Since 1991, the Sourcing Interests Group (SIG) has provided forums for networking, relationship building, knowledge sharing and education in a non-commercial environment. SIG, a recognized industry-leading, membership-based organization, helps members to achieve improved business results, sooner, at a lower cost and with reduced risk across the spectrum of outsourcing, offshoring, insourcing, procurement and shared services. SIG members are from both the user and provider communities drawn from Fortune 500 companies. For more information go to www.sourcinginterests.org Welcome to Neutralizing the US Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals Should Know to Help Control the Cost of Mail Presented by Océ Business Services, Inc.
Transcript
Since 1991, the Sourcing Interests Group (SIG) has provided forums for networking, relationship building, knowledge sharing and education in a non-commercial environment.
SIG, a recognized industry-leading, membership-based organization, helps members to achieve improved business results, sooner, at a lower cost and with reduced risk across the spectrum of outsourcing, offshoring, insourcing, procurement and shared services. SIG members are from
both the user and provider communities drawn from Fortune 500 companies.
For more information go to www.sourcinginterests.org
Welcome to Neutralizing the US Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals
Should Know to Help Control the Cost of Mail Presented by Océ Business Services, Inc.
Upcoming SIG EventsSIG Webinar Series- every Tuesday Register at www.sourcinginterests.org
NEW DATE: Thursday, April 23, 2009 - Winning Tools and Techniques for Sourcing in a Down MarketPresented By: Denali Consulting
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May 5, 2009 -Untapped Savings Opportunity: An Innovative Approach to Rapidly Reduce CostsPresented By: ICG Commerce and The Hackett Group
SIG Global Leadership Summit, Loews Coronado Bay, Coronado, Calif. October 20 – 23, 2009
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Register at www.sourcinginterests.org For more information, call 530-582-8600
Joseph Freeman, CMDSM, MQC, AQS, ECMPJames P. Mullan, CMDSM, EMCM, MQC, CSSGBApril 21, 2009
Neutralizing the U.S. Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals Should Know to Help Control the Cost of Mail
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Speakers Joe Freeman, CMDSM, MQC, AQS, ECMP
Joe is a Business Solutions Architect with over 20 years of experience managing planning, and implementing large and complex mail center operations in Fortune 1000 companies. He is a leader in the Mail Systems Management Association (MSMA) where he currently serves as the NY Chapter President. James P. Mullan, CMDSM, EMCM, MQC
Jim is a National Operations Manager at Océ responsible for overseeing complex client mail operations. His 35 years of experience includes mail process management, mail automation, shipping & receiving, disaster recovery planning, distribution, and fulfillment. Jim currently serves as Executive Vice President of the GNY MSMA. He also served as Chairman on the CMDSM Study Guide Committee.
• US, Canada, Europe• Philippines processing center – legal coding,
indexing• Global revenue ~ €427M, 8,000 employees• 1,250 client sites• 95% client retention rate• IAOP Top 100 Global Outsource provider
2007, 2008, 2009• Black Book of Outsourcing #1 DPO Provider
2007, 2008• Socia-Gelbmann Top eDiscovery Provider
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Agenda
The USPS Shape Based Pricing of 2007
Strategies to overcome price increase
Top mail consuming functions
Implementable tactics to control mail cost
Mail Center technology and cost analysis
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U.S. Postal Service Reform Act- Dec 9, 2007
Provided the ability for the government to re-write the rules regarding postal rate increases
Old practice: timely and costly – utilized a series of rate inquiries, hearings and requests, then approval meetings and CFR updates
New procedure – evaluate Postal cost on an annual basis and increase prices in line with cost of living
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USPS Shape-based Rate Change
US Postal Service rate restructuring took effect May 14, 2007
New rates are based on weight and shape
$
+
$
Previous Now
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USPS Rate Change
Major increase in costs for non-conforming pieces
Decrease in costs for conforming pieces
2 oz flat+54.0%
63¢ 97¢
63¢ 59¢
2 oz letter-7.9%
63¢ $1.30
2 oz parcel+106.3%
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What shape is it?
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Poll Question #1
Do you know what your total cost of mail is?
Yes
No
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5 Strategies to reduce mail cost
Change shape to avoid cost increase
Review, challenge Mail Class or Service needed
Use automation (intelligent bar code)
Change, update, mail piece / document design
Database (house list update, cleanse, update,
CASS, etc)
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Strategies – Shape
Change shape to avoid cost increase Fold Package Group / Combine
Flat-size to letter-size envelope
Save 38¢ 2-oz example
97¢ 59¢
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Strategies – Class / Service
When, How, Where Review, assess, and challenge mail class requirements Review, assess, and challenge mail service requirements
Co. Location 1
Co. Location 2
Field Office
Mail Center
Bureau pre-sort (automated)
Direct USPS
Group to package/pouch
Multiple Mail Options
Customer Home
Example
Mail Center
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Strategies - Automate
New Intelligent Mail Barcode (IMB) What it is …
Benefits of IMB
How to use the IMB Detailed specs at www.ribbs.usps.gov
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Strategies – Change, update mail piece and/or document design/format
Document design can made a big difference 2 page to 1 – print duplex, cut paper in half Letter size v. flat size Send and return address window envelope
Variable data, 1 to 1, document composition Simple formats can reduce number of pages
Decrease margin Decrease font
Variable data and document composition tools may combine 2 documents/mailings into 1 Trans Promo
Package can make a difference Padded to card board to avoid over ¾ inch
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Strategies – Database
Return mail facts Total cost of re-mail estimated at $3 per mail piece 18% of outgoing mail pieces have something wrong with the address 2% of all mail is returned
Return in corporate mail can be up to 20% House list hygiene
17% of consumers and businesses move every year Use mail center to update databases and prevent re-mail
USPS data services CASS ACS – Address Correction Service DPV Delivery Point Validation Fast Forward
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High Mail Consumption Activities
Customer Service Sales & Marketing Field offices / Distribution Centers Shared Service Center
Accounting/Finance, HR, Logistics, Training Processing Centers (print production) Headquarter or Regional Offices
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Poll question #2
Has your company implemented changes to take advantage of the postal discounts offered under the shape-based pricing method?
Yes
No
Don’t know / not sure
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Mail cost reduction tacticsLetter - reduce thickness to < ¼ inch
6” x 9.5”
+ = $1.14Flat Rate
10 sheets folded in half
< ¼ thick
+ =$0.59
Letter Rate
Reduce envelope thickness save 40%!
6 Pages6 Pages6 Pages6 Pages10 sheets
tri-folded 20lb. stock > ¼” thick
4” x 9.5”From
To
For every 10,000 pieces save = $5,100
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+ = $1.14
+ = $0.59
10” x 13” Flat
Change size category by folding save 49%!
Mail cost reduction tacticsCategory - change from FLAT to Letter
6 Pages
6 Pages6 Pages6 Pages6 Pages9 Sheets
mailed flatFrom
To9 sheets
folded in half 6” x 9.5”
For every 10,000 pieces save = $5,500
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Mail cost reduction tacticsAutomation - IMB
2 oz.letter
1 oz. letter
33.4¢
45.9¢
Automated
21% Savings
20% Savings
Based on 3-digit sort
Not Automated
59¢
42¢
Automate and save 20%!Automation requires a minimum volume of 200 mail pieces
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Mail cost reduction tacticsDuplex print reduces weight and thickness by 50%
10 Pg documentDouble side print, 5 sheetsWeight reduced by 1 oz.Mail category – letter (bi-folded)
Rate Shop Carrier systems and reports Mail process performance management tools such as
Océ MAX
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Conclusion
The USPS shape-based pricing requires attention until organizations migrate from the old ways of mailing to the new
The strategies discusses will help reduce costs immediately but they require implementing change
Procurement professional can help reduce the cost of mail by working with the mail center and business units to help implement the strategies and tactics throughout the organization
Since 1991, the Sourcing Interests Group (SIG) has provided forums for networking, relationship building, knowledge sharing and education in a non-commercial environment.
SIG, a recognized industry-leading, membership-based organization, helps members to achieve improved business results, sooner, at a lower cost and with reduced risk across the spectrum of outsourcing, offshoring, insourcing, procurement and shared services. SIG
members are from both the user and provider communities drawn from Fortune 500 companies.
For more information go to www.sourcinginterests.org
Thank you for attending Océ Business Services, Inc. presentation of: Neutralizing the US Postal Rate Increase:
Strategies and Tactics Procurement and Sourcing ProfessionalsShould Know to Help Control the Cost of Mail
