Oct 9, 2007
Automated Mail----How It All Began
By Mary Ann Bennett
“Our goal is the lowest combined mailer and Postal Service costs in preparing and delivering mail. To achieve this goal, we plan to have a barcode on all letter mail and all non-carrier route presort flat mail by the end of 1995----either by you (with rate incentives) or by us.”
That statement was made to mailers by former Postmaster General Anthony M. Frank on September 26, 1988.
Mr. Frank was true to his word, and in February 1991, postage rates were introduced that provided incentives for mail that was automation-compatible (pre-barcoded or “barcodable”) for United States Postal Service (USPS®) equipment. At that time, the incentives were substantial, to say the least. Hard dollar savings in postage costs to your company could be in the 20% range. The same hard dollar savings could be achieved in your print, production and processing costs. Soft dollar savings far exceeded 20% and could be found in the rate structure for departments throughout your company.
Today, sixteen years later in 2007, your hard dollar savings are in the 50% range and, just as in 1991, all of these savings are there for the keeping or they are yours to give away to the post office. The vast majority of the savings lay quietly inside the Name, Street, City, State and ZIP® code you place on a piece of mail. Pay attention to the quality of an address and keep the money. Ignore address quality and give the money away.
Taking a few simple steps will put these savings on your company’s bottom line:
- Look at the USPS Automation Plan as a business venture.
- Develop a Postal Point of View™ for mailpiece design.
- DPV-ZIP+4 your database.
- Barcode, barcode, barcode.
The Automation Plan
The USPS began testing the first pieces of equipment, Optical Character Readers (OCRs), to automatically scan and sort mail pieces in 1965. The postal powers-that-be knew even then that mail processing had to become automated if the postal service was going to survive.
In 1976, a task force began to put the Automation Plan in place and ZIP+4® was born. ZIP+4 played the most critical role in the entire automation scheme. It was and is the code that OCRs read and interpret in order to apply a barcode.
By the early 1980s, hundreds of OCRs and BCSs (Bar Code Sorters) began to be installed at mail-processing centers across the nation. These pieces of equipment operated extremely efficiently when presented with mail addressed in a format that was machine-readable or “automation-compatible”.
In 1987, the Postal Service enlisted the assistance of the mailing industry to develop strategies for customer participation in postal automation. These meetings resulted in a shift in the automation plan. Incentives for customers to prepare pre-barcoded mail with the new rates were in place in February 1991.
Prior to February 1991, most veterans of the mailing industry were very comfortable and familiar with the discount rate structure of the post office. Take a moment to savor the memory of the magnificent simplicity of Third Class Basic, Pre-Sort, and Carrier Route. Mid 1990 brought rumblings of a rate increase, and the word “automation” began to be heard throughout the mailing industry. Mailers and postal staffers alike used the word freely, but with little or no real understanding of the definition or its application. A sense of unease began to permeate the industry. Marketing plans, major purchases, advertising strategies, and corporate directions were put on hold until the new rate increase was announced. A relatively subdued but chaotic atmosphere existed because every member of the mailing industry had an opinion but no one really knew for sure the complexion of the new rates.
The USPS added mystification to chaos with the announcement and simultaneous implementation of the new rate structure. Basic, Pre-Sort and Carrier Route were joined by Automation, Destination Entry, and Walk Sequence incentives. Compounding all discount levels was the introduction of “Letter” and Non-Letter” categories. ZIP+4 and barcode discounts were also introduced, and the Post Office started to write the technobabble for Chapter 5--Automation of the Domestic Mail Manual (DMM).
The result was an unbelievably complex rate structure with incentives based on complicated mail-preparation requirements. No grace period. No ease of transition. The bewilderment unfortunately still exists today, the outcome being lost revenues for companies across the country.
The bafflement can be reduced if you look at the USPS’s Automation Plan as a business venture and try to keep a few basic postal facts in mind:
Fact: The USPS has invested hundreds of millions of dollars in the last three decades on automated equipment, primarily in the form of optical character readers and barcode sorters.
Fact: The equipment was purchased to speed up the handling and sorting of mail pieces and to lower internal costs.
Fact: The USPS’s internal costs to sort 1,000 letters manually is about $50. It’s costs to sort 1,000 letters with automation is $4.50.
Fact: The USPS is still looking to get a return on its investment.
Fact: The USPS’s return on investment will occur only if its equipment is utilized to sort mail.
Fact: The USPS cannot process mail with its automated equipment if the mail pieces do not conform to specific standards.
Fact: Postage savings incentives have been established for mail that is automation compatible. You provide compatible mail to the post office and you are rewarded with lower postage costs.
Fact: The postage dollar savings are substantial---over 3,000 postage discounts exist in the rate structure---the money is there for the taking.
To summarize: If your mailings can be handled by the sophisticated USPS equipment, it will cost you less in postage and be processed and delivered sooner. The post office benefits by lowering its internal processing costs and recovering its investment at a faster rate. The incentives are in place. Logically, the post office will charge you more postage if it costs them more internally to sort and handle your mail. It will pass savings along to you if you present mail that is presorted or has physical characteristics so it can be sorted by its automated equipment.
The bottomline: The USPS cannot accomplish its goals without you, the customer. And you cannot lower your postage costs without providing the post office with automation-compatible mail.
I hope this column has provided some of you with new knowledge and, for fellow veterans of this magnificent industry, a reminder of how it all began. I wanted to provide a solid foundation and view of the past so that my upcoming columns can focus on today’s challenges and future opportunities for everyone who utilizes the US Postal Service and is interested in decreasing costs and increasing profits for their company and their mail.