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Logistics of 5-Day Delivery

August 21, 2012

The dire financial situation for the USPS is well documented and splashed across nearly every media channel: Declining mail volumes projected to bottom out at 150 billion pieces by 2020 … Rising costs per delivery point that exceed revenue attained … And a law that makes it nearly impossible to dynamically adjust their delivery network to mitigate fluctuating mail volumes. Drastic situations like this are prompting the USPS to consider drastic measures including exigency price increases, competing directly with their business partners in providing direct mail processing services, and the elimination of Saturday delivery service.

Numerous stakeholders, including industry associations and postal unions, have weighed in on the issue of five-day delivery and there have been several discussions in Congress on this topic. Those opposed to the issue cite concerns including loss of jobs, disruptions in service, and questionable financial gain. Those who favor it include the general public (68 percent of respondents to a recent Gallup poll) as well as the USPS Board of Governors, who estimate savings of $3 billion by eliminating Saturday delivery.

Ultimately, the decision to remove Saturday delivery rests with Congress and the Postal Regulatory Commission. Both seem to be on the fence regarding the decision (and Congress seems to be rather occupied lately with other issues), thus any specific action towards this in 2010 may seem optimistic.

In the meantime, there is an important role that software can provide relative to the five-day delivery question. Chief among these is how to ensure that time-sensitive mailings arrive in a consistent manner despite the reduction of a delivery day. This is a logistics planning problem; and today’s advanced software and improved delivery data seem poised to ensure timely, predictable, and ultimate delivery of the mail.

Strictly speaking, software to aid in logistics planning has been around for nearly two decades. In the early 1990s, many mailers leveraged a container specification file based on a format created by the Graphic Communication Association. That file format as well as the GCA has evolved into Mail.dat and the IDEAlliance respectively. Though the data transmitted is different, the concept remains the same. If mail is inducted into a USPS entry point closer to the final destination, there is a better chance of achieving a final delivery date within the requested in-home date range.

The decision to induct mail at a Bulk Mail Center (BMC) also known as a Network Distribution Center (NDC), a Sectional Center Facility (SCF), or Destination Delivery Unit (DDU) is often viewed as a balance between net postage savings – which considers the mailer incurred transportation costs to deliver – and the average delivery time from that USPS entry point to the addressee. The problem is that while the associated costs and postage savings can be calculated to a high degree of accuracy, the delivery time from a given USPS induction point cannot. That is, until the introduction of the Intelligent Mail barcode (IMb).

One of the many benefits of Intelligent Mail is its use in service performance and measurement. As the mail is inducted, processed, and delivered via the various entry facilities, the USPS is able to scan the IMb to determine the actual number of days needed to deliver the different classes of mail from each location. This data is now available at a level of granularity far greater than the averages previously used. In the past, many logistics calculations were based on a one-day delivery from a DDU, three days from an SCF, and six days from a BMC. Now, thanks in part to IMb, logistic planning software can reference updated USPS-provided tables that provide delivery times from an entry point to a 3-digit ZIP Code for Periodical, Standard, and Package Services.

This service data is available on https://postalpro.usps.com, a website maintained by the USPS National Customer Support Center. You will need to look for “Modern Service Standards” under “Site Index A-Z.” From there, you can download a spreadsheet containing the latest service standards. The data is also available in a text file, useful for logistics planning software to determine optimal postal induction points.

As mail continues to become more personalized and relevant, the importance of meeting time-sensitive in-home dates has also increased. Armed with more precise delivery data, enhanced data communication standards, and improvements in logistics planning software, astute mailers will be able to achieve the dual goal of reducing postage while simultaneously improving delivery.

This article was originally published in the May/June 2010 edition of Mailing Systems Technology.

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