U.S. Postal Service:

The Service's Strategy for Realigning Its Mail Processing Infrastructure Lacks Clarity, Criteria, and Accountability

GAO-05-261: Published: Apr 8, 2005. Publicly Released: Apr 8, 2005.

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With declining mail volumes, increasing compensation costs, and a more competitive marketplace, the need for the U.S. Postal Service (Service) to increase efficiency and reduce expenses is a matter of increasing importance and concern. According to the Service, one area where it can become more efficient is in its mail processing and distribution infrastructure. The objectives of this report are to (1) describe major business and demographic changes and their effect on the Service's mail processing and distribution infrastructure; (2) describe what actions the Service is taking in response to these changes, and what challenges exist; and (3) discuss the Service's strategy for realigning its infrastructure.

Several major changes have affected mail processing and distribution operations including marketplace changes, such as declines in First-Class Mail and increased competition; increased automation and mail processing by mailers; and shifts in population demographics. Effects of these changes include excess capacity in the mail processing and distribution infrastructure and variations in productivity among plants. The Service is exploring ways to realign its infrastructure by closing annexes, consolidating operations, and employing tools to model its infrastructure needs, while at the same time attempting to increase efficiencies in its current operations by expanding automation, improving material handling operations, creating a comprehensive transportation network, and introducing standardization programs. Also, there is a large range in productivity among plants. Reducing this range is difficult due to the complexity of operations and differences in plant layout. In addition, the Service faces challenges in eliminating excess capacity, while maintaining service standards, due to workforce rules and resistance to plant closings. Questions remain about how the Service intends to realign its processing and distribution infrastructure and workforce. The Service's strategy for realigning has not been clear because the Service has outlined several seemingly different strategies over the past 3 years. None of these strategies include criteria and processes for eliminating excess capacity, which may prolong inefficiencies. Also, the strategy lacks sufficient transparency and accountability, excludes stakeholder input, and lacks performance measures for results.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In our April 2005 report, we assessed the U.S. Postal Service's strategy for realigning its infrastructure. The report found that the Service did not establish criteria to use when evaluating Area Mail Processing (AMP) proposals or making realignment decisions. As a result, it was unclear whether decisions were being made in a fair and efficient manner and how the Service's strategy would eliminate excess capacity. Accordingly, we recommended that the Service establish a set of criteria for evaluating realignment decisions. In its 2008 Network Plan, the Service included a set of criteria for evaluating proposals to conduct an AMP feasibility study, and in a recent interview postal officials told us that there are three primary criteria used for evaluating realignment decisions, which are cost, service, and capacity.

    Recommendation: To enhance the Postal Service's transparency of its decisions related to realigning its infrastructure and ensure that these decisions advance the Service's realignment goals, the Postmaster General should establish a set of criteria for evaluating realignment decisions, and in taking this action, the Service should reconcile any planned infrastructure realignment changes with the criteria used to make the decisions.

    Agency Affected: United States Postal Service

  2. Status: Closed - Implemented

    Comments: In our April 2005 report we assessed the U.S. Postal Service's strategy for realigning its infrastructure. The report found that the Service's limited communication with stakeholders made it difficult for customers to work with the Service to achieve a least-cost network for the entire mailing industry, for Service employees and communities to understand how they might be affected, and for Members of Congress to explain to their constituents what the Service was planning to do. Accordingly, we recommended that the Service develop a mechanism for informing stakeholders as realignment decisions are made. Since then, the Service has improved its communication practices by releasing its updated Area Mail Processing (AMP) Communications Plan in March 2008, which explains its public input process and contains timelines, templates of the notification letters, and news releases used for communicating AMP information.

    Recommendation: To enhance the Postal Service's transparency of its decisions related to realigning its infrastructure and ensure that these decisions advance the Service's realignment goals, the Postmaster General should develop a mechanism for informing stakeholders as decisions are made, and in taking this action, the Service should reconcile any planned infrastructure realignment changes with the criteria used to make the decisions.

    Agency Affected: United States Postal Service

  3. Status: Closed - Implemented

    Comments: In our April 2005 report, we assessed the U.S. Postal Service's strategy for realigning its infrastructure. The report found that it was unclear how the strategy would provide accountability for realignment decisions because there was no process for evaluating the results of implementing its realignment decisions and no stated policy for making managers accountable for decisions. Accordingly, we recommended that the Service develop a process for implementing these decisions that includes evaluating and measuring the results. Since then in March 2008, the Service has updated its Area Mail Processing (AMP) procedural guidelines to require semi-annual and annual post-implementation reviews (PIR) of AMP consolidations; these reviews assess whether planned savings, workhours, and levels of service are met and ensure management's accountability for implementing an AMP plan.

    Recommendation: To enhance the Postal Service's transparency of its decisions related to realigning its infrastructure and ensure that these decisions advance the Service's realignment goals, the Postmaster General should develop a process for implementing these decisions that includes evaluating and measuring the results, as well as the actual costs and savings resulting from the decisions, and in taking this action, the Service should reconcile any planned infrastructure realignment changes with the criteria used to make the decisions.

    Agency Affected: United States Postal Service

 

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