Saturday, February 22, 2014

Postal Officials Don't Know Whether the FSS Is Saving Money

The U.S. Postal Service doesn’t know whether the Flats Sequencing System is reducing its costs and doesn’t seem to be trying to find out.

As a result, one major mailer is calling for hefty price increases on “Standard flats” (such as catalogs) that would presumably spill over to the Periodicals class (magazines and newspapers) as well.

Both postal officials and mailers have been hoping for several years that FSS would yield substantial decreases in the cost of handling and delivering flat mail. But only about 30% of flat mail is being processed on the football-field-sized machines, which are failing to live up to expectations and have led to a legal dispute between USPS and the company that built the machines.

“Based on available information it appears that [increased use of FSS] either lowered costs or left them unchanged,” the Postal Service recently told the Postal Regulatory Commission. But that conclusion, USPS acknowledged, was “determined in a simplistic fashion” based on comparing total flats-handling costs in FY2013 to those in FY2010, when it began installing the $1.3-billion FSS.

USPS told the PRC it has not done a head-to-head comparison of the cost of sorting and delivering FSS mail versus the primary alternative method, the older and less sophisticated AFSM 100 machines.

A year ago, the Postal Service said FSS had apparently increased the costs of handling flat mail because low machine productivity ate up the savings from automating some delivery functions. But it noted at the time that it was investing in productivity improvements to the machines.

FSS productivity, however, declined by 2% during FY2013, according to a recent USPS filing with the PRC.

USPS’s responses demonstrate “there is no reason to expect a meaningful reduction in the unit cost of handling flats as a result of deploying all 100 FSS machines,” Valpak told the PRC this week. “Accordingly, the only way for Standard Flats to achieve breakeven and become profitable is via significant rate increases, imposed without delay.”

Valpak, which uses Standard letter mail to send coupons and advertisements for multiple clients, is a frequent critic of Standard flats postal rates that allegedly subsidize Valpak’s competition. Valpak’s logic for advocating price hikes for Standard flats would apply as well to Periodicals flats; the Postal Service says it loses money on both types of mail.

A big wild card in the debate is whether a recent change in postal regulations will boost FSS productivity. Starting late last month, presorted flat mail going to FSS ZIP codes must be packaged in a manner that is optimal for the FSS operation. In theory, the change will decrease mail-handling costs without affecting delivery operations.

But that still leaves us with a troubling question: If USPS doesn’t really know how FSS is affecting its costs, how will it know whether to continue investing in and running the machines? Postal officials have typically brushed off such questions, responding that they have no choice but to automate the labor-intensive process of sorting flat mail.

Without good cost analysis, however, how will postal officials know whether all the “tiger teams” and machinery tweaks and changes in regulations are paying off? And how will they know whether to continue running the machines or to consign them to The Museum of Good Intentions Gone Bad?

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21 comments:

Anonymous said...

The flat sorting machines were another total waste of money by USPS management who have no idea how mail delivery works.

Gregg_and_Lanie said...

I can't see hoe the use of FSS machines save any money at all. Any time saved in the office by carriers is eaten up on the street by having to deal with the extra cumbersome bundle of mail.

Anonymous said...

FSS can't handle thin flats, and has done damage to covers of many flats. Our dream team of mgt goons adjusted routes to be working off 100% efficent FSS, and we struggle to get done in 10 hours.

Anonymous said...

Postal management doesn't have a clue about mail service, its a guessing game each day HONESTLY.

Anonymous said...

Ask any carrier. They will tell you it's a waste. The route I was on for 25 years was cut after the FSS went online. It takes longer to deliver.

Anonymous said...

FSS is ideal for curbside delivery. However in park and loop or walk out routes it is definitely more cumbersome for the carrier. In a regular delivery office the cost savings are being seen on the clerk side. Less time sorting flats, handling bundled mail etc. More time for F4 to focus on scanning and sorting parcels. Watching it being implemented I have to say it was more accurate than early DPS but it takes away the ability to manage. Monday you may get 10 FSS trays a route and Tuesday only 2.

Anonymous said...

No machines save money in the long run. How was it that carriers used to start at 6AM -6:30AM before the machines arrived. The mail was always ready for the carriers in the morning with the clerks sorting by hand. Carriers were never out past 5PM. Now with all the machines, most carriers don't start until at least 8AM. Mail still isn't ready for them. Out until after 7PM many times in the dark. How can this be if mail volume is "supposedly" so low and with machines sorting it? The cost and upkeep of the DPS and FSS machines, along with autocratic management have destroyed the post office. Notice I say "office" and not "service". The post office never lost money before the machines came like it does now with them. If they don't know that FSS is a complete flop, they are worse off than I thought.

ET-10 Simmons said...

Of COURSE they're losing money. Billion$ spent on a machine originally intended to primarily DPS BBM flats, which we barely make any money on to begin with. Less than 80% of originally estimated throughput on a labor and maintenance intensive machine and lawsuits between the USPS and Northrop Grumman over the whole debacle. Corporate doesn't know much would be a better title...

Anonymous said...

DPS and FSS machines along with autocratic management have destroyed the post office. Notice I say "office" and not "service". That has been long gone. How is it that carriers used to start the day at 6 - 6:30AM before the machines came along. Now most start after 8AM. How can this be if the mail volume is supposedly so low with the life saving machines to sort it, it takes longer than when people actually done it all by hand? The postal service never lost money like this new post office is. If postal officials don't know what a total waste the FSS is by now, then I have always been correct in my thinking that they are dumber than I always thought. Most didn't get to where they are with their brains anyway, but that is another topic.

Anonymous said...

To admit it does not work, would be admitting that ALL route adjustments,plant closures,excessing of clerks and mail handlers were a mistake.

One thing is a constant. Management never admits failure, they re-asses then double down.

The one thing they can't teach in
B-school: common sense.

Anonymous said...

Whoever said management clowns went to B-School...quite a stretch there...Just Sayin'...

@dryMAILman said...

Do postal officials know that *postal* FSS caused our workers' comp debt to double to over $17 billion? Do postal officials know when *postal* FSS will cause our workers' comp debt to reach $34 billion? Do postal officials know how to deliver *postal* FSS? Has anyone other than Senator Tom Coburn noticed these alarming numbers?

Anonymous said...

By the time you figure out all the sorting time (and they don't sort all the mail the handful they said we would have to hand sort that turns out to be several feet) these machines are costing more then they are worth. They also depend on computers that they say are accurate which are not, to tell them how long it should take to case and street deliver the mail and when you go beyond that time they call you in to the office to harass you. We have a supervisor that never carried mail and has only been a carrier supervisor for three months that was transferred to our office because of all the EEO complaints against her trying to tell carriers with 29 years experience how to carry mail violating the carriers hand book and the national agreement trying to make there unrealistic numbers. Friends it's only going to get worst.

Cindy said...

The most significant factor related to FSS is the actual product, once pristine magazines are now wrinkled and often ruined. The amount of energy used to power those machines can't possibly be saving money. Usually the number of flats I receive in FSS could be sorted by a human in 15-30 mins. Automation of letters dems to work well, but for flats it is a disaster.

Anonymous said...

The FSS intent is to reduce the number of employees and require carriers to work harder and longer on the street. More of the elder carriers would retire and cheaper labor would be hired.

Has negative behavior towards the workforce and the National Agreement increased in your office? Has discipline increased in your office?

I don't about the rest of you but thank you NALC for watching my back and protecting my job.

Anonymous said...

Bottom line folks, how can the USPS set pricing for separate classes of mail products if they in fact can't determine costs? I know craft employees might dislike ad mail but that fact doesn't change the alarming decreases in profitable First Class letter mail. How often do you see a First Class flat? Those same days are coming for First Class letters in our lifetime. Standard mailers comprise close to 67% of the USPSs' bottom line and the way HQ has bumbled countless loyalty programs to improve business is embarrassing. The reason why advertisers use direct mail is because it works. Every time the PMG and his cronies raise postage equates to that much less coming into our coffers for postage because mailers just won't spend anymore. I say clean house in Washington DC and start running the USPS as a business and not an entitlement vehicle for all the "friends of friends" holding onto jobs that should have been gone 3 reorgs ago! Ignorance in Congress and upper levels of USPS management is the problem, there you have it. The American public and dedicated USPS employees have preserved the service for centuries and corrupt and self serving officials need to hear their voices. If every stake holder and employee sent a letter every week to their representatives and the USPS hierarchy eventually something would change. So if you want to change what is broken, pony up and become part of the solution.

Anonymous said...

The money for the FSS machines and the facilities to house them would have been better spent on updating the USPS fleet of vehicles.

Anonymous said...

Of course they know, they just won't admit it

Anonymous said...

Too many people that have never touched mail are making the decisions for those that do. ASK the people who deal with the sorting and delivery of mail how to do it more efficiently and they will tell you. That is what most companies do.

Anonymous said...

Yet *another* huge money losing idea done by the inept, corrupt, and unethical ranks of USPS mgmt.

Of course, as usual, not one will be held accountable.

Anonymous said...

I have NEVER touched the mail let alone delivered it, but I know how best to do your job so I will tell you how to do it!