Kent Smith, Research Director, Ursa Major Associates was a speaker at the annual MailCom conference in Atlanta, March 15-18. This keynote addresses were provided by industry leaders from Donnelley Logistics, Pitney Bowes, Cigna and others. Senior officers from the Postal Service also spoke to the conference.
Industry executives reviewed the progress of the industry and discussed issues such as the impeding postal rate increase. They recognized the complexity of the issues, especially the ones currently under dispute, but were optimistic about resolution of the pricing issues and future stability in postal pricing. They were less optimistic about the likelihood of helpful postal reform legislation.
What Postal Changes Will Mean for Mailers
David E. Williams, the new Chief Operating Officer of the Postal Service presented a summary of recent service and revenue performance. He documented the cost reductions made, and discussed the progress on revenue generation.
However, Mr. Williams made a strong point that the USPS is hardly out of its dangerous financial situation. The focus now is the ratio of assets to liabilities, suggesting that the Postal Service still needs significant long-term changes in the business model, despite recent improvements in controllable costs and revenues.
The Future of Mail
The Inspector General cautioned that the Postal Service was approaching the end of the major opportunities available through operational efficiencies and cost reductions. He focused instead on a broad outline of potential non-core opportunities for the Postal Service, based primarily on leveraging its historic public service role, the extensive infrastructure, and its unique relationship with the American people. Examples, based a recent series of OIG studies, included:
- Financial services (moving beyond money orders and into retail-based services, including payment is person and limited services for the underbanked) especially as banks withdraw from providing retail services.
- Identity verification services, similar to current passport services, voting (vote by mail) and extending into digital verification.
- Leveraging widespread installation of solar and other technologies on the many postal facilities to create an energy utility, and to create Internet connection in areas not currently well served.
He suggested that the Postal Service was a little late to the innovation game, but could learn from and partner with others to catch up now that the organization had a little more financial flexibility. He received some push back from the audience, including concerns about unfairly competing with the private sector and the diversion of resources from the core business. There were also comments about disruptions to service standards and operations resulting from consolidations. Mr. Williams noted that research indicated that most consumers were willing to adjust to service changes in order to hold costs down, and that overall the Postal Service had done a very good job of managing network consolidation.
Both postal executives were asked to provide their perspective on what the new Postmaster General will do. Their perceptions, based on long association with her, were consistent with our X Point of View (“What Will She Do?”). Both mentioned her willingness to focus on investment in the business and in finding common ground with stakeholders.
Data Protection and Security
A major theme of the conference was the need to improve security in mail operations. Raymond Umerley, Chief Data Protection Officer at Pitney Bowes, talked about privacy and security in the age of the hacker. Multiple sessions addressed mailroom physical operations as well as information systems security. The need for action was made very real and immediate by the news of a letter apparently laced with cyanide delivered to the White House (while the threat turned out to be unfounded, the issue did bring the reality of the problem to the attention of the industry) and the announcement of another major data breach in the health industry.
The Postal Service, the Mailing Industry, and the Internet of Things
The convergence of a number of technologies can lead to new opportunities for the mailing industry. There are at many positive and non-exclusive scenarios for significant change in the core mail business, based on efforts already underway:
- The USPS as an information powerhouse, based on effective use of total mail visibility (winning with data and analytics
- USPS as a secure digital network, based on the evolution of commercial and consumer interfaces.
- Significant advances in productivity through the application of next generation robotics, artificial intelligence, and advances in materials handling, distribution, and logistics (the Internet of Physical Things).
- Reinventing delivery in response to the increasing power of connected customers and the demand for flexible services, including connecting carriers with their customers through social media.
- Collaborative innovation between the Postal Service and its industry partners, creating new products and services through public/private partnerships.
- Re-creation of the Postal Service as a center for relevant public services, paid for by fees, interagency agreements, and judicious public support.
The industry now faces opportunities that may be greater than the challenges. This is a refreshing change of tone from just a year or so ago.
By Kent Smith
Kent Smith is Research Director, Ursa Major Associates / Postal Vision 2020. His 38 year career in the Postal Service included Rate Classification Research, Market Research, and Strategic Planning. Ursa Major Associates / Postal Vision 2020 is dedicated to taking a broader, longer-term perspective on the future of the mailing industry ecosystem. The thoughts expressed in this “Point of View” are his own.
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