the right induction location
based on mail class and shape.
Expanding Mail Visibility:
Transparency in the mail value chain will be based on an integrated set
of information systems, operational procedures, and the passive
capturing of information as part of normal operations using
standardized codes to uniquely identify and report on the status of
mailpieces, trays and larger containers. As the actual containers
arrive at postal facilities, container barcodes will be scanned and the
system will compare them to the mailers' electronic manifest to confirm
that containers are being entered at the proper location. As individual
mailpieces are processed on automation equipment, barcodes are
passively read and the system will again compare them to the mailers'
electronic manifest to confirm that the mail pieces processed match the
manifest. The mailer's quality information can be used to provide
feedback to the customer and determine any adjustments to the postage
paid. Additional visibility enables improved diagnostics, particularly
to analyze service performance opportunities and potential fail points
and bottlenecks in the system.
Surface Visibility utilizes barcode technology to track assets
(handling units, containers, trailers) for mail that moves via the
Postal Service surface transportation network. Although this system was
originally focused on improvements for our own transportation network,
we have expanded this technology to provide additional benefits to the
mailing community. The Surface Visibility technology consists of a
wireless network and the use of new scanning devices, with deployment
just getting underway. The system is integrated with FAST to display
drop shipment appointment information on the device's inbound status
screen to support employee real-time decisions on the dock. The device
provides employees the ability to capture information about when a
mailing arrived at the facility and when unloading of the containers
began and ended. This process has been further enhanced by the
introduction of a Surface Visibility mailer barcode, which can be
included on the mailer's documentation and scanned using the Surface
Visibility device as each container is offloaded from the trailer. The
device is also used to capture information when a driver arrives for an
appointment and is unable to get to a dock door prior to the scheduled
appointment arrival time.
Information regarding the content, presort level and the number of
containers is fed from PostalOne! to FAST. This information is included
in the FAST appointment record displayed on the Surface Visibility
scanning device. As part of the induction process, we are able to
validate that the number of pallets on which postage was collected
matches the number of pallets inducted, and we are also able to verify
that the mailer has dropped the pallet at the same location that the
drop-shipment discount was claimed.
By utilizing nesting capabilities and new data points, the Postal
Service will be able to provide additional enroute scanning points
after induction. Visibility for cross-dock pallets is captured when
Surface Visibility scanners capture a load scan using the placard
barcode as the container is loaded onto a trailer and an unload scan is
performed at the destination facility as the pallets are offloaded. At
the destination facility, visibility for bundles and individual pieces
can be captured via automation equipment scans and pieces nested to a
container. A container can then be nested to a trailer for dispatch to
a Post Office.
[See PDF for image]
[End of figure]
In addition to streamlining the induction process and creating better
visibility, we have made tactical operational improvements. We have
worked with customers in the MTAC workgroups to identify facilities
where appointment slots and capacities were inadequate. Working with
these facilities, more than 300 additional appointment slots were added
and a process to establish minimum capacity levels based on the size of
the facility for flat volume was implemented at all facilities. This
has resulted in an all-time low in customer complaints regarding
available slots and capacity for drop shipments, which improves service
to the mailer.
The Postal Service is currently working with Periodical and First-Class
mailers through MTAC workgroups to bring them on-line with FAST and
Surface Visibility. A new workgroup for parcel shippers is currently
being formed. The goal is to have pre-notification information for all
mailer inducted volume to enhance resource and equipment planning
efforts and increase visibility for customer mailings. These processes
will help ensure that service commitments are met and provide better
diagnostics to identify a break-down in the process so it can be
resolved quickly.
The following diagram shows how the pieces fit together for packages,
and will be similar for letters and flats.
[See PDf for Image]
[End of Figure]
Flats Sequencing System (FSS):
The Postal Service obtained significant benefits in the 1990s by
automating the processing of letter mail. Automated letter processing
is now a mature and stable method that reduces costs, improves service
and provides additional diagnostic data to both the Postal Service and
to mailers through the use of CONFIRM.
Efforts now are underway to further automate the processing of flats,
hence increasing visibility. The vision is to use the Flats Sequencing
System (FSS), a new type of sorter that will sort the flats into walk
sequence for the carrier's route. This machine will process flats from
the current sorting operations and a significant portion of the flats
that currently arrive at delivery units in mailer prepared bundles and
sacks. To accomplish this mission, the FSS will need to have the
capability to sort flats with a wide range of physical characteristics
(dimensions, weight, etc.), and at high throughputs.
The FSS targets the portion of flats currently processed manually. At
present, each carrier receives flats from a variety of sources. This
mail is not merged and much of it is in random order. The carrier
manually sorts this mail into the delivery case, thereby merging it and
placing it into delivery sequence. The carrier then removes the flats
from the case (pull down), and takes them to the street for delivery.
Therefore, we are currently unable to passively collect barcode
information for flats already sorted to carrier route, approximately 50
percent of Standard Mail flats.
A better way to achieve this result is to pass as much of the flats
workload as possible through a machine that is designed to accomplish
the same result. For the portion of the flats that can be processed on
the new FSS, the manual casing and pull-down activities described above
would no longer be necessary. A prototype FSS was recently successfully
tested at the Indianapolis, Indiana Mail Processing Annex.
Based upon the Postal Service's experience in the 1990s with letter
mail automation, we expect a major reduction in carrier office time and
in manual sorting work hours once the FSS is deployed. In addition,
moving manually processed flats to automation will allow us to take
advantage of technology by significantly expanding the amount of
diagnostic information collected through CONFIRM to the benefit of the
Postal Service and our customers.
Mailers Must Play Their Part in the Value Chain:
Any focus on improved service and service delivery measurement cannot
succeed without the direct participation of the mailers. The value of
the workshare discounts given to mailers exceeded $18 billion in FY
2005. In FY 2005, nearly 75 percent of Standard Mail and over 62
percent of Periodicals received destination-entry discounts. Mail
preparation has a direct bearing on service and costs. The mailers and
their partners in the mail value chain must take specific steps to
improve the quality of their mail and to keep price increases to a
minimum. The areas where we expect mailer improvement are outlined
below. We have tried to set out staggered deadlines for completion,
where applicable, taking into account the practical ability of the
industry to implement these changes and to allow the mailing industry
to provide us with feedback on these proposals.
The Link between Mail Preparation and Service:
In order for our bulk classes of mail, including Standard Mail, to have
value, the mail pieces must connect with the recipient in order to
achieve the intended response. In an attempt to provide our customers
with the best opportunity to create and prepare valuable mail pieces,
we provide tremendous flexibility in terms of the type of mail that can
be inducted into our system. If fact, the Postal Service provides some
of the most extensive suite of options in terms of mail-piece design of
any post in the world. For example, a marketing newsletter can be
prepared in a standard envelope but can also be folded into a self-
mailer and left unsealed to increase response rates. Also, a customer
may choose to prepare flat mail pieces in poly bags and include rigid
compact disks with each mail piece. Customers can even request that
their mail bypass automation, to prevent the application of barcodes
that are deemed by certain customers to degrade the value of the mail.
Furthermore, customers will weigh the cost of producing the mail pieces
with the value and potential response. A customer working with a
limited budget may choose to reduce the paper stock or packaging
materials in order to lower costs. Again, the Postal Service provides a
great deal of flexibility along these lines in order to increase the
pool of potential mailers.
With the extensive variability in terms of mail piece design and
quality comes a resulting variability in service performance. Though
customers will pay higher rates in some cases based on the decisions
they make in terms of mail piece design, there may not be an adjustment
in their expectation for service performance. However, manual handling
is inherently more labor intensive, and a reliance on human factors can
impact delivery. Also, mail pieces meeting all automation standards are
significantly more likely to remain in the automated mail stream
throughout the process and therefore unlikely to be rejected into a
manual operation. To summarize, any service measurement system must
take into consideration that, for example, a manual letter could have a
different service expectation and visibility than a fully automation-
compatible letter otherwise there will need to be a reevaluation of the
flexibility offered to our customers.
Furthermore, customers will need to change their mail preparation
processes in order to further reduce the inherent service variability
in their mailings. For example, today's acceptance function is meant to
mitigate the risk of additional costs associated with mailings that
fall outside of our work-sharing specifications and create an incentive
for preparing good-quality mailings. The process incorporates
statistically valid samples within a mailing, which are then verified
against mailing standards. Mailings determined to be outside of the
specifications are either returned to the customer to allow corrections
to be made or assessed a postage adjustment.
Though the expectation is that all mail must be barcoded, presorted,
and containerized accurately, the verifications incorporate tolerances.
For example, our automated systems that verify the quality of barcodes
allow a tolerance of 10 percent of the codes to fall outside of the
specifications for readability. For presort ad mail, five percent of
the pieces can be improperly sorted or sequenced while still qualifying
for the requested discount. Finally, due to significant concerns from
the mailing community, address and barcode accuracy is not a factor in
determining whether a mailing must be corrected or a postage adjustment
assessed despite the fact that deficiencies in address and barcode
accuracy affect service performance and costs.
These tolerances and other considerations are in place to account for
the variability that exists in any production process and customers
have long insisted on retaining them even though there is a clear
consequence to service. Therefore, tolerances are important to consider
in the context of service measurement. While the Postal Service will
almost certainly be measured against a delivery standard for all
pieces, for example, in a given tray; there could be factors working
against the delivery performance that are not transparent to the
measurement system. For a system to accurately measure our performance
and create a meaningful expectation in the eyes of the customer, these
tolerances must be significantly tightened or possibly eliminated to
ensure our errors are not confused with customer errors.
Better Addressing:
The Postal Service's goal in the area of Address Quality is to have
perfect addresses on all mail which receives an automation discount. In
order to achieve this goal, it would require mailers to update their
mailing list weekly to make sure the file does not include any
addresses that are undeliverable as addressed. The Postal Service will
be working with mailers to determine the optimum level of Address
Quality requirements. A perfect address would allow us to deliver a
mail piece quickly, on the first attempt, and at the lowest cost,
improving overall service for all classes of mail. When a mail piece
requires forwarding or is returned because of an incorrect or
incomplete address, the Postal Service incurs avoidable expenses
associated with processing, handling and transporting. Moreover, if a
mailpiece does not have a delivery point barcode, or one cannot be
applied, the Postal Service misses the opportunity to take advantage of
its sophisticated automation equipment to fully, efficiently, and
reliably process the mail. As a result there is a negative impact on
both service and cost. The Postal Service has already taken several
steps to address a variety of address quality issues. One such example
is a work group cosponsored by the mailing community through the Mail
Technical Advisory Committee to work on new procedures for certifying
mail lists.
In addition, we are finalizing the appropriate steps needed to increase
address quality requirements for mailers. As a first step, in August of
2007 mailers will be required to use Coding Accuracy Support System
(CASS) certified software with Delivery Point Validation. CASS is run
on a mailing list at a minimum of once every six months and ensures
that the addresses are valid street addresses or Post Office boxes. One
enhancement that would improve service is to require all mailers across
all mail classes to use a Move Update tool to update their mailing
lists. This would ensure that the recipient of the mailpiece has not
moved. The Postal Service Intelligent Mail and Addressing Quality group
has developed new tools, such as One Code Address Change Service, that
will allow customers to receive near real-time address updates. We will
continue to develop new tools and increase our addressing requirements
over time. We envision these move updates tools being run weekly in
order to ensure optimum service.
Barcode Readability and Usage:
Barcodes must be readable to limit costly and timely manual handling
and to improve service. If mailers want improved service, then they
will need to tighten their procedures so that all barcodes are readable
by automation. This means that the mailing community will have to take
steps to reduce or eliminate spraying over barcodes.
Presort Tolerances:
Currently, we accept a mailing and give a full presort discount so long
as 95 percent of the mailing is properly presorted. In an effort to
improve service and reduce the costs associated with manual handling,
mailers and presort houses must work to increase the percent of their
mailings that are properly presorted.
FAST Appointments:
The Postal Service presently makes every effort to assist mailers who
make drop ship appointments, even if those mailers show up hours early
or late or without an appointment. Because early, late and unscheduled
arrivals are detrimental both to our efforts to improve service and to
reduce costs, mailers and their logistics providers must make a
concerted effort to schedule appointments and arrive on time. Results
are provided in Appendix D.
The Postal Service's Vision of a Transparent Value Chain:
The Postal Service, however, is interested in more than just our part.
We would like to see a completely transparent mail system, from mail
creation through delivery. When a mail piece is conceived, there is a
certain expectation of when the mailing must reach the recipients to,
for example, maximize the effectiveness of the marketing message or the
financial transaction. The Postal Service only supplies a portion of
the services associated with the value chain. If service is not
rendered at any step along the chain such that delivery cannot be
affected consistent with the customer expectation, a service failure is
the result in the eyes of the customer. In our 2002 Transformation
Plan, Appendix C, page C-2, we described the mailing industry value
chain:
The mailing industry can be defined in terms of a value chain. The
mailing industry value chain supports business mailer activities such
as customer acquisition, service delivery and customer retention.
Mailing service participants, working on behalf of a manufacturer or
retailer, might include a creative design agency, an address manager,
service bureau responsible for processing a mail piece, a printer, a
letter shop, a presort bureau, and a shipper, all of whom play roles
designed to get a mailing into the postal network. Equipment
manufacturers, software vendors, retail outlets, and other stakeholders
support and share interests with these players.
The following illustration gives a good overview of the multitude of
activities that take place in the value chain.
The Mail Value Chain:
[See PDF for image]
[End of figure]
As the Postmaster General indicated in a recent speech to the Twin
Cities Postal Customer Council, our network is just one part of this
larger chain, which begins with design and printing, addressing and
presorting and transportation to the Postal Service. Each one of these
steps, as well as the Postal Service's part, is critical to a
successful mailing. A recent example concerned a large mailing from a
national grocery store chain, with desired in-home delivery dates in
advance of a planned sale. By the time the mailing was dropped off with
the Postal Service, the sale was over. That company deserves to know
where, when and why something went wrong with their mailing, so the
appropriate link in the chain can be held accountable. History has
shown that the other service providers within the chain are very
unwilling to share information about their service performance, yet we
believe this is extremely important, since we are the public face of
the mail and are often held accountable in the eyes of the recipients.
This is no different than the grocer being held accountable by its
customers for being out of milk though the distributor failed to
deliver the expected quantity.
As also said in the speech, "The person paying for the mail has to be
able to see it all before and after it gets to the Postal Service.
Because at the end of the day, it's the payer who's most interested in
what's happening - and whether there are any delays." We also think it
vitally important that our regulator, who may be judging our compliance
with our service standards, as well as other oversight bodies, have
insight into all elements of the value chain, and know where, when and
why delays and problems occur, and how they are addressed and resolved.
The Postal Service is firmly committed to this ultimate vision of
improved service and enhanced service delivery performance measurement
systems, but it must be understood that it will take time, effort and
resources to accomplish. It will be a challenge to implement this
technology, but still be mindful of the value equation between service
and prices, keeping prices within the Consumer Price Index. It will be
an added challenge to implement the necessary changes if the Postal
Service becomes subject to the requirements of Sarbanes-Oxley. The
detailed effort and massive resources needed to document and test all
applicable processes may well result in a delay of several years in
making progress toward this vision.
Appendix D Measurement Systems and Diagnostic Tools:
Overview:
We have developed a number of measurement systems and diagnostic tools
"used by managers to make decisions oriented towards improving results"
and to monitor service performance and identify issues needing
resolution. While some of these tools may monitor mailings from our
larger customers, any resulting operational improvements benefit all of
our customers. The chart on the next page shows the measurement systems
and tools used for each class of mail. The measurement systems and
diagnostic tools are explained in detail in the sections following the
chart.
[See PDf for Image]
[End of table]
Measurement Systems:
First-Class Mail:
In 1990, the Postal Service replaced the Originating Destinating
Information System (ODIS)-based First-Class service measurement system
with a more effective External First Class Measurement system (EXFC).
ODIS lacked the necessary quality controls over non-dated, metered
indicia, and presorted mailings.
Mailers who use metered indicia have complete control over the date
printed by the metering machine and the date and city in which the
metered mail is deposited. The typical scenario is that an employee of
the firm using a meter drops the outgoing mail into a collection box on
the way home. This is certainly convenient for the office employee, but
offers the potential of inaccurate service performance measurement.
Issues with ODIS included:
1. The Postal Service cannot control whether the mail is dropped after
the last collection of the day, in which case, ODIS will report the
mail as late based on the meter date, when in fact it was not.
2. The Postal Service cannot control whether the meter date is set
correctly, is stale or is set forward of the correct date. Future dates
can not be included in a service measurement.
3. The Postal Service cannot control the location at which mail is
dropped into the system, regardless of the terms of use specified in
the meter license. In fact, most employees of a firm using metered
postage may not know that mail is required to be deposited in the city
in which a meter license is issued. A typical example is when an
employee works in one city, like Washington, DC, and lives in another,
like Manassas, VA, and drops the office mail into a collection box
after arriving home. Mail bearing a Washington, DC meter impression
deposited and processed in another city will be misattributed by ODIS
as to origin and misreported as late whenever Washington, DC and
Manassas, VA, service commitments do not match.
The creation of First-Class presort discounts added an additional
complication to First-Class service measurements. Discounts only apply
when sufficient mail is entered into the Postal Service, sorted to
specific ZIP Code ranges. Presort providers often delay the induction
of individual customers' First-Class metered mail when necessary to
wait for more volume to maximize their postage presort discount. Mail
that is held beyond that day's processing distorts the true delivery
time and customer perception of mail delivery performance.
The creation of EXFC, an external First-Class measurement system,
addressed these quality issues and provided a far more accurate and
realistic service measurement system. EXFC measures service performance
from a customer perspective. EXFC is an end-to-end service performance
measurement system; it measures First-Class Mail performance from the
time mail enters the mail stream until it is delivered to a household,
small business, or post office box.
EXFC is administered by an independent firm, IBM Consulting Services.
Sample mailings that statistically represent both mail volumes between
locations and mail characteristics are used to insure data integrity
and accuracy. EXFC is designed to provide quarterly estimates of First-
Class Mail service performance for all 80 performance clusters,
encompassing 463 3-digit ZIP Codes, at their overnight, two-day, and
three-day service standard areas. This network represents approximately
80 percent of the nation's destinating First-Class stamped and metered
mail volume. Every Processing and Distribution Center (P&DC) is
represented by at least one 3-digit ZIP Code. The annual cost of EXFC
is approximately $21 million.
All First-Class Mail receives the same preferential service, regardless
if entered as single-pieces by residential customers or in massive
quantities by business mailers. EXFC measures the end-to-end processes
of the First-Class Mail stream from the earliest possible acceptance
point, the collection box, to the recipient's mail box. Bulk First-
Class Mail deposited by business mailers enters the mail stream at
various mid-points in the end-to-end process based on the presort level
of their mailing and the entry locations. Large business mailers,
especially presort bureaus, usually drop their mail off at the
processing facility and bypass Postal Service collection and initial
handlings. Residential and business mailings are combined in our
processing, distribution and transportation activities. Therefore, all
First-Class Mail service is reflected in this service measurement.
The diagram which follows titled "First-Class Mail Stream" shows a high-
level view of the First-Class mail stream. The portion of the diagram
at the bottom, outlined in red, depicts the typical path of a First-
Class single mailpiece from receipt by the Postal Service to delivery.
This flow would also be characteristic of those EXFC test pieces which
are currently used to measure the service performance of our system.
The flow begins with the originating receipt of mailed items at
acceptance points such as the familiar blue Postal Service collection
box or a Post Office lobby. Once collected, mail pieces are
consolidated at local Post Offices and transported to P&DCs where they
are postmarked and prepared for processing on automated distribution
equipment. Based upon volume densities and service standards, this
equipment performs a distribution of mail to various sort levels which
correlate to subsequent distribution responsibilities at destinating
postal facilities throughout the country.
Upon completion of outgoing distribution activities, individual mail
pieces are sorted within appropriate transport equipment and assigned
to programmed transportation. Primarily, inter-facility transportation
modes include air, surface, or a combination of both. There are cases
where the next level of distribution is performed within the same
facility where the outgoing distribution was performed, primarily where
local delivery is involved, and the mail simply moves between
distribution operations.
As determined by a variety of factors, such as mail shape, volume, and
final sort level requirements, destinating processing and distribution
operations can result in multiple handlings of mail received from
originating operations. In general, destinating mail normally receives
both a primary and secondary distribution. At the completion of
destinating distribution, mail is prepared for dispatch through
programmed transportation to local delivery units.
Upon receipt at delivery units, mail that has been prepared to a
delivery-ready sort level will be staged in preparation for carrier
departure. A final distribution is performed on any remaining mail
which is not already in carrier-walk-sequence format. Once all mail
volume is finalized to this sort level, it is delivered, thus
completing the flow.
The portion of the flow diagram at the top, outlined in green, provides
a high-level view of the typical path taken by mail pieces prepared by
bulk mailers of First-Class Mail. This flow also indicates the most
common points where the workshared presorted product is merged with the
single-piece First-Class Mail flow.
Upon completion of their destination sort level activities, bulk
mailers deposit daily mailings at postal facilities for system entry
and payment processing. Depending upon mailing requirements and
services available, the acceptance and entry point may be a Post Office
local to the mailer or a centralized Bulk Mail Entry Unit (BMEU), which
serves the local mailing community and is often located at the
originating plant.
Once a mailing is accepted by the Postal Service, it enters the single-
piece First-Class Mail flow based upon the destinating sort level to
which it was prepared by the bulk mailer. Allowable residual volumes,
which were unable to be presorted to finer sort levels, enter the
previously described single-piece flow through an outgoing distribution
operation. The remainder of the mailing enters the same flow in a
downstream dispatch operation, where it is assigned to transportation
that supports the service level of the destinating sort-level of the
mailing. In some instances, bulk mailers have the ability to assign
their own destinating sort level volumes to postal transportation. In
these cases, their mail may actually enter the flow through a Postal
Service operation at a major airport.
Regardless of the originating entry point of First-Class Mail prepared
by bulk mailers, all volumes enter the previously identified single-
piece mail flow prior to final delivery by postal delivery personnel.
Given the fact that the service performance of this flow is
systemically measured through EXEC, it is valid that the resulting
performance score applies to each component of the system workload
being monitored, including First-Class Presorted Mail volumes prepared
by bulk mailers.
[See PDF for image]
[End of figure]
Express Mail:
Express Mail is a seven-day-a-week product, including delivery on
Sundays and holidays. Scanning is built into the Express Mail rate for
every piece, unlike other classes of mail and optional services. With
the unique piece identifier and processes to scan the mail, we have a
virtual census of all Express Mail pieces. We measure each Post Office
to Post Office ("A" label) mail piece and Post Office to Addressee ("B"
label) mail piece from acceptance to delivery and compare the actual
service to the current service standard. The scan data for Express Mail
is used for a reliable performance measurement system, service problem
diagnostics, and to check that pieces have indeed received the service
for which the customer paid. Domestic Express Mail is a day-certain,
money-back guaranteed product. Customers can access their tracking and
delivery status at usps.com or 1-800-ASK-USPS.
The overall intent of the Express Mail Validation System is to
determine if the scanning procedures and processes are valid and
accurate. This external, independent measurement system allows us to
test our systems. Keeping our scan data accurate helps us find areas
where improvement would be helpful, and helps us better understand how
our customers experience our service.
Six postal administrations (Australia, China, Hong Kong, Japan, South
Korea, and the United States) formed an alliance, the Kahala Group
International, by aligning the Global Express Mail (GEM) service
network, including processing operations, transportation, and delivery.
This expedited service has a day certain, money-back guarantee, and
customer tracking. These posts scan pieces at delivery, so that both we
and our customers can track service. The posts are paid based on
service performance. The service was launched in July 2005.
Additionally, Royal Mail of Great Britain has recently signed on to the
Kahala Group and we are in negotiations with additional foreign
entities.
For other International Express Mail, we are limited to the measurement
of the domestic legs of service due to the technical and diplomatic
complexity of obtaining transit information from foreign countries. We
measure International inbound Express Mail from the point it leaves
Customs (which "starts the clock") to the domestic delivery of that
piece, and the outbound International Express Mail, which is measured
from the originating Post Office to the domestic plant that is one of
the international gateway offices.
Priority Mail:
In FY 2006, we replaced the Priority End-to-End (PETE) measurement
system with Delivery Confirmation Priority Mail purchased at retail
units nationwide. PETE was an external, weighted sampling method
measuring service from acceptance to delivery. Approximately 450,000
test pieces were inducted annually in specific ZIP Code locations that
were representative of our delivery network, at an annual cost of $10
million. This external measurement gave us the first opportunity to
accurately record acceptance, or "start the clock," and delivery times.
Customers now can purchase Priority Mail with Delivery Confirmation
service at postal retail units nationwide. Given the increasing volume
of retail Delivery Confirmation, we were able to switch to an internal
system, take advantage of technology, and eliminate costs associated
with an external system. Using retail Priority Mail with Delivery
Confirmation has increased our sample size of 450,000 PETE test pieces
to over 23,000,000 actual mail pieces annually.
By scanning the Delivery Confirmation barcode at retail acceptance and
at delivery, we are able to measure the service performance of this
mail class from entry by the customer to delivery to the recipient.
There are processes in place to ensure that the data are accurate at
specific points in the system. Those processes allow us to have a high
confidence in the quality of the data. The costs of Delivery
Confirmation are voluntarily borne by the retail customers who select
this service. We have taken advantage of the scanning features to
provide both confirmation of delivery and the elapsed delivery time
from end-to-end to the customer via our website at usps.com.
The Delivery Confirmation Priority Mail retail (DCPM-R) service
performance measure is complimented by two sampling programs that
validate performance based on a sampling of test mail. One of the
samplings uses Priority Mail with Delivery Confirmation, and one uses
Priority Mail without Delivery Confirmation. DCPMR-Validation is very
similar to the Delivery Confirmation process that uses the scans of
customer's mail. A person (IBM dropper) goes to a Postal Service
window, presents Priority Mail pieces they wish to mail, and asks for
Delivery Confirmation for the mail pieces. The pieces are monitored by
both the Delivery Confirmation scans and by IBM's reports from the
droppers and reporters. DCMPR-Validation compares the delivery results
of test mail to scans in the Product Tracking System (PTS). A match
rate is generated based on how often the PTS scan matches the
reporter's receipt date. The primary goal is to help improve service to
customers and this program helps us see performance through the
customer's eyes. We are measuring from and validating our customers'
experience. This is the core value of our tests.
Delivery Confirmation is a service provided to commercial mailers who
submit an electronic manifest with their bulk Priority Mail pieces. The
manifest is scanned at acceptance. In order to reliably "start the
clock" on the commercial pieces, the manifests must contain all the
pieces, and only the pieces in the shipment. These accurate manifests
have to be received in a timely manner. That requires the mailer to put
additional safeguards in place to better control what mail is actually
on what truck, and to ensure timely transmission of that data. Many
mailers are not ready for that level of precision. As electronic mail-
acceptance technology improves and commercial mailers and mail
providers improve their daily operational quality control process to
provide an accurate piece level "start the clock," commercially-
manifested Priority mail will be included in the service performance
measurement system.
Package Services:
Retail-purchased Parcel Post represents a situation in which customers
largely do not want to bear the cost of either Delivery Confirmation or
Signature Confirmation, and for that reason, there are not enough
pieces to represent this product through a unique measurement system.
The commercial Parcel Post product is Parcel Select, which is tracked
since Delivery Confirmation is built in as part of the service. Parcel
Select offers commercial mailers and mail providers several options.
Mail can be entered as far up stream as a Bulk Mail Center, requiring
several levels of distribution prior to arriving at the delivery unit
or mail can be entered directly at a specific delivery unit. Mailer
quality, correctly manifested pieces dropped at the correct location,
and entry times prior to 7: 00 AM, have a direct impact on delivery
performance. The service standard for Parcel Select is next day for
mail entered at delivery units by 7:00 AM. Currently, 43 percent of all
Parcel Select volume entered at a delivery unit is delivered on the
same day it is tendered to the Postal Service and 98 percent of this
category is delivered by the next day.
Standard and Periodicals Mail:
Measuring Standard Mail and Periodicals Mail successfully has been an
elusive goal for us. In the 1970s and 1980s, we used an internal
measurement system, ODIS, to measure point-to-point volume by class of
mail. This same system was used during that period to measure service
performance by comparing the postmark date with the date the piece
passed through the last processing operation prior to going to the
delivery unit. Although attempted, Standard Mail could not be reliably
measured. Standard Mail lacks a postmark or other reliable measure of
acceptance into the postal system. The complexity of the Standard Mail
entry also hampers its measurement. A single mailing may be entered at
multiple postal facilities, at multiple presort levels, at multiple
container levels and on multiple days. The same issues and complexities
exist with regard to Periodicals Mail.
In the 1990s, two external, end-to-end sampling systems were designed
and tested by Price Waterhouse: the External Second Class Measurement
System (EX2C) to measure Periodicals, and the External Third Class
Measurement System (EX3C) to measure Standard Mail. Both of these
systems involved working with volunteer commercial mailers on a small
scale to deliver "proof of concept" sample-based measurement systems.
The concept systems required a high level of cooperation between the
commercial mailing community and the Postal Service, along with a high
level of participation among the mailers to produce representative
numbers to measure the complexity of presort and entry levels.
EX3C and EX2C was a great learning experience. We realized it is
difficult to track the variabilities of presort and drop-ship entry and
the diversity of the product. We learned we could not create a single
service measurement for Periodicals or Standard Mail that addresses all
the complexities offered with these mail categories. Standard Mail was
created as a low-cost mailing alternative that allows mailers greater
opportunities to lower their cost and to give postal operations greater
flexibility in when they process and deliver Standard Mail. Mailers
have greater leeway in the make up, preparation and entry level,
allowing them to reduce their total mailing costs. Postal operations
can determine the most cost-effective time to process and sort the
mail, taking advantage of non-peak processing windows, avoiding the use
of overtime and increasing productivity. After First-Class, Priority
and Express volumes have been dispatched, the delivery operations can
manage the day-to-day delivery volume and deliver Standard Mail on non-
peak delivery days.
Periodicals have additional complexities. Periodicals range from daily,
weekly, bi-monthly, monthly and quarterly publications with expected or
desired delivery of same day to day-specific service. Some daily
newspapers are dropped off at 4:00 AM and receive same day delivery.
Rates vary from news content, in-county, out-of-county, and
agricultural publications. More stringent specific delivery
expectations will eliminate or curtail existing flexibilities for both
the mailing industry and the Postal Service resulting in higher cost.
Given that Periodicals often do not cover their costs, any cost of new
systems would directly impact their rates.
Diagnostic Tools:
Mail Condition Reporting System (MCRS):
MCRS is a national data collection system used in our plants for the
analysis of a facility's performance, an indicator for service
performance, and the analysis of operating units within a facility.
Reports from this system examine facility performance by looking at
operating plan conditions in terms of volumes on-hand and delayed
volumes. Part of the system contains expected thresholds which differ
by plant, so it is easy to determine potential service implications.
Local, area and national operations management use this information
daily to identify potential problems and take corrective action to
improve overall operational efficiency in processing, distribution and
dispatch of mail.
Customer Service and Delivery Service Reporting System (CSDRS):
Customer Service and Delivery Service Reporting System (CSDRS) is a
delivery unit based data collection and reporting system that provides
data to all levels of postal management. It provides a snapshot of the
daily condition of the mail in the delivery units. There are
approximately 7,300 delivery units reporting in CSDRS, which represents
about 159,000 city routes or 95 percent of all city delivery routes. As
with MCRS, local, area and national operations management use this
information daily to identify potential problems and take corrective
action to improve overall operational efficiency in delivery of mail.
Color-Coding:
We use an internal color-coding process to identify mail based on its
entry into the postal system, thereby keeping the mail flowing in first-
in, first-out order. Our national color code policy and procedures are
in place to support the timely processing, dispatch and delivery of
Standard Mail within established service standards. Standard Mail
processed at all outgoing, ADCs or SCFs regardless of where received
(e.g., associate office, P&DCs, or other location) must be coded with
the color that represents the day the mail is scheduled to be
processed. All other destinating Standard Mail must be coded with a
delivery color that represents the scheduled day of delivery. Once the
color code is applied, it remains on the mail until it is taken out for
delivery. There are no prohibitions against management agreements being
made below the national level which accelerates the color coding and/or
delivery expectations for any Standard Mail versus this policy. The
color coding, and hence the service, varies depending upon the amount
of processing required. If a container of mail is sorted to a delivery
unit, it goes out right away. If mail is sorted to 3-digit ZIP Code, it
must first be sorted to either 5-digit ZIP Code, carrier route or walk
sequence, depending on the shape and volume of the mail.
ADVANCE Notification and Tracking System:
The Postal Service is very aware that timing the delivery of
advertising and promotions is critical to the success of direct-mail
campaigns and marketing strategies. We also recognize that publications
must be delivered in a timely and consistent manner. We have offered
ADVANCE since 1995, to track the delivery process for qualified
Standard Mail and Periodicals mailings. ADVANCE also offers delivery
performance reports for Standard Mail mailings with required in-home
delivery windows and Periodicals mailings with preferred delivery
dates.
Delivery performance is tracked by approximately 7,000 delivery units
serving over 11,000 ZIP Codes. ADVANCE mailers provide information
prior to entry of the mailing. This information includes a sample mail
piece, entry location, beginning and ending in-home date or preferred
delivery date requests, mailpiece description, and mail preparation
level. ADVANCE posts information via the Internet to all participating
delivery units. The date the mailing arrives at the delivery unit is
recorded. The delivery unit also enters when delivery begins and when
it is completed. Using the process, the district and area offices can
track the mailing to ensure receipt and delivery at the delivery unit.
After the delivery unit has entered the required dates, ADVANCE
provides delivery performance reports for the mailings calculated from
the data entered by the delivery units. These reports can be obtained
in real time through the ADVANCE Mailer Web page, where they can be
viewed and/or downloaded by the mailer in a password protected
environment. In this way, mailers are kept informed of the progress of
their mailings.
CONFIRM Service:
CONFIRM service was originally designed to provide raw scan data from a
second mailer-applied barcode (the PLANET Code) to subscribing bulk
First-Class and Standard Mail customers. In an attempt to use these
data to measure service performance, the Postal Service developed a
process in which mailers would submit electronic preshipment
notifications documenting where and when individual CONFIRM mail pieces
were being entered. The Postal Service would record the entry of those
shipments by scanning a unique barcode included on the entry
documentation. These "start-the-clock" scans would provide evidence of
receipt of the mailing by the Postal Service and could be matched to
downstream scans of individual PLANET Codes to determine the time to
deliver that mailing.
The Postal Service originally expected to rely upon pre-shipment
notifications as a tool to increase the utility of CONFIRM scans.
However, that expectation was not borne out operationally. Some of the
issues that prevent CONFIRM service from being a service performance
tool include inconsistent mail preparation and barcoding methods by
CONFIRM mailers; inconsistent induction procedures; system
infrastructure limitations that impact the ability to uniquely identify
mailpieces within a pre-shipment notification; lack of integration with
postal mail acceptance and verification procedures; and incorrect entry
of information on mail processing equipment that becomes associated
with a CONFIRM scan.
In an effort to address these issues and use customer mail to measure
accurately, the Postal Service and the mailers jointly developed a
CONFIRM certification process. To date, only a handful of mailers have
attempted certification, and only two have passed. Generally, mailers
either cannot, or chose not, to change their processes to produce data
and mailings accurate enough to pass certification. Some report the
costs they would incur as a deterrent to certification. In many cases,
the scan data provided to them from CONFIRM is enough for them to do
their own internal analysis and diagnostics, and fully meets their
needs. The end result is a delivery performance product that provides
the mailers with desired information, but still is inadequate for the
service measurement of Standard Mail or bulk First-Class Mail.
CONFIRM is also used as an internal analytical tool today by the Postal
Service seeding test pieces and analyzing the sequence of scans from
those pieces. PLANET Code labels are applied to mail pieces selected
from key points in mail processing. Data are collected from scans in
subsequent sortation operations and analyzed to determine whether mail
is being moved in a timely and effective manner between mail processing
operations. These data are used by postal facilities nationwide to
monitor and improve service performance. The results of these efforts
have shown improvement to plant-specific 3-digit service for overnight,
two-day, and three-day service performance. Mail Processing continues
to diagnose both on-time to failed mail pieces to determine the root
causes and to resolve issues causing the delays, so we can better serve
our customer.
Similarly, some CONFIRM customers have relied upon their own scan data
when approaching the Postal Service to discuss service issues. The
Postal Service has responded by developing reports that permit
isolation of each customer's data. The purpose of these reports is to
help standardize the evaluation of customers' data.
Regardless of the source of CONFIRM scan data, its use to measure,
diagnose, monitor, or improve mail processing is used on an ad hoc
basis to highlight and resolve specific problems.
24 Hour Clock Indicators:
In February 2006 the Deputy Postmaster General and Chief Operating
Officer (DPMG/COO) implemented the "24 Hour Clock" indicators. These
indicators measure the Postal Service's internal processes by
establishing national standard completion times for key activities.
Improvements to these indicators have a positive impact on service
performance. Meeting commitments by deadline helps the next shift, or
the next plant or post office further down the mail stream meets its
deadlines. A field operations executive meeting in June 2006 focused
attention on these indicators, showing their relation to service
improvement, included sharing success stories, and identifying
opportunities for improvement.
[See PDF for image]
[End of figure]
Facility Access and Shipment Trackinq (FAST):
The Postal Service instituted a drop ship appointment system to allow
mailers to schedule appointments with the facility where they desire to
drop off their mail for delivery. Mailers are supposed to arrive with
the mail and the accompanying paperwork at the scheduled appointment
time. The mailing and paperwork can be immediately reviewed and
verified, thus avoiding potential delays and improving service.
The Facility Access and Shipment Tracking (FAST) recently replaced our
previous drop shipment appointment system. The FAST system report that
follows shows some weekly variation, with scheduled appointments
tending to increase toward the end of the week, on Thursdays and
Fridays. Although these are recent data from spring and early summer,
there also are seasonal variations, resulting in greater Standard Mail
volumes during the fall as opposed to other times of the year. The
fluctuations in weekly and seasonal workloads demonstrate the necessity
for flexibility and deferability regarding service standards for
Standard Mail. The data also show the frequency of late arrivals and
the percent of "no shows," compared to the portion actually on time.
The portion of scheduled on-time appointments (where "on time" actually
covers mailers arriving 30 minutes late) -10 percent or less --pales in
comparison to the early and late arrivals and the "no shows." These
data demonstrate, even more compellingly, the need for flexibility and
deferability in service standards for certain types of mail. We could
not "start the clock" based on the appointments made since over 20
percent are late and another 20 percent or more are "no shows."
Facility Access and Shipment Tracking Report:
Month: April;
Day: Sunday;
Early: Average: 201;
Early: Percent: 43%;
On Time: Average: 39;
On Time: Percent: 8%;
Late: Average: 101;
Late: Percent: 22%;
No Show: Average: 93;
No Show: Percent: 20%;
Unscheduled arrival: Average: 34;
Unscheduled arrival: Percent: 7%.
Month: April;
Day: Monday;
Early: Average: 2104;
Early: Percent: 42%;
On Time: Average: 426;
On Time: Percent: 9%;
Late: Average: 1158;
Late: Percent: 23%;
No Show: Average: 1088;
No Show: Percent: 22%;
Unscheduled arrival: Average: 187;
Unscheduled arrival: Percent: 4%.
Month: April;
Day: Tuesday;
Early: Average: 1681;
Early: Percent: 41%;
On Time: Average: 352;
On Time: Percent: 8%;
Late: Average: 1005;
Late: Percent: 24%;
No Show: Average: 956;
No Show: Percent: 23%;
Unscheduled arrival: Average: 150;
Unscheduled arrival: Percent: 4%.
Month: April;
Day: Wednesday;
Early: Average: 1402;
Early: Percent: 40%;
On Time: Average: 295;
On Time: Percent: 8%;
Late: Average: 844;
Late: Percent: 24%;
No Show: Average: 793;
No Show: Percent: 23%;
Unscheduled arrival: Average: 166;
Unscheduled arrival: Percent: 5%.
Month: April;
Day: Thursday;
Early: Average: 2193;
Early: Percent: 42%;
On Time: Average: 442;
On Time: Percent: 8%;
Late: Average: 1310;
Late: Percent: 25%;
No Show: Average: 1100;
No Show: Percent: 21%;
Unscheduled arrival: Average: 173;
Unscheduled arrival: Percent: 3%.
Month: April;
Day: Friday;
Early: Average: 2674;
Early: Percent: 42%;
On Time: Average: 514;
On Time: Percent: 8%;
Late: Average: 1478;
Late: Percent: 23%;
No Show: Average: 1453;
No Show: Percent: 23%;
Unscheduled arrival: Average: 189;
Unscheduled arrival: Percent: 3%.
Month: April;
Day: Saturday;
Early: Average: 1217;
Early: Percent: 39%;
On Time: Average: 304;
On Time: Percent: 10%;
Late: Average: 749;
Late: Percent: 24%;
No Show: Average: 787;
No Show: Percent: 25%;
Unscheduled arrival: Average: 97;
Unscheduled arrival: Percent: 3%.
Month: May;
Day: Sunday;
Early: Average: 202;
Early: Percent: 40%;
On Time: Average: 46;
On Time: Percent: 9%;
Late: Average: 112;
Late: Percent: 22%;
No Show: Average: 115;
No Show: Percent: 22%;
Unscheduled arrival: Average: 37;
Unscheduled arrival: Percent: 7%.
Month: May;
Day: Monday;
Early: Average: 1670;
Early: Percent: 41%;
On Time: Average: 321;
On Time: Percent: 8%;
Late: Average: 910;
Late: Percent: 22%;
No Show: Average: 1066;
No Show: Percent: 26%;
Unscheduled arrival: Average: 140;
Unscheduled arrival: Percent: 3%.
Month: May;
Day: Tuesday;
Early: Average: 1743;
Early: Percent: 39%;
On Time: Average: 378;
On Time: Percent: 9%;
Late: Average: 1061;
Late: Percent: 24%;
No Show: Average: 1052;
No Show: Percent: 24%;
Unscheduled arrival: Average: 181;
Unscheduled arrival: Percent: 4%.
Month: May;
Day: Wednesday;
Early: Average: 1793;
Early: Percent: 40%;
On Time: Average: 371;
On Time: Percent: 8%;
Late: Average: 1091;
Late: Percent: 24%;
No Show: Average: 1074;
No Show: Percent: 24%;
Unscheduled arrival: Average: 164;
Unscheduled arrival: Percent: 4%.
Month: May;
Day: Thursday;
Early: Average: 2022;
Early: Percent: 41%;
On Time: Average: 405;
On Time: Percent: 8%;
Late: Average: 1204;
Late: Percent: 25%;
No Show: Average: 1099;
No Show: Percent: 22%;
Unscheduled arrival: Average: 181;
Unscheduled arrival: Percent: 4%.
Month: May;
Day: Friday;
Early: Average: 2534;
Early: Percent: 42%;
On Time: Average: 469;
On Time: Percent: 8%;
Late: Average: 1447;
Late: Percent: 24%;
No Show: Average: 1365;
No Show: Percent: 23%;
Unscheduled arrival: Average: 191;
Unscheduled arrival: Percent: 3%.
Month: May;
Day: Saturday;
Early: Average: 948;
Early: Percent: 38%;
On Time: Average: 218;
On Time: Percent: 9%;
Late: Average: 591;
Late: Percent: 24%;
No Show: Average: 665;
No Show: Percent: 26%;
Unscheduled arrival: Average: 87;
Unscheduled arrival: Percent: 3%.
Month: June;
Day: Sunday;
Early: Average: 189;
Early: Percent: 41%;
On Time: Average: 35;
On Time: Percent: 8%;
Late: Average: 109;
Late: Percent: 24%;
No Show: Average: 93;
No Show: Percent: 20%;
Unscheduled arrival: Average: 35;
Unscheduled arrival: Percent: 8%.
Month: June;
Day: Monday;
Early: Average: 1903;
Early: Percent: 42%;
On Time: Average: 353;
On Time: Percent: 8%;
Late: Average: 1011;
Late: Percent: 22%;
No Show: Average: 1075;
No Show: Percent: 24%;
Unscheduled arrival: Average: 169;
Unscheduled arrival: Percent: 4%.
Month: June;
Day: Tuesday;
Early: Average: 1541;
Early: Percent: 40%;
On Time: Average: 325;
On Time: Percent: 9%;
Late: Average: 872;
Late: Percent: 23%;
No Show: Average: 917;
No Show: Percent: 24%;
Unscheduled arrival: Average: 155;
Unscheduled arrival: Percent: 4%.
Month: June;
Day: Wednesday;
Early: Average: 1612;
Early: Percent: 40%;
On Time: Average: 353;
On Time: Percent: 9%;
Late: Average: 946;
Late: Percent: 24%;
No Show: Average: 938;
No Show: Percent: 23%;
Unscheduled arrival: Average: 153;
Unscheduled arrival: Percent: 4%.
Month: June;
Day: Thursday;
Early: Average: 1528;
Early: Percent: 40%;
On Time: Average: 330;
On Time: Percent: 9%;
Late: Average: 889;
Late: Percent: 23%;
No Show: Average: 886;
No Show: Percent: 23%;
Unscheduled arrival: Average: 150;
Unscheduled arrival: Percent: 4%.
Month: June;
Day: Friday;
Early: Average: 1872;
Early: Percent: 42%;
On Time: Average: 392;
On Time: Percent: 9%;
Late: Average: 1046;
Late: Percent: 23%;
No Show: Average: 1031;
No Show: Percent: 23%;
Unscheduled arrival: Average: 140;
Unscheduled arrival: Percent: 3%.
Month: June;
Day: Saturday;
Early: Average: 671;
Early: Percent: 38%;
On Time: Average: 167;
On Time: Percent: 9%;
Late: Average: 397;
Late: Percent: 22%;
No Show: Average: 474;
No Show: Percent: 27%;
Unscheduled arrival: Average: 59;
Unscheduled arrival: Percent: 3%.
Notes: An on time arrival is up to 30 minutes after the scheduled
appointment time. Data are from 4/5/2006 to 6/29/2006.
Appointments include Standard, Package Services, and mixed mail
classes. Appointments are not required for First-Class Mail, Priority
Mail or Periodicals.
Delivery Units are not included.
[End of table]
More detail on FAST is included in Appendix C - Visibility --The Future
Vision.
Appendix E Choice - The Value Equation between Service and Price:
Overview:
The Postal Service is committed to providing the best possible service
for its customers while at the same time maintaining reasonable prices.
This is as necessary for the future viability of the Postal Service as
it is for our customers to run successful businesses or efficient
households. As stated in the GAO report, "The Mailers Council, a
coalition of over 30 major mailing associations, corporations, and
nonprofit organizations, told us that its members would be willing to
pay higher postage rates, within reason, for delivery performance
measurement." The issue of reasonable cost for all Postal Service
customers is one of our main focuses and concerns. In making service
improvements, whether establishing processes to move the mail more
timely or to monitor service performance, the value equation must be
kept in mind. There is a clear value equation of service and price for
every one of our products and the definition of reasonable cost differs
from user to user. Each product's price is based on a mix of speed of
service, cost, and value added services, such as forwarding.
Mailers Have Choices:
Mailers implicitly recognize that value equation in selecting their
mail service. Mailers desiring speed of delivery and predictability
choose First-Class, Express or Priority Mail and recognize that the
higher value of these services comes at a higher price. Standard
mailers, on the other hand, are opting for a lower price, which is a
direct result of the deferability and flexibility inherent in the
service accorded Standard Mail. The greatest flexibility and value in
mailer options to determine presort levels, entry destinations
including day and times, and requested windows of delivery days, also
comes with less rigid service measurements. However, both Standard and
Periodicals mailers can chose to presort to carrier route and use
destination entry to achieve better service at even lower rates.
First-Class Mail volume is declining due to customer migration to
alternative methods of delivery and bill payment. Single-piece First-
Class Mail has been most affected and has steadily declined since
FY1998 despite record service levels. Standard Mail volume is growing
steadily and is expected to continue growing. We are aware that some
First-Class mailers have moved to Standard Mail because they are
willing to accept deferability and flexibility in exchange for paying a
lower price. Although still important, service alone does not determine
a customer's use of the Postal Service. Periodicals volume has declined
every year since FY2000. Priority and Express Mail volumes are price
sensitive and have declined four out of the last five years, with
increases last year. These mail volume declines and shifts only
reinforce the fact that an extremely careful balance must be struck
between such improvements as increased delivery service measurement and
the prices paid by our customers.
Costs of Measurement Systems and Postal Rates:
The cost of service improvements, including measurement systems, must
be considered within the context of postage rates since the cost of any
measurement system ultimately has to be paid for through the prices
charged to mailers. The mailing industry is sensitive to price
increases, especially for Periodicals and Standard Mail, so the costs
of service measurement have to be weighed against the benefits to
ensure that customers desire and are willing to pay for the service
without driving business away. In addition, the value created by any
new system, and any resulting changes in service, would add to the
value for the affected products. By law, as a part of the ratesetting
process, the costs of the systems as well as the increases in the value
of service would be built into prices by the Postal Rate Commission.
If, for example, Standard mailers wanted a date-specific product, the
price would have to be higher to support the higher costs associated
with providing this increased level of service.
Installing a full external measurement system, similar to EXFC, for the
other mail classes would require contracts for preparation of transit
time mailings and independent reporting, plus additional costs for data
storage, retrieval, data analyses, diagnostics and reporting. It would
require much more complicated seeding within customer's mailings to
reflect the various presort levels and dropship entry points. The
current annual cost for EXFC is approximately $21 million to measure
single-piece First-Class Mail. The complexity and cost of full external
measurement for all mail classes would be much higher and the cost
would have to be borne by the ratepayers, many of whom are already
aware of the service they are receiving on their specific mailings
because of the various diagnostic tools used by the Postal Service. We
also believe that building measurement systems from the bottom up,
using diagnostic tools that measure individual mailings, is a more
appropriate strategy and will better meet the individual needs of our
customers.
Appendix F Modern Service Standards:
Overview:
Our service standards are modern and up-to-date. For over three
decades, we have established, monitored, reviewed and refined our
standards, as appropriate. The fact that some standards have remained
consistent does not demonstrate that those standards have not been
reviewed or are outdated. Rather, it means we have determined that they
still work for the mailers and for us. In large part, our service
standards are based on and designed around three factors. One factor is
our transportation capabilities; another is our sortation capacities.
In other words, our service standards reflect our network. The third
factor is how our customers conduct their businesses - our service
standards reflect our customers' needs. If our operational capabilities
and customers' needs change, standards will be reviewed and, as
appropriate, adjusted to reflect those changes.
Changes Affecting Multiple Mail Classes:
AMP Chanqes:
As our dynamic mail processing infrastructure has evolved, Area Mail
Processing (AMP) changes, or consolidations of volumes, have helped us
maintain a maximum degree of efficiency. While the AMP process
generally transfers all processing responsibility from one plant to
another, it is common for exceptions to be made for Express Mail, which
is always handled as expeditiously as possible. Prior to approval, AMP
proposals are scrutinized to ensure that any changes to levels of
service are justified. Where appropriate, service standards are
upgraded to maintain traditional performance levels among community and
business areas of interest. Potential impacts to service are discussed
in an open "town hall" forum with communities involved in AMP-related
changes. After review of community feedback and official approval, the
AMP proposal is implemented.
The AMP process provides a framework for analyzing individual network
changes to ensure that sound business practices are followed. It is
also a methodical way to work though the entire service standards
database, reviewing it completely before we proceed with any movement
of mail. Comprehensive review of the application of current service
standard definitions is an integral part of the ongoing Evolutionary
Network Development initiative and is expected continue through the
next few years (as described in testimony in Postal Rate Commission
Docket No. N2006-1).
Preparation, Transportation and Routing Changes:
All preparation, transportation and routing changes for First-Class
Mail, Periodicals, Package Services Mail, and Standard Mail are
coordinated carefully with the mailing community. They are printed in
the Postal Bulletin, the Domestic Mail Manual and are available online.
These changes also require related service standards adjustments for
First-Class Mail and Package Services since the basis for the
aggregation of their service standards is at the Area Distribution
Center (ADC) or Bulk Mail Center (BMC) level.
Changes Affecting Individual Mail Classes:
Express Mail:
Reflecting its position as our premium product, the service standards
for this product carry a money-back guarantee. Express Mail service
standards are based on the total end-to-end logistics and operations
supply chain and are updated approximately every two months,
maintaining a current set of commitments at all customer access points,
at postal locations or online. Given the blend of logistics providers
that we utilize, these service standards fluctuate incrementally to
synchronize our operations with the dynamic nature of transportation
schedules. Since there can be as many as 16 different levels of service
between each 5-digit ZIP Code origin and destination pair, the service
standard changes for Express Mail are often just a matter of a few
hours at the point of acceptance or delivery.
Priority Mail:
Priority Mail service standards are traditionally faster than or equal
to the service standards of First-Class Mail (FCM). However, the focus
of Priority Mail is to maximize delivery within two days. Consequently,
while the overnight service standards of Priority and FCM are designed
to be equal, over 93 percent of Priority Mail pairs, or 97 percent of
volume, has an overnight or two-day service standard. Priority Mail
standards are continually kept current based on AMP and the
preparation, transportation and routing changes noted above.
First-Class Mail:
First-Class Mail service standards were adjusted on a nationwide basis
in 1989 and were again adjusted in 2001. Also, as described above,
First-Class Mail service standards are revised when affected by AMP
changes, which are publicly discussed during AMP "town hall" meetings,
and also are revised as required by preparation, transportation and
routing changes, which are published in the Postal Bulletin, the
Domestic Mail Manual and are available online.
Periodicals:
Periodicals service standards are designed to be overnight in the same
areas that Priority and First-Class Mail are overnight. These standards
are continually reviewed as part of the AMP process and as a result of
preparation, transportation and routing changes, as noted above. The
standards are based on postal zones, which also are the foundation of
Periodicals rate categories.
There is an additional, important dimension related to Periodicals
service standards. A broad spectrum of worksharing opportunities,
including presort and destination-entry discounts, enables customers,
printers, and logistics providers to collaborate with the Postal
Service to effectively move their products into zones with faster
service standards, as appropriate for their purposes.
Package Services Mail:
Formerly Parcel Post, these service standards were revised to correlate
with the BMC network. Changes to this network, including AMPs, which
affect the location of processing, are adjusted continually within the
service standards database. Mail preparation changes are also focused
on improving service. For example, in FY 2000, Bound Printed Matter was
required to be palletized, thereby reducing unloading times by up to 8
hours. Zone-skipping (like dropship) results in more parcels and Bound
Printed Matter deposited close to destination.
Worksharing opportunities exist, similar to those available for
Periodicals, as described above. In addition to those worksharing
opportunities, there is Parcel Select, which was added in 1999. Parcel
Select has a faster service standard of one to three days.
Standard Mail:
Service standards are kept current as part of the AMP program and as a
result of preparation, transportation and routing changes, as described
previously, but the predominant service standard related programs for
this class of mail are related to collaborative worksharing efforts
with the mailing community (including printers and logistics
providers). A variety of presort and destination entry opportunities
exist to effectively move customers' products into zones with faster
service standards, as appropriate for their purposes. This strategy has
been leveraged as the service-related mechanism of choice, allowing an
effective balance between service and price.
Transparency of our Service Standards:
As appropriate to each individual customer, service standards of all
possible mail classes are shared at all access points, including retail
POS ONE terminals, Automated Postal Centers (APCs), and the online
inquiry application available on usps.com. In addition, various
guidelines for mailing have been circulated through the Mailers
Technical Advisory Committee to help determine appropriate service
expectations for mailings which move in a more streamlined fashion
through our networks due to various levels of presort and destination
entry options.
An example of these guidelines covers requests by some Standard mailers
for in-home delivery dates. Under these guidelines, the Postal Service
works closely with large mailers to improve delivery performance and
resolve outstanding issues. For instance, the Postal Service has a
close working relationship with a large national retailer. Mailings
from this customer are tracked and measured in accordance with the
requested in- home date using CONFIRM service. Delivery is measured in
three categories - percent early, percent on time and percent late.
Service performance is provided at the area, district and Post Office
level. Customer mail entry locations, date and time are also tracked.
Data gathered through this cooperative effort help the customer
identify correct entry locations as well as the best time of day and
day of week to enter their mail to improve the delivery performance
within the requested delivery window. Area and district staffs use the
Post Office level data to identify specific locations needing
improvement. The overall result is that the printer, logistics
provider, and the Postal Service can all work cooperatively to deliver
service for the organization paying the postage.
Since their inception, our service standards have been directly tied to
our operational capabilities - they mirror our networks - and to our
customers' needs. Changes to facility locations, processing
technologies and available transportation either enhance or limit the
service that can be provided consistently. One of the principal aspects
of the Evolutionary Network Development initiative is to ensure service
standards are reviewed in light of new operational capabilities. As
both the operations network and our customers' needs evolve, evolution
of our service standards, where appropriate, also will take place.
Appendix G Customer Collaboration:
Overview:
The Postal Service has a solid track record of working with our major
customers to improve the entire value chain of mail preparation,
transportation, induction, mail processing, and delivery. This is
founded in the shared objective of a strong postal system. The joint
efforts touch on all aspects of mailing, from making mail easy and
affordable, to improving service. In fact, these collaborative efforts
set the standard of how posts around the world are now starting to work
with their customers.
Strategic Transformation Plan Process:
During the process of preparing the Strategic Transformation Plan, 2006-
2010, we solicited stakeholder input. We began by asking attendees at
the March 2005 National Postal Forum to complete a survey and respond
to five open-ended questions. The following month, we published a
Federal Register notice requesting comments on the Plan.
An aggressive effort was made to involve the Postal Service's 700,000
employees. In addition, press releases and targeted mailings were sent
to key individuals and organizations and senior postal executives
contacted postal oversight organizations. Dedicated channels, such as
unique websites were used to provide information about the Plan as well
as to provide a quick, easy and convenient way for stakeholders to give
feedback. A total of 1,400 items of feedback were received, including
survey responses, emails and letters. The response rate was nearly ten
times greater than that for previous, similar outreach efforts. The
feedback we received was that the Postal Service was on the right track
- and just keep improving. The Strategic Transformation Plan reflects
this continuation of momentum.
Mailers Technical Advisory Committee (MTAC):
A prime example of customer collaboration is the Mailers Technical
Advisory Committee (MTAC), which recently celebrated its 40TH
anniversary. MTAC was established in 1965 as a partnership between the
Postal Service and leading companies in the mailing industry to share
information and ideas for improving mail services and products. Over
the years, MTAC member companies have helped us use technologies that
led to the implementation of the 5-digit ZIP Code, ZIP+4, presorting,
barcoding, automation, drop shipment, and a growing list of new
efficiencies to improve service, reduce costs and add value to the
mail.
Also, collaborative MTAC activities have yielded a number of changes to
the standards that dictate how mail is prepared and entered. Not only
have most of the proposed changes been vetted through industry
stakeholders during the development stage, customers have the
opportunity to comment and provide input within a formal process on all
proposed changes that will impact how they do business with the Postal
Service. Currently, MTAC is organized into four main activities, one of
which is "Service Measurement and Improvement." One of the workgroups
under this channel is focused on the standardization of service
reporting and performance.
An MTAC work group was tasked with developing an affordable service
measurement, specifically for First-Class bulk mail, in addition to the
current EXFC service measurement. The work group developed a
certification process using the CONFIRM system, which if used as
designated, would offer a valid "start the clock" acceptance for
measuring service performance for that specific mailing. Funding for
the additional First-Class service matrix was to be borne by the
mailers wanting the additional service. However, lack of mailer
participation has prevented implementation at this time.
Mailing Industry Task Force (MITF):
Another example of the Postal Service working with customers is the
Mailing Industry Task Force (MITF). In 2001, the MITF was created to
focus on industry-wide issues that included the best opportunities to
improve mail and the mail channel, through the creation of targeted
strategic initiatives. Approximately 60 mailing organizations and 175
postal and industry executives participated in the MITF. They defined
three overarching strategic principles that would further define their
objectives: respond to customer needs; unify the mailing industry, and
make the mail and the mail channel more responsive. These strategies
led to MITF members collaborating on standardizing mail preparation and
distribution, developing a CEO-level advisory council, and developing
ideas for intelligent mail and consumer services. As a result, the MITF
conceived and supported over 40 opportunities. Examples of these
initiatives range from the approval to have Automated Change Service
(ACS) preprinted on envelopes which reduces mailer's cost and increases
the percentage of ACS, to the creation of an official snowbird program,
Premium Forwarding Service, which handles forwarding of mail for
seasonal travelers, reduces forwarding costs and increases customer
satisfaction. Over the course of its three-year term, the MITF
demonstrated that it was a catalyst for positive change by producing
meaningful and achievable results.
Postal Customer Councils (PCCs):
Postal Customer Councils (PCCs) are made up of Postal Service leaders
and business mailers who work together at the local level to promote
the value of mail, address mailing concerns, and exchange ideas to
maximize the benefits of postal services used by all businesses.
Through regular meetings, educational programs, mailer clinics, and
seminars, PCC members learn about the latest postal products and
services that will help them grow their businesses by deriving greater
value from the mail. PCCs also serve as an important resource and
shared experience network that help the local mailing community learn
from others to become more efficient as they become more knowledgeable
about various aspects of the mailing experience. The PCCs are essential
grass root- level partnerships that allow local managers to address
specific local issues.
Business Service Network (BSN):
We also view the Business Service Network (BSN) as a further way to
receive customer input and respond to their needs. Customers contact us
concerning anything from service issues to requests for information
about new products or operational changes.
The BSN is a dedicated nationwide network that serves as the primary
point of contact and provides customer service support to the Postal
Service's larger customers who make up a significant percent of postal
revenue. This customer base has a combination of simple and complex
issues and requires an integrated and cross functional approach to
resolution. In addition, the BSN handles customer requests for
information, supplies, and equipment. Customers can access the BSN by
calling their BSN representative, via email, or using the Internet-
based BSN eService.
The BSN was initially established in 1998. At that time, the primary
focus was to document and track customer service complaints and issues,
and notify the appropriate internal people that issues existed. Most
BSN personnel were assigned to the district and were limited in their
ability to solve problems that crossed district and area boundaries.
The BSN has changed dramatically over the past several years and
continues to evolve. In response to our customers' changing and diverse
business needs, the BSN is positioning itself to be proactive and
focused on problem identification and resolution. The BSN structure
aligns resources so that more complex issues can be handled at the area
level and less complex issues will be handled locally.
In addition to being the primary point of contact for customers to
report issues and request services, the BSN makes special contacts to
customers when new products or operational information might impact
mail service operations. The BSN received recognition from the mailing
industry for providing outstanding communications during Hurricanes
Katrina and Rita. Specifically, the BSN provided frequent
communications to customers regarding postal operations and mail
service in the hurricane-impacted areas. The BSN effectively
communicated critical information to customers that alleviated
confusion and provided up-to-date information on the status of postal
operations.
National Postal Forum (NPF):
The premier educational venue, trade show and networking event, the
National Postal Forum (NPF), is now an annual event, with the purpose
of assisting the Postal Service in building relationships with and
educating mailers in the most effective and efficient use of products
and services. The NPF was established in 1968 by a group of major
postal customers who were committed to an ongoing partnership with the
Postal Service. The last three events each had over 6,000 attendees who
heard directly from Postal Service senior management about our focus on
service, as well as our longer term vision of quality and what their
roles are in that vision. During the NPF, each area and district meets
with customers to discuss service, mail preparation and other more
local issues.
All of these joint efforts provide opportunities to improve the Postal
Service from the standpoint of our financial position and the service
we provide our customers. Though it may not be spelled out as the
specific purpose of a Postal Service/industry effort, the underlying
objective is always to enhance our ability to render postal services in
a cost-effective and service-responsive manner.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Katherine Siggerud (202) 512-2834:
Staff Acknowledgments:
In addition to the individual named above, Teresa Anderson, Cynthia
Daffron, Tamera L. Dorland, Kathy Gilhooly, Brandon Haller, Kenneth E.
John, Catherine S. Kim, Karen O'Conor, Jacqueline M. Nowicki, and Edda
Emmanuelli-Perez made key contributions to this report.
FOOTNOTES
[1] For the purposes of this report, major types of mail include:
Express Mail (also referred to as Expedited Mail); Priority Mail (i.e.,
First-Class Mail that weighs over 13 ounces); First-Class Mail--single-
piece mail (e.g., bill payments and letters sent at the rate of 39
cents for the first ounce plus 24 cents for each additional ounce) and
bulk mail (e.g., bills and advertising); Periodicals (mainly magazines
and local newspapers); Standard Mail (mainly bulk advertising and
direct mail solicitations); Package Services (e.g., parcels,
merchandise, catalogs, media mail, library mail, and books); and
International Mail (e.g., letters, parcels, and periodicals destinating
in foreign countries).
[2] H.R. 22, 109th Congress, was passed by the House on July 26, 2005.
The Senate bill was introduced as S. 662, 109TH Congress and on Feb. 9,
2006, the Senate incorporated S. 662 into H.R. 22 and passed H.R. 22 in
lieu of S. 662.
[3] 39 U.S.C. §2401(e), initially added as 39 U.S.C. §2401(g) by Pub.
L. 94-421, Postal Reorganization Act Amendments of 1976.
[4] The PRC's Office of the Consumer Advocate represents the interests
of the general public. The written agreement with USPS is available at
[Hyperlink,
http://www.prc.gov/docs/46/46232/OCA_Notice_with_Letter.pdf].
[5] 39 U.S.C. §101.
[6] The Postal Reorganization Act of 1970 (Pub. L. No. 91-375)
reorganized the former U.S. Post Office Department into the U.S. Postal
Service and created PRC.
[7] 39 U.S.C. §101.
[8] 39 U.S.C. §101(e).
[9] 39 U.S.C. §101(f).
[10] 39 U.S.C. §403.
[11] USPS, Strategic Transformation Plan 2006-2010 (Washington, D.C.:
Sept. 2005).
[12] GAO, Results-Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, GAO-03-488
(Washington, D.C.: Mar. 14, 2003).
[13] GAO, Managing for Results: Enhancing Agency Use of Performance
Information for Decision-Making, GAO-05-927 (Washington, D.C.: Sept. 9,
2005).
[14] GAO, U.S. Postal Service: New Focus on Improving Service Quality
and Customer Satisfaction, GAO/GGD-96-30 (Washington, D.C.: Dec. 20,
1995).
[15] GAO-05-927, GAO-03-488.
[16] GAO, Priority Mail: Advertised 2-Day Service Is Not Guaranteed,
GAO/GGD-93-122 (Washington, D.C.: July 16, 1993).
[17] Although Priority Mail is classified as a subclass of First-Class
Mail, for purposes of this report, "First-Class Mail" refers to First-
Class Mail that does not include Priority Mail.
[18] PRC, Commission Report: Complaint on First-Class Mail Standards
Service, Docket No. C2001-3 (Washington, D.C.: Apr. 17, 2006).
[19] PRC Docket No. N2006-1, Evolutionary Network Development Service
Changes, 2006.
[20] A 3-digit ZIP Code area includes all addresses with the same first
three digits of the ZIP Code.
[21] PRC, Order on Complaint on Express Mail, Docket No. C2005-1
(Washington, D.C.: Apr. 18, 2006).
[22] The reporting requirements in the House and Senate postal reform
bills do not cover types of mail classified as "competitive" such as
Express Mail and Priority Mail.
[23] S. Rept. 108-318, to accompany S. 2468, at 22-23 (2004).
[24] Delivery Confirmation service provides mailers with the date and
time of delivery or attempted delivery.
[25] GAO, Operational Performance of the United States Postal Service,
GAO/T-GGD-91-9 (Washington, D.C.: Mar. 5, 1991).
[26] 39 U.S.C. §2401(e), initially added as 39 U.S.C. §2401(g) by Pub.
L. 94-421, Postal Reorganization Act Amendments of 1976.
[27] H.R. Rep. No. 94-1444, at 14 (1976).
[28] GPRA requires that USPS submit strategic plans to the President
and Congress, which are to be updated at least every 3 years, and to
submit annual performance plans and annual performance reports to
Congress.
[29] The PRC's Office of the Consumer Advocate represents the interests
of the general public. The written agreement with USPS is available at
[Hyperlink,
http://www.prc.gov/docs/46/46232/OCA_Notice_with_Letter.pdf].
[30] USPS response to ValPak interrogatory in Evolutionary Network
Development Service Changes proceeding, USPS-T1-15, PRC Docket No.
N2006-1, filed Apr. 25, 2006.
[31] National Academy of Public Administration, How Federal Programs
Use Outcome Information: Opportunities for Federal Mangers (Washington,
D.C.: May 2003).
[32] GAO-05-927.
[33] The EMS Cooperative has more than 130 members, including USPS and
foreign postal administrations.
[34] For example, Red Tag News Publications Association, a nonprofit
association of 64 magazines and other publications that generate about
830,000 pieces of Periodicals mail annually, has 1,000 monitors who
receive magazines and who report when they arrive.
[35] USPS Office of the Inspector General, External First-Class
Measurement System, report number DS-AR-00-001 (Arlington, VA: Mar. 27,
2000).
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