We’ve all heard some big whoppers in the past, and the death knell of print to mail or paper document processing is one of them. I’ve been in the business over 20 years, and I'm still waiting. It started with the POSTNET barcode in the early 90s and continues today with the Intelligent Mail barcode (IMB). Is the US Postal Service (USPS) in trouble? Yes. Is Washington making it worse? Yes. Is there real competition for marketing dollars other than paper? Yes. Has there ever been a time in your career when those answers weren’t the same? No.
There are multiple studies available to contradict every report on the ultimate demise of the industry. You are either in or out. A wait-and-see attitude is a decision for out. Any serious person knows there is still 170 billion pieces of mail to process and deliver, and the downward trend is flattening. Has volume declined? Sure. The industry is rightsizing itself in the face of other channels.
Direct mail is actually increasing, and projections into 2020, according to the Boston Consulting Group's "Projecting US Mail Volumes" report, are 150 billion pieces. Why? Because it works. What matters are results, and marketing executives and CFOs know it. Print to mail is an important part of the customer communication spectrum and will continue to be well into the future. There was entirely too much capacity at mail volume peak anyway, so there was going to be some closures. This is not an industry winner-take-all scenario, and anyone telling you otherwise is selling something.
Not to say that everything is rainbows and unicorns either. There are some real challenges facing mail producers. Namely, how do we continue to beat the competition on cost per acquisition to deliver the highest return on investment and trust in communications to our customers? If you are in it for the long haul, what can you do? One answer that has always worked and will continue to work in any industry is improved operational efficiency. It’s not sexy but has long-lasting results by lowering costs, which convert to more customers and bottom line dollars. The trouble with that is it requires commitment from top to bottom in any organization. Unlike a merger, acquisition, marketing, etc., operational improvement requires top management through front line supervisors to commit and stick with it. As advisors to the industry, we see many well-intentioned starts on the improvement path but very few finishes. Most of the blame lies directly on management, and why not? They make the decisions.
Typically, the failure of management lies in long-term commitment. To coin a phrase: management attention deficit disorder or MADD. Improvement takes time, whether it’s a lean transformation, Six Sigma, re-tooling or any cross-departmental improvement. Instant results are rare and usually short-lived. Operational improvement requires visible support from the top financially, conceptually and with active involvement for the long term to push past roadblocks further down the chain of command. Front line employees simply do what their supervisors tell them. The real test of success is front line supervisor follow-through, and that needs a push from the top. To prevent supervisor attention deficit disorder, management must stay the course and stay involved. Take an honest look at your organization’s past improvement programs and determine if they had long-term success. Where does the responsibility for success or failure lie? Where would your stockholders say it lies?
Besides culture change, as in lean or Six Sigma-type programs, there are some tried-and-true solutions for operational improvement. In particular, one is automating repetitive manual processes. It never ceases to amaze me that the document processing industry has not adopted more automation in production. Automation of manual processes has always made sense and will continue to do so. If this wasn't true, you would still be hand stuffing envelopes. Automation reduces headcount, increases productivity per employee, level loads workflow, integrates quality assurance (QA) in-line and allows better resource planning, to name a few.
Especially now, with increasingly restrictive rules and the IMB, the USPS has a way to police every producer and assess additional dollars for mail not prepared to their myriad of standards. Even more frightening, it’s no secret the IMB was hatched out of the revenue department and will leave no stone unturned in search of more revenue. According to the 2011 USPS "Annual Compliance Determination Report", 62% of workshare discounts are unearned by the programs, and you can bet the USPS and Washington are going to come looking for it.
Well-run organizations have been working on the Automated Document Factory (ADF) or some variation of it for some time. Usually, there is significant investment in software (think data, composition, postal, enterprise resource planning, etc.) and lettershop (think printers, inserters, bindery, etc.). The goal is to tie it all together in an unbroken chain of digital events for QA, tracing/tracking and an efficient workflow. For the most part, the digital aspects of the ADF are fairly solid, as well as the mail production machinery. Even the enterprise resource planning tools continue to get better, both home-grown and from the major vendors.
What is missing from all but a precious few is truly tying the virtual and physical workflows together. As it stands now, most organizations producing mail do a pretty good job of data processing, compose, print, bindery, insert and sort. Additionally, with the IMB driving it, most are converting to e-statements and postal processing. The trouble is the huge black hole in the process, where the lowest-paid employees control the flow and final steps in the process. That black hole will soon become more and more prevalent as the USPS begins "finding" revenue from producers that can’t prove a bulletproof process or, in their words, “not earning the workshare discount.”
I’m speaking of the clear break in the chain of events after the completed mailpiece comes off the end of your inserter. Literally, millions of dollars are invested to produce a highly traceable, bulletproof mailpiece, but then what happens in the process? The answer: Finished mail is manually handled multiple times by the lowest-paid workers to move it around the plant, performing a myriad of manual processes and breaking the provable audit trail. In other words, the digital workflow is not connected to the physical workflow all the way through the process, i.e., placing finished envelopes into a USPS tray, tagging the tray, sleeving and strapping the tray and placing the tray onto a pallet, onto a truck and connected to your digital postal statement.
Think your process is bulletproof now with quality checks and manual processes? Prove it, or at least that’s what the USPS will ask you to do when your pallet of mail meant for Maine ends up in Miami, whether it’s your error or not. What’s your recourse with a Seamless Acceptance process adopted by the USPS when every piece, from every tray on every pallet, is traceable back to the source? Another scary thought: The USPS bungles the pallet and contents of it, coming after you with fee assessments or full rate postage for unearned workshare discounts. The answer is you can’t prove your process completely since too many human hands have touched that mail from end of inserter to delivery point.
Think eliminating manual processes is the wave of the future? Yes, you’re right—for the survivors. The future already exists actually for some forward-thinking companies that have adopted automated material movement and robotics in the finishing processes of traying mail, sleeving trays and palletizing. Connecting a process where human hands don’t actually touch the output achieved successful long-term operational improvement. Results include reduced headcount, improved throughput (from four days to four hours at one site), level-loaded workflow and the tools to create a connected virtual and physical audit trail.
The mature technology used in industries like automotive, tool and die, aircraft and the like are now available to help mailers attain a competitive edge and build a bulletproof process that will be required for mailers in the future. Think the cost is too high? What’s the cost for maintaining status quo? Results we’ve seen are typically a two-year payback on investment or less and double-digit internal rate of return.