Thursday, April 13, 2017

Why the Flats Sequencing System Should Be Scrapped

A 2011 presentation explained how FSS would
streamline the handling of flat mail. Oops!

What many have long suspected has now been confirmed: The U.S. Postal Service’s Flats Sequencing System is a disastrous failure that cannot be fixed.

The FSS is adding so much to the costs of handling magazines, catalogs, and other flat mail that no amount of machinery tweaks, Lean Six Sigma projects, or "Tiger Teams" can ever make it right.

“When all processing and delivery costs are included, an average Periodicals flat addressed to an FSS zone costs over 10.5 cents more than if addressed to a non-FSS zone,” postal expert Halstein Stralberg wrote recently. Assuming the same 40% cost differential applies as well to flat-shaped Standard Mail, such as catalogs and retailer flyers, Stralberg’s analysis indicates that FSS is adding several hundred million dollars annually to the Postal Service’s costs.

And that doesn’t even count the $1.3 billion spent on purchasing the huge machines or the additional investments in building modifications, training, and other start-up costs.

“Because of the large investment in the FSS and the great hopes that were attached to them, USPS managers appear still unwilling to admit that the program is a failure,” wrote Stralberg, a longtime consultant on postal costing and prices to Time Inc.
Another utopian vision from 2011
Based partly on Stralberg’s analysis, three mailer organizations recently called for the USPS to “(1) retire the FSS machines, (2) allow mailers of flat-shaped mail to prepare their mail for (and qualify for) Carrier Route and other discounts in all zones; and (3) make Carrier Route and other worksharing discounts for flats deep enough to cover 100 percent of the costs avoided by the worksharing.”

“These reforms alone should encourage enough co-mailing to enable Periodicals Mail and flat-shaped Marketing [aka Standard] Mail to cover all, or nearly all, of their attributable costs,” they told the Postal Regulatory Commission.

The three organizations are MPA-The Association of Magazine Media, the Association for Postal Commerce (aka PostCom), and the Alliance of Nonprofit Mailers.They submitted their comments and Stralberg’s analysis to the PRC to counter the USPS’s proposal to abolish the inflation-based cap on Periodicals postage rates, as explained in my recent Publishing Executive article, Postal Rate Fight Continues as Publishers Battle USPS "Stupidity Tax".

A 2003 Stralberg presentation correctly predicted
FSS mail would cost more than carrier-route flats.
Stralberg’s predictions in 2003 about why FSS would not reduce flats-processing costs have turned out to have nearly prophetic accuracy, except the program turned out even worse than he expected.

For example, he contradicted postal officials who claimed that their costs for FSS-sorted pieces would be lower than for pieces in carrier-route bundles. (Postal officials now acknowledge that carrier-route mail is cheaper to deliver than FSS mail.)

But Stralberg never predicted that the FSS cost per Periodicals piece would be nearly double that of carrier-route pieces, as his recent analysis shows.

Here’s the MPA/PostCom/ANM summary of why the Postal Service’s assumptions about FSS turned out to be so fatally flawed:

1) “The Postal Service’s planners greatly underestimated the extent to which mailers would sort flats to the carrier route level.” About half of flat-mail copies were in efficient carrier-route bundles when FSS was first conceived more than a decade ago. Because of co-mailing and similar mail-consolidation efforts by printers, the proportion is now higher than 70% in non-FSS zones. (When a system nearly doubles the cost of handling 70% of the mail, it cannot possibly save enough on the other 30% to reach breakeven.)

The view from 2010, before reality intruded.
2) “The Postal Service overstated the costs of manual sequencing of carrier route flats by carriers, and thereby overestimated the costs saved by diverting the sequencing work to the FSS.” Stralberg called out this flawed assumption in a 2003 presentation to mailers and postal officials.

3) “The Postal Service, erroneously assuming that practically all flats within an FSS zone would be placed in delivery sequence by the FSS, removed the vertical flats cases carriers had used for manual sequencing.” This triumph of optimism over reality adds to the amount of time carriers need to prepare flat mail for delivery. Barely half of the flats in FSS ZIP codes are presented to carriers in delivery sequence.

4) “The Postal Service’s planners incorrectly assumed that nearly all flats would be machinable on the FSS.” Stralberg warned in 2003 that flat mail unsuited for the Postal Service’s existing machines probably couldn’t be handled on the FSS, meaning that “non-machinable flats will cost more” under FSS.

5) “The Postal Service’s predictions that practical concerns about the FSS machines themselves, including their footprint, cost, and complexity, would be solved during the design and implementation of the system proved incorrect.” That’s nearly a direct quote from Michael Plunkett, a USPS pricing manager when FSS was being developed and now PostCom’s President and CEO. He also told the PRC, “From the outset of the FSS project there was significant skepticism that the proposed technology would achieve the intended results and concern that substantial capital was being invested in a system that would unnecessarily complicate a network that already needed to be rationalized.”

6) “Finally, because flats mail volume was lower than the Postal Service had expected, it added many outlying zones to the territory covered by each FSS machine, causing substantial service degradation.” Mailers warned postal officials more than a decade ago that digital disruption was reducing the volume of printed catalogs and magazines, but the Postal Service persisted with an FSS plan that assumed gradually increasing volumes. Flat mail peaked in 2005 and has dropped about 40% since then.

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Wednesday, March 22, 2017

Print Geek Alert!: A 360-Degree Video of The New York Times Being Printed

The New York Times published a two-minute 360-degree video today of its own printing plant in action.

The video doesn't try to be comprehensive, instead focusing on arresting shots that show the scale and sophistication of the operation -- such as a robotic crane transporting a massive roll of newsprint from storage and a web of already-printed paper picking up color as it zips through the press.

Plus what looks like an amusement-park ride for newspapers, which transports the printed product from the pressroom, then automatically bundles, palletizes, shrink-wraps, and loads into on to a delivery truck.

"The presses print 300,000 to 800,000 papers daily," the video tells us. "Most nights, the presses start before 11 p.m. and finish printing all editions before 3 a.m."

I've been in a lot of pressrooms, and I've never seen as much automation as The Times has.

Nor have I seen working press operators who weren't sporting earmuff-style hearing protection. I don't think The Times employees were even wearing the little foam in-ear inserts.  Perhaps the press is unusually quiet, or perhaps The Times' occupational-safety rules are more lax than those of magazine printers.

Saturday, March 18, 2017

Bang-Up Job: USPS Blames New Employees for Rising Motor Vehicle Accidents

The increasing use of non-career letter carriers has caused a steady rise in motor vehicle accidents and liability, postal officials said this week.

The U.S. Postal Service’s liability for motor vehicle tort claims (paid to victims of accidents) rose from $48 million in Fiscal Year 2015 to $88 million in FY2016, the Postal Regulatory Commission recently pointed out.

In responding to that observation on Thursday, the Postal Service explained: “Since the 2011 Collective Bargaining Agreements between the Postal Service and several employee unions, which expanded the role of non-career mail delivery drivers, there has been an increase in the number of motor vehicle accidents (MVAs).”

“The number of MVAs attributed to career carriers has remained largely flat, while those attributed to their non-career counterparts has increased out of proportion to the percentage of the carrier workforce that they occupy.” The 2011 agreements created the non-career City Carrier Assistant (CCA) and Rural Carrier Associate (RCA) positions, which last year combined for one-fourth of the USPS’s carrier workhours.

The cost of saving money
The lower pay, paltry benefits, and more flexible schedules of the 70,000 or so CCAs and RCAs are probably saving the Postal Service at least $500 million in annual compensation. But the inexperienced employees have also meant more mis-delivered mail, employee injuries, lower productivity, higher turnover, and ballooning recruiting and training costs, according to the USPS.

The Postal Service has not provided specifics on the number of motor-vehicle accidents or what proportion of accidents or tort claims are caused by non-career employees.

The USPS told the PRC earlier this year that its FY2017 strategy for reducing motor-vehicle accidents includes “redesigning the driver training program to expand opportunities for new drivers to become more skillful. Testing will be added to the program to assess the suitability of each employee to perform duties as a professional driver.”

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Saturday, February 25, 2017

Turnover Rising Among Non-Career Postal Workers

USPS is looking for answers to rising turnover.
Plagued by increasing turnover among non-career employees, postal officials are trying to stem the tide with new management incentives and an overhauled orientation program.

The average annual turnover rate among non-career employees rose from 38.69% in FY2015 to 42.82% last year, the U.S. Postal Service reported earlier this month. Postal officials had set a target of 34.8% for FY2016.

Turnover was worst among City Carrier Assistants (CCAs), rising from 54.24% to 59.66%. Among the other three major non-career categories, turnover for Rural Carrier Associates rose from 30.1% to 35.29%, for Postal Support Employees remained stable at 36.6%, and for Mail Handler Assistants increased from 29.86% to 37.67%.

“Most frequently cited causes for non-career employee turnover are lack of schedule flexibility, physical demands, and employee did not like supervisor,” the USPS said.

Swelling the ranks of the non-career workers – who are paid far less than their career counterparts and receive few benefits -- to more than 130,000 is yielding huge savings for the USPS. But it’s come at a cost.

Postal officials acknowledge that having so many inexperienced employees is lowering productivity, increasing on-the-job injuries, slowing deliveries, and jacking up recruiting and training costs.

“Because CCA turnover represents the biggest opportunity for improvement, non-career employee turnover was selected as an NPA [National Performance Assessment] indicator for field positions with high concentrations of CCAs (large Post Offices and Stations and Branches),” the USPS said. Pay-for-performance bonuses for postal managers are based on progress toward meeting NPA targets.

The USPS is also rolling out a revised new-employee orientation program that attempts to address the factors that cause turnover – “from training to feeling welcomed and supported by supervisors,” the USPS reported in December. A pilot of the program in Northern Virginia decreased turnover 22%, the agency said.

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