The U.S.

Postal Service
The U.S. Postal Service (USPS) is the largest Next the letters go to the multiline optical
postal service in the world, handling about 41 character readers, which can handle both
percent (630 million pieces a day) of the printed and pre–bar-coded mail, but not hand-
world’s mail volume. The second largest is addressed mail. The optical reader sprays a bar
Japan’s, which handles only about 6 percent of code on the mail that hasn’t been pre–bar-
the world’s mail. The USPS is huge by any coded, which represents up to an 11-digit zip
standard. It employs over 760,000 workers, code. For hand-addressed mail, a camera
making it the largest civilian employer in the focuses on the front of the letter, and the image
United States. It has over 300,000 mail is displayed on a remote terminal, often in
collection boxes, 38,000 post offices, 130 another city, where an operator views the
million mail delivery points, more than 300 image and provides the information that the
processing plants to sort and ship mail, and optical readers could not determine so that a
more than 75,000 pieces of mail processing bar code can be added.
equipment. It handles over 100 billion pieces
Bar-code readers then sort the mail into one of
of first-class mail a year, and ships about 3
96 stackers, doing this at a rate of more than
billion pounds of mail on commercial airline
500 a minute. The mail goes through another
flights, making it the airlines’ largest shipper.
sort using manually controlled mechanical
equipment.
Processing First-Class Mail
The essence of processing the mail is sorting, At that point, the mail is separated according
which means organizing the mail into smaller to whether it is local or out-of-town mail. The
and smaller subgroups to facilitate its timely out-of-town mail is placed into appropriate
delivery. Sorting involves a combination of sacks according to its destination, and moved
manual and automatic operations. Much of the to the outgoing send area where it will be
mail that is processed is firstclass mail. loaded on trucks.

Most first-class mail is handled using The local mail is moved to another machine
automated equipment. A small portion that that not only sorts the mail into local carrier
cannot be handled by automated equipment delivery routes, it sorts it according to delivery
must be sorted by hand, just the way it was walk sequence!
done in colonial times.
Small parcels, bundles of letters, and bundles
The majority of first-class mail begins at the of flats are sorted by a bundle-sorting machine.
advanced facer canceling system. This system
positions each letter so that it is face up, with Productivity
the stamp in the upper corner, checks to see if Over the years, the USPS has experienced an
the address is handwritten, and pulls the hand- ever-increasing volume of mail. Productivity
addressed letters off the line. It also rejects has been an important factor for the USPS in
letters that have the stamp covered by tape, keeping postal rates low and maintaining rapid
have no postage, are third-class mail, or have delivery service. Two key factors in improved
meter impressions that are too light to read. productivity have been the increased use of
The rejects are handled manually. The automation and the introduction of zip codes.
remaining letters are cancelled and date
stamped, and then sorted to one of seven Mail processing underwent a major shift to
stackers. mechanization during the 1950s and 1960s,
which led to more rapid processing and higher support for rates reflecting customer work-
productivity. In 1978, an expanded zip code sharing features, many tied to automation, to
was introduced. give customers more flexibility. At the same
time, the USPS began forming Customer
That was followed in 1983 by a four-digit
Advisory Councils—groups of citizens who
expansion in zip codes. These changes
volunteered to work with local postal
required new, automated processing
management on postal issues of interest to the
equipment, and the use of bar codes and
community. In 1990, the USPS awarded two
optical readers. All of these changes added
contracts to private firms to measure first-class
greatly to productivity. But even with these
mail service and customer satisfaction. In
improvements, the USPS faced increasing
1992, the USPS stepped up its quest to become
competitive pressures.
more competitive by reducing bureaucracy and
overhead in order to improve service and
Competition customer satisfaction, and to reduce the need
In the late 1980s, the USPS experienced a to increase postage rates.
slowdown in the volume of mail. Some of this
was due to a slowing of the economy, but most To help accomplish these goals, the USPS
of it was the result of increasing competition. underwent a reorganization. Layers of
Delivery giants FedEx and UPS, as well as management were eliminated and overhead
other companies that offer speedy delivery and positions were cut by about 30,000. Five
package tracking, gave businesses and the regions and 73 field divisions were replaced
general public convenient alternatives for by 10 areas, each with a manager for customer
some mail services. At the same time, there services and a manager for processing and
was a growing use of fax machines and distribution. Ten customer service areas were
electronic communications and increased use established, with managers for customer
of alternate forms of advertising such as cable service and processing and distribution in each
TV, all of which cut into the volume of mail. area, as well as a marketing and sales office.
Early in this century, e-mail and automated bill The new structure allowed postal managers to
paying also cut into mail volume. be focused, improved communications, and
empowered employees to meet customer
needs. The USPS also took other steps to
Strategies and Tactics Used to improve service. In 1993 it implemented
Make the Postal Service More improvements in processing and mail delivery
at major postal facilities, expanded retail
Competitive hours, and developed a more user-friendly
To meet these challenges, the USPS developed
Domestic Mail Manual. In cooperation with
several strategies to become more competitive.
business customers, the USPS began to
These included reorganizing, continuing to
develop new services to meet specific mailer
seek ways to keep costs down, increasing
needs and to overhaul and simplify its
productivity, and emphasizing quality and
complex rate structure. It also awarded
customer service. Here is an overview of the
contracts for two more external tracking
situation and the strategies and tactics used by
systems, one to measure satisfaction levels of
the USPS.
business mailers, and the other to measure
The USPS began working more closely with service performance of third-class mail.
customers to identify better ways to meet their
The reorganization eliminated some programs,
needs and expanded customer conveniences
cut costs, attracted new business, and reduced
such as stamps on consignment. With the help
the USPS’s projected deficit.
of business mailers, the USPS continued
Questions
1. Why is it important for the USPS to have a high volume of mail to process?
2. What caused productivity to increase?
3. What impact did competitive pressures have on the USPS?
4. What measures did the USPS adopt to increase competitiveness?
5. What results were achieved by the USPS’s changes?
6. What effect does the increased use of e-mail have on postal productivity?
7. How does the use of standard shipping containers and flat-rate mailers help competitiveness?