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Dependency of Software for Workshare Discounts

September 05, 2012

As our nation was finishing another annual celebration of our independence, the USPS and the mailing industry were combing through the specifics of the first ever Exigency Rate Case (R2010-4), which was filed on July 6, 2010 by the United States Postal Service. Within the 124 pages and numerous supporting documents, the industry found a number of surprises, some relief, and some items that left many scratching their heads.

Since this column is focused on software, I will leave the legality of R2010-4 to the Postal Regulatory Commission and the lawyers for both the USPS and the various industry associations. However, I should point out that I cannot recall a time like this when the industry has joined together so quickly and with such a unified response to a rate increase. The Affordable Mail Alliance, a coalition of companies and industry associations, have banded together in an unprecedented approach to present a unified opposition to R2010-4.

While the coalition and the industry were poring through R2010-4, another document surfaced just six days later that may have been missed by many yet has a direct correlation to the Exigency Case. RARC-WP-10-005, a white paper produced by the U.S. Postal Service Office of the Inspector General (OIG), presents an assessment of worksharing discounts for the past 30 years.

According to the OIG, “worksharing has rapidly grown to dominate the Postal Service’s business and today represents over 80 percent of mail volume.” The paper continues to state that “…almost 95 percent of workshared mail volume is now entered at automation rates.” Combining these two data points reveals that 76 percent (or 3 out of every 4 pieces of mail) are touched by some hardware or software technology.

That is a very significant amount of mail volume and underscores the dependency of software for workshare discounts. Indeed, the OIG specifically listed Software Vendors as a key player in the worksharing supply chain. For those that rely on CASS™ and PAVE™ certified solutions to prepare and sort mail, this is no surprise. Yet, it is a welcome and timely admission.

Turning back to R2010-4, that is why some in the mailing industry are left scratching our heads. While the USPS has certainly provided a six-month window to prepare for R2010-4, given the January 6, 2011 implementation date, the effective implementation window is actually ninety days since the Postal Regulatory Commission will not file their final ruling until October 4, 2010. Considering the complicated rules to support the advanced mail preparation requirements in today’s workshare-supported USPS, ninety days is simply not enough time to ensure a smooth transition to any rate adjustment.

This position was echoed by the Mailing Software Development Group – a working group within the IDEAlliance association. MSDG is comprised of organizations that develop – and in many cases distribute – software to support the complicated rules related to workshare discounts. It is the recommendation of MSDG members to limit PRC adjustments to R2010-4 to the individual rate cells and not to mail classification or structure changes for mail preparation.

Another important point raised by MSDG (a point that is perhaps absent in the underpinnings of R2010-4) is the cost to the mailing industry to enhance and support the software technology necessary to support today’s advanced mail preparation schemes. These costs must be factored into such nontrivial investments as support for Full Service Intelligent Mail barcodes. For many in the industry, the investment cost to support Full Service IMb is simply not worth the $1 or $3 per thousand workshare discount. Perhaps the price elasticity models used by the USPS and the PRC need to be enhanced to consider the true net cost for supporting these advanced mail preparation schemes in today’s software-dependent USPS.

In the end, it is important to perhaps consider the spirit behind what workshare is all about – sharing. If the industry, the USPS, and the PRC can continue to come together in a sharing, proactive manner through venues such as the Mailers Technical Advisory Committee and work through the issues ahead of time, we can all share in the work to build a better and stronger USPS for all.

This article was originally published in the September/October 2010 edition of Mailing Systems Technology.

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