The Postal Productivity Equation
October 2013
Post Expo 2013 Vienna
Adrian King
Principal, Strategia Group
Introduction
• Postal Challenge of Core Delivery Productivity in Current Markets
• The Postal Productivity Equation
• Factors Creating Labour Flexibility
• Conclusion - Productivity Checklist
Productivity and the Post
Posts now have to deliver increasing productivity in more demanding environments all aspects of the
corporate model will come under pressure to increase output and reduce input to meet these challenges.
Scenarios
Issues
•
Jaws of Death
Achieving productivity growth in high automation
environments
Accelerating productivity growth in the light of mail
volumes and packet competition
Defining productivity paradigms for the new market
Developing flexible work practice environments
– New contractual forms
– Productivity cultures
Optimisation trade-offs around productivity
decisions
•
120
•
•
100
80
60
•
40
Areas
20
0
2014
2015
2016
2017
2018
2019
Revenue
Cost Scenario1
Cost Scenario2
Cost Scenario3
2020
•
•
•
•
•
Overheads
Transport
Collection and Induction
Processing
Delivery
Postal Ambition and Productivity Equation
• Goal is to minimise base unit cost to create competitive platform
Technology
and Logistic
Enablers
Work Practice
and process
Productivity
• Goal is to establish
continuous
improvement cultures
Address
System and
Databases
Financial
y
Return
USO &
Quality
Future
Demand @
Work practices
and process
Quality
Innovation
Regulatory
Alignment to
Market
•
Goal is that USO is
based within
acceptable financial
and service
parameters and
reflects demand
changes service
and productivity
implication
Labour
Agility
• Goal is to increase flexibility and agility which enables alignment
between hours and works at acceptable levels of contract flexibility
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The Productivity Equation: Regulatory Framework
In future market conditions engaging in the regulatory debate on USO Standards and requirements is
critical as these will place a constraint on process and flexibility initiatives.
Current Environment
•
•
•
•
Universal Service Standards have been
driven by a common set of assumptions
– Rising volumes, inelastic prices
– Demand for next day service
– Customer Demand for increasing
quality of next day services
These service standards place an
operational fixed point on productivity
development.
Key regulatory factors on pipeline
– Number of collection points
– Collection cut off times
– Delivery Times
– Quality Standards
– Access conditions
Impacts resourcing and flexibility –
understanding cost fundamental to
creating arguments
Emerging Issues
•
•
•
The demand profile for mail is changing
• Declining volumes
• Different composition
• Customer migration around cost,
quality reliability trade-offs-price
sensitivity
• Green concerns
The new debate
• What USO at What Cost and Who
pays ?
• Competitive alternatives for
document delivery-Mail prices cant
assume RPI link
Regulatory accommodations to support
productivity growth
• Alternate day – defacto or de jure
• Digital
• CMB, Roadside boxes, Lockers,
The Productivity Equation: Technology and Logistic Enablers
There are established leading practices in relation to logistic design and technology deployment. The Challenge
is to drive productivity from the next generation of technology opportunity
Parcel Automation
RFID
Flat Sequencing
Intelligent Network
not Machines
Mobile and PDA
Collection
Scheduling Software
Packet Sorting
Operations
Performance Mgmt.
Addressee
Information
Collection
Scanning
Mail Sequencing
IMS/ Visibility
Dynamic Route
Planning
Collection
Rationalisation
OCR & Video
Coding
Production Planning
and Control
Customer Forecast
and Schedules
Mail and Flat
Sort Automation
Tracking Systems
Mechanical
Handling
Product/Machine
Alignment
Plant Modernisation
and Rationalisation
Address Database
Depot & Frames
Modernisation
Collections and
Induction
Processing
Processing System
Support
Route Planning
Delivery
The Productivity Equation: Process and Management
Posts have implemented a range of schemes to change productivity cultures. The hardest challenge in the
productivity equation is the implementation and continual renewal of management and work process which
focuses on unit cost not labor cost thinking and measurement.
Feature
Objectives
Best Practice
Front Line
Management
• To create change agent
• Commercial leader
• Front line management-business skills
• Measurement targets and empowerment
• Support – Training & Development
Standard
Process
• Development of standard procedures
• Compliance as norm
• Ensure local input
• Rigorous definition of service standards
• Roll-out to minimise service disruption create process champions
• TQM -discipline engaged -e.g. six sigma- information relevance and timeliness
Job
Design
• Postal Productivity requires greater labour
flexibility to reflect work flows-achieving the
ideal is a long process
• Full time, part time ,casual, divisions of labour e.g. just delivery function
• Match work flow to hours e.g. annual hours, dynamic rostering, relief etc
• Labour pools and employee –employer centric flexibility model
Team
Working
• Change work practices & demarcations
• End shop-steward work process control
• Introduce team approaches
• Local managers have ability to resource in flexible way against volumes and
operational financial targets, maximizing productivity potential and that allow
team working, dynamic rostering, and flexible hours in remuneration
agreements
Quality
Circles
• Create team involvement
• Focus on quality and unit cost
• Engagement of employee, not shop
steward
• TQM -Six Sigma
• Incentives- financial –enrichment
• Internal communication and process
Measure &
Incentives
• The measures to be used to develop
leadership and commercial capabilities
relevant to unit and related to pipeline
maximisation not unit maximisation
• Devolution of budgetary system to provide good local information
• Issue is not manpower or costs, but of ensuring falling unit costs
• Ability to reward unit level productivity
Postal Productivity- The Labour Challenge
•
Competition, cost pressures , consumer demand and a shift to 24x7 commerce all create
pressure to increase flexibility
•
Labour still accounts for 50-70% of cost
•
Alignment of labour time to work load critical to gain productivity benefits
•
Collective contracts prevail and have created rigidities through standard work measures,
complex allowances and fixed working periods
•
Posts have a tradition and expectation to be a high quality employer
•
Post need greater labour flexibility and agility to meet productivity imperative and
customer expectations
•
Posts would want to create flexibility within the Lisbon “Flexicurity” model rather than in a
free market model of low rights, wages and certainty. Both for ethical and commercial
reasons ( commitment, recruitment, quality )
•
New and creative thinking will be required
Productivity Equation Labour : Flexibility : A Working Definition
Successful flexibility cannot only be an employer centric zero hours model to be successful and sustainable there
need to be employee centric features which are about having sufficient autonomy that works for the individual,
the customer and increases the productivity and efficiency of the organisation
Flexibility
Customer
• Responding to
demand for
customised
services
Employee
• Balancing work
and life at
different times in
the lifecycle
Employer
• Ability to drive
productivity and
reduce cost
•Numerical Flexibility
•Short term contracts part time, casuals,
shift patterns, overtime
•Functional Flexibility
•Variablies task, multi skilled employees
teams, engagement to process
• Organisational Flexibility
•Sub–contracting, Franchising, link cost to
pay and transfer risk
•Pay Flexibility
•Increase profit related elements, reduce
pension commitment
•Employee Flexibility
•Flexible banked hours, work life balance,
life cycle stage
Productivity Equation Ideal Postal Flexibility ?
Postal Productivity requires greater labor flexibility to reflect work flows - achieving the ideal is a long
process.
Processing
 Part-time unskilled for mail
preparation
 Full time sorting shifts
(manual, video or OCR feed)
 Managing relief
 Dynamic rostering
 Productivity Measurement
Transport
 Full-time: load & drive
 Outsource or owner-driver
models
 Vehicle care
 Collections critical for service
 Part-time skilled walk
sorting/Sequence
 Full-time delivery
 Part- Time
 Daily hours variation for
weekly volume cycle
 Managing relief
 ‘Cut-ups’
 Productivity Measurement
 Health & safety
 Seasonality
 Rosters to meet foot traffic
 Part-time options
Delivery
Retail
However to achieve these process & productivity led innovations there will be a need to accept some
employee centric flexibility elements and incorporate these in total review of work organisation, job design,
workplace culture, management styles and performance management systems
Productivity Equation : Core – Periphery Models
The Postal Logistic E-commerce Sector is increasingly moving to a core- periphery labour model with greater
use of peripheral workers. To retain competitiveness the Post will incorporate elements of this. However if
the balance is too far to the right then significant quality and churn cost will undermine benefits. To retain a
core it will need to be more flexible in certain areas
Core
Features
Periphery
Intermediary
•
•
•
•
Flexibility
Requirement
•
•
•
•
Core
Labour Pool
•
Intermediary
Peripheral
Full Time
Secure
Conditions
Career Path
Training
•
•
•
•
Part Time
Clear Conditions
Committed
Defined
Hours/Task
•
Variable work
task
Weekly Hours
Limited Overtime
Pay Performance
•
Willingness part
time
Could be
flexible
•
•
No Guarantees
Limited
Expectations
Traditional full
time worker
•
New labour
pools different
challenges
Commitment to
part timeretirees /careers
Outsourced
contractors
•
•
Starter Jobs
Students
•
•
•
•
•
Fixed Short
Term
Basic Contract
Limited
Commitment
Difficult to implement especially in social partner environments if perceived as an attack on employment
security. Relating flexibility to a more diverse set of employee values can be key enabler………
Productivity Equation : Tools for Flexibility
Post should consider utilising more employee centric flexibility models to win support for a more agile
labour environment
Employee
Centric
Shift Swapping
V-Time working
Self Rostering
Compressed and
Banked Hours
Home Working
Team Working
Over time.
Family Contracts
Term-Time Work
Annualised Hours.
Part time.
Relief Pools
Employer
Centric
Weekly Hours
Sub -contracting
Split Shifts
Casual
Zero -Hours
Increasing Flexibility
Conclusion – Productivity Check List
•
•
Technology
and Logistic
Enablers
Work Practice
and process
Productivity
Address
System and
Databases
Financial
Work
practices and
process
Quality
y
Return
USO &
Quality
•
Future
Demand @
Innovation
•
Regulatory
Alignment to
Market
Labour
Agility
•
Technology Enablers
– First generation implemented
– Second generation plan
Regulatory Alignment
– Cost understood
– Clarity on universal access to information
vision and regulatory / price negotiation
strategy
– Product Alignment to drive productivity
Work Practices
– Stretch productivity orientated standards
and measurement
– Front Line management business orientated
and empowered
Labour Agility
– Vision of model
– Incorporation of employee centric tools
– Clear defined negotiation and change
strategy
Culture
– Stakeholders aligned and understanding
the imperative of the productivity agenda if
the Posts is to continue to be a financially
independent and sustainable key national
infrastructure
Thank You
Adrian King
The Strategia Group
+44 7796 308618
adrian.king@strategiagroup.net
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