The Parcel Revolution (1 of 4)

The growth in parcel volumes and the decline of lettermail present mid-size postal organizations with opportunities as well as challenges.  In this series of four articles, we explore how posts can address these challenges and develop and implement a clear operational strategy.  This operational approach is based on our company’s recent experience with several mid-size posts and express carriers.

Outdated Parcel Networks and Operational Strategies

Parcel distribution and delivery in postal organizations traditionally “rode” on the lettermail network, sharing transportation and delivery routes.  Postal organizations have depended for many years on their lettermail networks to carry their parcels.  Some operators were sharing facilities, others shared delivery routes, depending on their respective parcel volumes and capabilities.  In the last few years, many operators have grown their parcel volumes significantly. Some operators such as ParcelForce in the UK, Geopost in France and TPG in the Netherlands successfully adapted their networks.  Our experience, however, shows that many distribution and delivery networks have not evolved in response to volume and marketplace dynamics.

Having an outdated distribution network and operational strategy can be costly from an operations standpoint, but also from the ability to secure additional market share.  Why aren’t companies busy studying possible options and implementing the best one for their unique circumstances?  Well, operators are busy struggling with real life day-to-day matters and often do not have the resources or expertise needed.  This is where experience and a proven approach can bring results.

Operational Strategy

The company’s operational strategy couples performance requirements (speed, accuracy, quality, flexibility) with an efficient allocation of resources to achieve this performance (processes, skills, facilities, automation and systems, and management.  The first step in developing an operational strategy is to build an internal company dialog where key topics are discussed regarding baseline and future strengths, weaknesses, opportunities and threats. This includes market dynamics (What do shippers want? What are recipients’ expectations? What are they willing to pay?)  The second step in the  process is to lay out a number of possible operating strategies using different network topologies, facilities, levels of automation or new technologies.  The right strategy can only be selected by measuring how each alternative would bring results today and in the future. The third step, therefore, is to model the performance of each strategy by using detailed network analysis tools to measure the service quality, costs, risks, and return on investment for each alternative.

Every Operator is Different

Every operator brings to these steps its current infrastructure, a set of strengths and weaknesses in markets with their own opportunities, risks and threats.  It is necessary to take these parameters into account when developing the right operational strategy.  Proven and sophisticated tools are needed to determine with precision how many facilities and  what type of automation is needed to future proof the company’s overall strategy.  Stay tuned for additional blogs on the topic: Network analysis, facility design and delivery strategy.