Audit Report – 11/19/2014

Background

The San Francisco Processing and Distribution Center (P&DC) is a mail processing plant in the U.S. Postal Service’s Pacific Area. This facility processes inbound/outbound mail for the city of San Francisco and associate offices in the surrounding area. In fiscal year (FY) 2013, it processed about 1.41 billion mailpieces, a decrease of about 8.6 percent from FY 2012.

Our mail processing risk model identified the San Francisco P&DC as having significant potential for savings through improved efficiency. To maximize efficiency, the P&DC must process mail using the least amount of resources while meeting service standards. Our objective was to assess the efficiency of San Francisco P&DC mail processing operations.

What The OIG Found

While the San Francisco P&DC has increased efficiency, there are more opportunities for improvement. We found it did not attain the efficiency achieved by similarly sized P&DCs. Specifically, in FY 2013 the San Francisco P&DC processed mail at a rate of 795 pieces per workhour, whereas the similarly sized P&DC at the median productivity level processed mail at the rate of 1,054 pieces per workhour. Accordingly, the San Francisco P&DC processed 259 fewer pieces per workhour than the comparable P&DC.

This occurred because management did not adjust workhours to workload, analyze operational efficiency through benchmarking, adequately supervise employees, or fully utilize automation equipment. Consequently, the facility was using more workhours than necessary to process mail volume. We identified specific mail processing functional areas that could be more efficient, resulting in 486,781 fewer workhours and an annual cost avoidance of over $21 million.

What The OIG Recommended

We recommended management at the San Francisco P&DC eliminate 486,781 workhours to produce an annual cost avoidance of over $21 million or increase mail volume by 533 million mailpieces, or increase efficiency by a combination of these actions.

We also recommended management periodically evaluate operational efficiency and staffing to determine whether additional workhour adjustments are needed based on workload and analyze operational efficiency by benchmarking operations against those of similarly sized plants. Additionally, we recommended management maximize the use of automated equipment and improve supervision of employees.

Related: Audit: SF postal distribution center ‘inefficient’ and ‘overstaffed’

via Office of Inspector General | United States Postal Service.