OIG Report: Mail Processing Variance Model


The U.S. Postal Service established its Mail Processing Variance (MPV) model in fiscal year (FY) 2011 to measure annual mail processing operational performance and efficiency.

The MPV model is a management tool that calculates mail processing productivity by dividing total mailpieces handled by workhours. The MPV model calculates national annual targets by excluding the top 10 percent most efficient facilities and the bottom 10 percent least efficient facilities, and averaging the productivities of the remaining top 25 percent most efficient facilities. Management uses model results to measure the mail processing productivity of all facilities in relation to the targets.

Our objective was to determine if the Postal Service effectively used the MPV model to increase mail processing productivity.

What the OIG Found

We determined the Postal Service did not effectively use the MPV model to increase mail processing productivity. From FYs 2014 to 2016, the Postal Service’s mail processing productivity declined by almost 10 percent. According to Headquarters Network Operations management, the changes in productivity were due to mismanaging workhours and not ensuring that employees are recording their workhours in the correct operation.

We surveyed the plant managers of all of the 256 facilities in the MPV model about their use of the MPV model. We specifically questioned their familiarity with and use of the MPV model; whether it helps them evaluate and improve productivity and staffing and identify incorrect workhours; and whether they knew their FY 2016 productivity and MPV targets and if the targets were attainable.

We found correlations between the plant managers’ answers and the changes in facility productivity from FYs 2015 to 2016. For respondents who said they used the MPV model more frequently and found it helpful, productivity only decreased by 2.68 percent. For respondents who said they sometimes used the model and found it helpful, productivity decreased by 4.84 percent. Finally for those respondents who said they used the model less frequently or not at all or found it only slightly helpful, productivity decreased by 9.03 percent. If the Postal Service were to use the model more frequently, we estimate it could save over 2.8 million workhours annually, or almost $120 million.

In addition, management could create more facility-specific and achievable MPV productivity targets. These MPV targets could include recognizing facility differences such as types of mail processed, types of processing machines used, mail volume, and facility size. These factors impact productivity and allow for easier evaluation of individual facility performance compared to productivity targets.

We found that no facility achieved all of the productivity targets for FY 2016. Additionally, on average, about 22 of the 256 processing facilities, or less than 9 percent, met any FY 2016 MPV productivity targets. Headquarters Continuous Improvement management said this was not an issue because facility managers are not expected to meet MPV targets and mail processing facility managers should use the MPV model to compare their productivity to previous periods and improve it.

Headquarters Network Operations management also told us they notify area vice presidents weekly of facilities with the most opportunity for improvement based on the MPV model. Even though Headquarters Network Operations management is making areas aware of opportunities for improvement, when mail processing facility managers do not use the model and do not have specific and achievable productivity targets it is unlikely that productivity will increase.

During our audit we noted that Headquarters Network Operations management has not updated Handbook M-32, Management Operating Data System, since March 2009. The handbook does not include the 79 mail processing operations that have since been created but does include 271 such operations that are no longer in use. Postal Service personnel use the handbook as a guide for correctly recording Management Operating Data System volume, workload, and workhours. This information is used in the MPV model to evaluate operational performance.

Headquarters Network Operations management could not provide a reason for not updating the handbook and said they maintain current Management Operating Data System operating numbers on a web page. When mail processing operation numbers are incorrect there is reduced assurance that the MPV model contains accurate data for measuring mail processing operational performance.

What the OIG Recommended

We recommended Postal Service management develop and implement an MPV model usage policy and training for mail processing managers to improve operational efficiency; evaluate developing specific MPV targets for similar mail processing facilities based on type of mail processed, type of processing machines used, mail volume, and facility size; and update Handbook M-32 to reflect all current mail processing operation numbers.

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Source: USPS Office of Inspector General

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