Challenges and Opportunities for the United States Postal Service
The United States Postal Service (USPS) faces various challenges such as strong employee unions, operational losses, and regulatory obligations, but also has opportunities like expanding profitable services and adapting to technological advancements. With a detailed analysis covering political, economic, social, technological, ethical, and legal aspects, along with a SWOT analysis and key issues identified, the USPS can navigate through disruptions and make informed decisions for its future.
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UNITED STATES POSTAL SERVICE Sai Gajjala, Tim Huffman, Sarah Meadows, Bruce Wayne
Introduction Overview of the United States Postal Service (USPS) Disruptors USPS Response Alternatives Recommendation Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Overview The United States Postal Service (USPS) is a government organization that was established in the early 1800s by Congress, and held to a Universal Service Obligation (USO), requiring it to deliver mail to U.S. residences six days a week. The USPS is regulated by Congress. The USPS is considered a private, government business and does not accept any tax revenue. All funds are received through business operations (e.g., paper mail, packages, office supplies, postage, passport and government documentation). The USPS delivers approximately 40% of the world s mail 40% of the world s mail. The USPS has $70 billion in operating expenses $70 billion in operating expenses and has been operating at a loss since 2006. Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
PESTEL ANALYSIS Political- Congress has been slow to react Economical- Limited to US market Social- Union presence creates limitations Technological- Rapid communication and technological development (internet) Ethical- Strong union resistance to operational changes (layoffs, job replacement) Legal- congress influence on USO
SWOT Analysis Strengths Strengths Weaknesses Weaknesses Large, well developed logistics network Over 20,000 retail locations Brand recognition Outdated business model Lots of Pensioners (Top Heavy) Strong Unions Opportunities Opportunities Threats Threats PO Boxes Government Services Profitable services The Internet Large Private Distributors Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Key Issues 4 strong employee unions 4,000 locations operating below $28,500 at a loss Universal Service Obligation (USO) regulated by congress Profitability skewed on different product and service offerings Federal government is unable to provide more than 3 billion per year Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Disruptors The USPS has been losing business because due to advancements in technology over the last couple decades: Telephone Fax machine Email Smartphones & computers Large distributors (e.g., Amazon, UPS, FedEx) Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
USPS Response The USPS attempted several response, which were all thwarted by their unions or Congress USO: Partnership with Staples (office supply store) Decrease delivery days from 6 to 5. Tried to close locations, as opposed to changing infrastructure Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Recommendations AI & Autonomous Vehicles Innovation & Agile Operations Partnerships Leverage technology for distribution Partner with FedEx, UPS, Amazon, & Walmart Make USPS leaner & more agile Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Alternative 1: AI & Autonomous Delivery Benefits AI and robotics have the potential to be responsible for a more efficient safer society Autonomous vehicles are more likely to be utilized for delivery of goods Drones have had pilot programs tested and recently approved for delivery by FAA Drawbacks Requires unprecedented investment but more sustainable for long term operations Would create liabilities that exceed current limitations Infrastructure & current legalities Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Alternative 2: Partnership Benefits Benefits Amazon has recently become the largest public company on earth Synergistic with current workforce in regards to amount of employees bound by union pensions Drawbacks Drawbacks Creates reliance on a third party for revenue Partners may require incentives for involvement May limit the hiring of independent contractors and create stronger reliance on unions Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Recommended Plan: Innovation & Agile Operations Pilot programs for the 4,000 locations operating at a loss These locations become PO Box pickup for locations in given zones Mail continues to be delivered for pick-up only at centralized locations Distribution channels Incorporate data findings for demonstration to congress about centralized mail services Premium delivery option is Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Recommended Plan: Pilot Program Dissolve the USO to decrease service obligation in favor of more modern business models. We propose petitioning congress by conducting a pilot program with our recommendations as a proof of concept: Close 4,000 of the USPS s lowest performing locations: $285 Million in savings Location will be enrolled in pilot program. Pilot program overview: Build more Post Office (PO) Boxes within the non-operational USPS locations. Install self-service mail/package kiosks. Reduce mail delivery to 5x per week. Implement Premium Mail Subscription services. $285 Million in savings. Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Premium Mail Subscription Services Annual Annual Rate Rate $50 $50 $75 50 Million 50 Million delivery points delivery points $2,500M $2,500M $3,750M 150 Million 150 Million delivery points delivery points $5,000M $5,000M $7,500M 150 Million 150 Million delivery points delivery points $7,500M $7,500M $11,250M Pick Pick- -up Services up Services Drop Drop- -off Services off Services Pick Pick- -up & drop up & drop- -off Services off Services Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Financial Implications Pilot program is a low cost solution Increased profitability from new recommended pricing model. Cost savings: Cost savings: Limited delivery points Leaner USPS store operation model Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Operational Implications Freeze hiring Age out some of the current workforce to reduce severance costs. Offer buy-out option as incentive to leave: $5,000 Maximize PO Box establishment Reduce pick-up locations Invest in automated sorting processes: writing recognition Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
Conclusion Overview of the United States Postal Service (USPS) Disruptors USPS Response Alternatives Recommendation Overview Overview Disruptors Disruptors Response Response Alternatives Alternatives Recommendation Recommendation
