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Software Enabled Workshare Opportunities

July 31, 2012

The Postal Service™ is enduring unprecedented losses in mail volume. This, combined with the prefunding of retiree healthcare, has the USPS® facing a projected loss of over $7 billion this year. With such unimaginable numbers, it’s no wonder everyone is searching for cost-cutting solutions, including calling into question the elimination of workshare discounts.

Imagining the mailing industry without workshare, however, is like asking what would happen if gravity ceased to exist or if there was no oxygen. Workshare discounts are the foundation of our industry – a veritable life force that sustains an ecosystem of mailing service providers, direct marketers, printers, publishers, transportation providers and software vendors.

The relationship between software and workshare discounts is intimate, and fundamental. Workshare opportunities provide the financial incentive to license and maintain software, which in turn is continually enhanced to optimally leverage workshare opportunities. The result is more efficiently prepared mail and improved deliverability, which lowers costs and increases the value of mail, respectively: A win-win situation.

Software-enabled workshare opportunities fall primarily into three categories: Mail preparation, destination entry and the emerging area of electronic postage payment. That latter area, which includes PostalOne!® and the Business Customer Gateway, doesn’t necessarily have a direct return-on-investment as with the preparation and entry categories. However, it certainly speaks to reducing costs for the USPS, and thus should be considered an opportunity for cost avoidance. It is also a key component to the Full Service Intelligent Mail barcode discount opportunities.

With the goal of worksharing discounts being cost avoidance, if the industry can prepare mail in a more efficient manner, then the cost avoided for the additional handling would be passed on to the mailer in the form of a postage discount. Most of a sortation discount is passed through at 100 percent of the cost avoided. However, there are situations where less than 100 percent or even more than 100 percent of the avoided costs are provided as a postage discount. For example, a First-Class Mail® presorted 5-digit parcel has a pass through of only 59.7 percent, whereas a First-Class Mail ADC flat has a pass through of 145.5 percent. In some cases, these postage discounts can be leveraged as an incentive or a disincentive for specific mail preparation.

Destination entry discounts are far more complicated. These discounts are tied to transportation costs and may factor in such variables as distance, fuel surcharges, multi-drop truckloads, less-than-load (LTL) shipments and nearly two-dozen other transportation assessorial charges. Moreover, Standard Mail® has an entry discount based on the type of facility where the mail is inducted, whereas Periodical and Package Services use a zone-based system that considers distance as well as the induction point.

As initiatives such as Intelligent Mail and Flats Sequencing strategies come to fruition, the value of using software to optimize workshare opportunities increases significantly. Preparing an optimal bundle of mail, in a fully utilized container, inducted into a strategic distribution network and logistically planned for a precise in-home arrival date is the mission of postal software. Workshare discounts drive enhancements to the software, which delivers increased opportunities for more efficient mail.

This article was originally published in the November/December 2009 edition of Mailing Systems Technology.

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