Chapter 7: Creating the Digital Postal Network: Linking Customers, Carriers, and Correspondence to the Future of the Mail
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Although a more efficient and capable physical network and workforce will be critical for the Postal Service in the years ahead, these steps will not suffice to ensure the future of traditional mail services. The future of the mail will depend upon the ability of the Postal Service to develop a new fusion of traditional services and advanced information technologies, "a digital postal network." Successfully realized, a digital postal network will enhance the value of the mail as a 21st century communications mode and improve virtually every aspect of the nation’s postal service, from efficiency and security to the range and quality of customer choices.
Technology can therefore give back some of what it takes away. While many of the challenges before the Postal Service are technological in nature, the net financial risks posed by technology can be significantly ameliorated if the Postal Service is able to take advantage of the opportunities that technology offers. Although the Commission firmly believes that the Postal Service should remain focused on delivery of physical mail, it also believes that the Postal Service should take full advantage of the Internet and other technological advances to perfect value-added services that will better serve the needs of its customers.
A central feature of the digital postal network of the future will be "Intelligent Mail." Each piece of Intelligent Mail will carry a unique, machine-readable barcode (or other indicia) that will identify, at a minimum, the sender, the destination, and the class of mail. If successfully deployed, Intelligent Mail will allow the real-time tracking of individual mail pieces.
Ultimately, Intelligent Mail can serve a far broader purpose, functioning as the foundation of a truly digital network that links postal facilities, vehicles, partners and employees not only to each other, but also via the Internet to customers and to the individual mail pieces themselves. Through the deployment of a "universal language," Intelligent Mail may also allow dynamic real-time routing and other sophisticated applications. return to Table of contents
Deploying such a system will require significant investment and a strategic focus that must be sustained over time. But if successfully executed, the Postal Service will reap the rewards of its most significant opportunity today to increase the value and security of the mail while reducing costs and improving overall performance. return to Table of contents
The postal business has always been one of information transportation. As such, throughout history, it has been challenged to adapt to new technologies, from the telegraph, to the telephone, to the fax machine, to the rise of private overnight delivery services and, now, the Internet. However, no prior advance has offered so much opportunity to improve the value of the mail, to root out excess capacity and costs and—increasingly important—to enhance the security of the nation’s postal system.
The Postal Service is well aware that technology presents many opportunities. Beginning in the 1980’s, the Service began automating what was, at the time, an almost entirely manual and mechanized postal undertaking. Given that the Postal Service spends more than 75 cents of every dollar it earns on personnel-related costs, automation continues to hold significant cost-saving potential.
Technology that enhances coordination among the workforce also can play a key role. However, fundamental gaps exist in the infrastructure available in the field today, notably the fact that most mail carriers have no means of communicating with one another or with their local post offices while out on their routes.
Customers, too, feel the lack of a leading edge in information services. While some advanced capabilities are available on a limited basis, such as mail tracking, they tend be either focused exclusively on larger mailers or they are costly and rudimentary. Current barcode technology is limited in its reach and is not completely standardized, inhibiting the efficiency gains of a uniform approach. Current on-line postage printing options are cumbersome, expensive, and confusing to many individual users. True tracking is only available to larger mailers. So even where progress is occurring, too often the full benefits do not reach smaller businesses and individual customers. Making this truth even more troublesome is the fact that many of these same services are standard for all customers of private postal carriers, placing the Postal Service significantly behind the curve of not only technology adoption, but also of consumer expectations.
Much of this can be attributed to a rather piecemeal approach the Postal Service has taken in the past to the acquisition and deployment of technology.
Over the years, the Postal Service has incorporated technology into its processes as it becomes available and affordable. However, these steps often lacked an over-arching strategy designed to maximize the benefits of these investments and enable rapid response to shifting market demands, mail volumes, and other current events.To begin addressing these issues in a more coordinated fashion, the Postal Service recently established the Mailing Technology Strategy Council to rationalize the Postal Service’s approach to its technology acquisitions and deployment. return to Table of contents
Intelligent Mail: Thinking Outside the Envelope
Traditional mail has little chance of competing directly with e-mail and its virtually free and instantaneous delivery. Rather than take a stand for traditional mail, the Postal Service should apply new technologies to make it smarter.
What are the advantages of physical mail? The nation is comfortable and familiar with it. Unlike e-mail, the internal contents of each piece can be readily categorized (i.e. bills, advertising, and personal letters are easy to differentiate). Because of its physical nature, it can be conveniently moved around. For example, magazines can go into the living room and mortgage bills can go to a home office for payment, then be transferred to a tax file. Why do people like e-mail? It’s free. It’s fast. It’s versatile. And, it is the mirror opposite of the physical mail stream: Large documents, photographs, bills, and correspondence all can fly back and forth without a single piece of paper changing hands.
Physical mail and e-mail each has its own separate and distinct value. However, by not viewing them as an "either/or" choice, but by applying the sophistication of the electronic world to the physical mail, the Postal Service can develop a new postal proposition for the 21st century. Once it does, it should work aggressively to make its advantages readily available to all customers.
Intelligent Mail, at its heart, is a powerful hybrid, applying leading-edge information technology to the delivery of paper correspondence. Mail has long carried information inside, but by encoding basic information outside the envelope, a whole new range of services can be made available to make mail a more attractive and valuable option to consumers. By thinking "outside the envelope," the Postal Service will be able to:
• Enhance the services it makes available to consumers;
•Improve mail security by enhancing traceability;
•Transform its website into a valued destination far more convenient to customers (and less costly to the Postal Service) than a post office visit; and
•Potentially save billions of dollars annually through enhanced logistics management.
Information such as sender identification, geographic origin, and mail class can be applied at the initial stage of the mail process and can be encoded by "smart" stamp vending machines or postage meters at the time of purchase. Then, once specific outgoing mail pieces enter the postal network, additional data (chiefly the destination and the date of processing the "postmark") could be added to the barcode by smart processing technology, making Intelligent Mail not only feasible, but highly unobtrusive, even for individual customers. return to Table of contents
Intelligent Mail’s Security Applications Should be Aggressively Pursued
The information-rich barcode that is the foundation of Intelligent Mail also has the potential to improve significantly the security of the nation’s mail stream, particularly if the Postal Service fully explores whether it is feasible to require every piece of mail to include sender identification, in order to better assure its traceability in the event of foul play. The events of September 11, 2001, and the subsequent anthrax attacks that exploited the nation’s mail system have raised significant concerns relating to the vulnerability of the nation’s relatively open postal network. In the weeks following the attacks, delivery of the mail slowed substantially, affecting all aspects of American life—from commerce to Congress. In addition to the many steps already taken by the Postal Service, the Commission believes that sender identification on all mail could further enhance the security and speed of the nation’s mail service.
Requiring all mail to identify its sender would likely have a negligible impact on most users of the Postal Service who readily identify themselves when they send mail and would consider such a requirement a relatively modest concession to ensure their safety and that of the men and women who deliver the nation’s mail. The greatest inconvenience, most certainly, would be to those who use the mail system for unlawful purposes, since such a move would hand law enforcement a powerful new tool to identify and prevent such abuse.
The Commission recommends that the Postal Service, in coordination with the Department of Homeland Security, study the development of sender-identification requirements for all mail. Issues of privacy should, of course, be noted and balanced with the value of enhanced safety. As a part of the study, the Postal Service should additionally explore the potential of technology to transition stamp purchasing equipment (e.g. vending machines, cash machines, self-service kiosks, post office counter sales, the Postal Service website, and postage meters) from the provision of general stamps to "personalized stamps" that automatically embed sender identification. return to Table of contents
All Customers Should Be Able To Track Their Mail
Of course, the barcodes that can easily contain basic sender identification also have numerous commercial applications, as well, pointing to the possibility of new revenue streams for the Postal Service and an enhanced ability to meet and even exceed rising customer expectations.
One of the most telling conclusions reached by the independent customer survey performed for the Commission was the fact that the top demand was not cheaper stamps or shorter lines at the post office, but the ability to know where specific mail items are in their journey.2Tracking is a standard service delivered by private carriers. While the Postal Service does currently offer some tracking services, it lags far behind consumer expectations and the capabilities of technology. Currently, for example, the Postal Service will estimate, but not guarantee, a delivery date for any type of mail.
Should individual customers require more complete information about their mail, tracking is available only at a very rudimentary level and only when customers pay for premium services, such as Priority Mail. As a result, if customers want to track a standard letter, rather than paying the current 37-cent price of a First-Class stamp, they must pay more than 10 times that amount to send the letter via Priority Mail,and they must pay an additional 45 cents for delivery confirmation. Even then, customers are notified only when the letter is placed in a recipient’s mailbox. There is no option to track its journey.
More conventional tracking services are available to a limited class of large users through systems designed for commercial vendors. The Postal Service, however, considers these systems too expensive for broader use. The Commission believes that mail tracking is essential to enhancing the modern day value of the mail. It also believes that, by embracing intelligent mail and smarter postal processing technologies, mail tracking can be made feasible for all postal customers. The Commission thus recommends that the Postal Service deploy mail tracking technology in a timely and comprehensive manner, making it available to all users at an affordable price. If it deems such an approach infeasible, then the Postal Service should be directed to explore partnerships with private postal carriers for developing tracking services and an "intelligent" postal environment.
Toward a 21st Century Postal Network
Once individual mail pieces are made intelligent and communicative, they require a means of conveying their information to relevant machines, information systems and people. This is why the creation of one overarching Postal Service technology acquisition and deployment strategy is so essential. By settling on a standard barcode, by adopting smart technologies that allow this code to convey its information throughout the postal network, and by securely linking these communications to customers via the Internet, the Postal Service can build a truly digital 21st century network with many attractive new features and others we are only beginning to imagine. return to Table of contents
Speaking the Same Language
The first step in building a robust, interconnected and information-rich network is to adopt one official "language" that all the related pieces, machines and people can "speak." To accomplish this task, the Commission recommends that the Postal Service continue to study the development of a single universal barcode designed forall mail pieces. This code could contain, at a minimum, sender identification, class of service, meter ID (i.e. where the stamp was printed) and delivery destination (added to the barcode during initial processing by the Postal Service).
The Commission also recommends that the Postal Service study upgrading its stamp vending and printing equipment to make possible a national requirement that all postage carry this universal barcode—laying the groundwork for a truly intelligent mail system that can fulfill the many security, efficiency, and commercial functions described in this chapter.
Such a requirement would render each piece of mail unique and able to communicate basic information about itself. Increasing the intelligence of each mail piece and adopting a universal barcode will enable many capabilities beyond mail tracking. Encouraging private partners to adopt the same system, for example, could create seamless public-private partnerships, enabling a far more efficient "hand off " of mail from worksharing partners to the Postal Service. Also, the more widely Intelligent Mail is capable of communicating its information to other elements of the postal network, the less likely it is to get lost or wind up at an outdated address—no small matter considering such mail costs the Postal Service $2billion a year to try and resolve.3
In addition to making each mail piece unique, the Commission recommends the Postal Service accelerate its efforts at marking and ensuring an information-based link between individual mail pieces and thecontainers they move in—whether a tray, palette, or transport vehicle. Allowing a "smart" container to know what it is carrying further allows for the real-time pinpointing of individual mail pieces, despite the extraordinary volumes the Postal Service handles on a daily basis. The intelligent container will also make a dynamic network possible. return to Table of contents
Encouraging "Dialogue:" Dynamic Mail Routing
Once mail and postal processes are communicating effectively with one another, the potential to produce significant efficiency gains is extraordinary. Regional ebbs and flows in mail volume can be adjusted by re-routing mail to less busy facilities to ensure its more rapid processing. Weather conditions or vehicle breakdowns can be adjusted for in real time to keep the mail moving.
Beyond improvements to the physical networks (discussed in Chapter 5), a robust information technology network can link these fixed facilities with the vast mobile transportation network of the Postal Service, producing efficiency not merely on a facility-by-facility basis butthroughout the postal network.
In its Transformation Plan, the Postal Service outlined strategies to achieve this result through its Surface Air Management System (SAMS), which would provide transportation assignments to specific surface and air mail routes. SAMS also would make possible the allocation of capacity by various mail classes and the on-line tracking of manifests. The Commission commends the Postal Service for this effort and urges the rapid deployment of SAMS.
However, the Commission believes that the Postal Service should be more aggressive in this area, building for itself one of the most sophisticated and capable public-private transportation networks in the world. To even begin in this direction, every vehicle must be linked to the real-time insights of the Postal Service logistics nerve center. Beyond Intelligent Mail and smart processing technologies, this will require investments in global positioning systems (GPS) and the universal provision of onboard computing capabilities.
Here again, the Postal Service is significantly behind delivery companies who regularly read a package’s barcode from hand-held devices that immediately communicate to their networks the item’s successful delivery. In contrast, the vast majority of letter carriers and local post offices have no capacity to communicate in real time. While the Postal Service has distributed a device to some letter carriers that allows them to monitor the consistency of delivery time, the information collected is not processed until the end of the workday, so there is no real-time opportunity to adjust to weather, mechanical, or other unique challenges facing the mail delivery in that location on that day.
A much enhanced local communications ability, with integrated GPS and Intelligent Mail functionalities, would allow, for example, efficient re-routing of delivery vehicles to compensate for peaks in demand, traffic or weather conditions, and vehicle breakdowns. return to Table of contents
Connecting It All to the Consumer: The 24x7 In-Home Post Office
By integrating Intelligent Mail, sender identification, global positioning, and other readily available technologies and allowing real-time communication between postal transportation vehicles, local post offices, robust Internet systems, and the mail itself, the Postal Service would be capable of providing unprecedented information to consumers.
With this capability will come profound pressure to truly place an always open, full-service post office in every American home and business via the Internet. Without question, the Postal Service should rise to the occasion, enhancing both the simplicity and the sophistication of its website to the point where it is virtually interchangeable with a local post office.
Specifically, the Commission recommends that the Postal Service expand the array of postal products and services available on its website (www.usps.com). That would include, for example, all Postal Service forms, registered mail, certified mail, and return receipts. In addition, a number of new postal services should be made available, such as real-time mail tracking. Other relatively new features should be made more userfriendly.
Current PC postage systems, for example, remain inconvenient and confusing to the individual user. These processes should be replaced by a more straightforward approach that is so convenient and inexpensive that anyone can buy stamps on-line.
Users, of course, should be able to print out "personalized" stamps, encoded with their sender identification information and other basic information, aimed at enhancing security, improving the efficiency of the postal network, and permitting mail tracking. The website, however, can also allow a far wider array of customer-pleasing "personalized" stamp services. For example, individuals could have the option to print a stamp with a family photo or a small business could print stamps with the company logo. This is a prime example of adding to the value of both personal and business correspondence.
Personalized stamps will enable commercial mailers to use their mail pieces as advertising media and will enable individual customers to tailor their own stamps as they please. "Personalized" stamps should be easily printable on standard commercial paper, directly on envelopes, or on adhesive labels. This may require some minor advances in technology, both in personal and business printers, as well as Postal Service and contractor barcode readers. The Commission is confident, however, that the market would respond to such a shift in the nation’s mail system. The Commission also believes that the Postal Service should charge a premium for personalized stamp services.
The Commission recognizes that not all Americans have ready access to the Internet and a printer and others will be uncomfortable making this transition. Therefore, in addition to the website, stamp vending and printing machines—whether at a post office, a self-service kiosk, or in a contract facility—should be similarly equipped, so purchasing a personalized stamp is as convenient as purchasing a general stamp today (and, eventually, far more so with the planned expansion of retail points of access). return to Table of contents
The Need for Expert, Strategic Guidance
Already, the Postal Service has created the Mail Technology Strategy Council to provide candid, independent assessments of technology trends. With representatives from leading organizations in the mailing industry, including senior officials from the Postal Service, industry, and academia, the Council explores key technology issues, particularly Intelligent Mail.
The Commission believes the Council should be expanded as an independent body, reporting directly to the Postmaster General, and should be empowered to provide more than just trend assessments. The Council should include postal engineers, scientists, employees and major mailers and should meet on a regular basis. It should have the power to monitor technologies for their effects on the mail system and for their return on investment. The Council should produce an annual report assessing advances in technology. Most importantly, it should be the key advisory body for establishing a coherent Postal Service technology strategy.
As is apparent in the recommendations of this chapter, information technology investments can only achieve their full potential and value if implemented together, in an integrated fashion, as part of one seamless technology strategy, and as a key incorporated element of the Postal Service’s overall business plan.
In performing its duties, the Commission suggests that the Council include in its deliberations two key lines of questioning. First,what should the Postal Service be doing? Is it burdening itself by taking on tasks that are not self-supporting and are nonessential?
Is it missing out on revenue opportunities by conceding promising areas? Does it have untapped assets that could be released through specific technologies? Second, how should the Postal Service do its work? Are existing technologies being applied as efficiently as possible? Is there a coherent plan for the acquisition of new technologies? Can costs be cut through integration of currently distinct systems? In what areas would the Postal Service be best-served by outsourcing technological systems, or pursuing development of mailing industry advancements in cooperation with private sector entities?
Because a technology strategy is only effective until a new development renders it obsolete, two key elements of its ongoing success are vigilance for the next big shift in capability or market demand and the technological wisdom to respond to it appropriately.
This vigilance requires the hard science of exploring what new capabilities are available and when their potential savings justify the acquisition cost, as well as the softer science of what customers want from the Postal Service. To aid this latter effort, the Commission suggests that the Council should not only develop its own ideas for improving the mail system, but accept them from all sources, including the individual Postal Service customer. return to Table of contents
Technologies exist today that have the ability to capture information through highspeed scanning, to store and forward the data through high-capacity computers, and to present the information to interested parties through the Postal Service website. This would allow for the creation of a national digital postal network that links the physical network of the Postal Service with customers, partners and the correspondence itself.
The potential efficiency gains and value-added benefits of such a system are great. As such, creation of this network should be aggressively and strategically pursued. While the technology necessary to make this vision a reality will likely require significant investment, the Commission is confident that the resulting efficiency and revenue gains, as well as service improvements, will offer a substantial return on investment to the Postal Service and its customers.
While the Commission commends the Postal Service’s technology-related work to date, it urges a far more ambitious and strategic effort in the future. This will require unifying good ideas and efforts into one coherent, integrated strategy, capable of delivering both near-term gains in efficiency and productivity as well as the enduring flexibility necessary to adapt to an ever-changing technological environment. Also, of key importance, the Postal Service’s technology investments should continue in the proudest tradition of the enterprise, ensuring that the benefits made possible by these advances are accessible to allpostal customers.
Despite the challenges posed by electronic diversion of mail volumes, the Postal Service’s future success lies not inresisting technological change, but in embracing it. With a proactive, strategic and visionary approach, it has every opportunity today to enhance the value of the mail in the modern context and to deliver to the nation a capable, sophisticated and leading-edge 21st century Postal Service. return to Table of contents
1. Benjamin, Maynard H., President, Envelope Manufacturers Association, "Trends in Intelligent Mail," Document Submitted to theTechnology Subcommittee, President’s Commission on the United States Postal Service.
2. Peter D. Hart Research Associates, Inc., Study #7006, May 2003. p. 3.
3. Pitney Bowes, "The Power of Intelligent Mail," Document Submitted to President’s Commission on the United States Postal Service, p. 9.
4. United States Postal Service, "History of the Postal Service," On-line Posting, <http://www.usps.com/history/his2_75.htm#MISSILE>.