The U.S. Postal Service uses Area Mail Processing (AMP) guidelines to consolidate mail processing functions and increase productivity through more efficient use of equipment, facilities, staffing, and transportation. These consolidations are intended to reduce costs and maintain quality service.
The Kalamazoo, MI, Processing and Distribution Center’s (P&DC’s) destinating mail moved to the Grand Rapids, MI, P&DC and Processing and Distribution Facility (P&DF) on April 18, 2015; and the delivery point sequence mail moved on April 25, 2015. Lansing, MI, P&DC destinating and delivery point sequence mail was to be moved on July 25, 2015; however, the Postal Service announced on May 27, 2015, that it was deferring all planned consolidations until 2016.
This report responds to a request from U.S. Senator Debbie Stabenow to review mail processing consolidations in Michigan. In a separate audit, we reviewed the Iron Mountain, MI, P&DF consolidation.
Our objectives were to determine whether business cases existed to consolidate Kalamazoo P&DC and Lansing P&DC mail processing operations and assess compliance with established AMP guidelines.
What The OIG Found
A business case exists to support consolidating the Kalamazoo and Lansing P&DCs. Following the Kalamazoo P&DC consolidation, productivity increased at the Grand Rapids facilities. Also, although delayed mail increased and service scores declined from the previous year, they were better than the national average in quarter 3, 2015. Further, there was no significant impact on carriers returning from the street after 5 p.m.
We also found the Grand Rapids facilities have capacity to process the additional mail and the Postal Service does not plan to lay off any career employees. In addition, the consolidations should not substantially impact the community and the AMP guidelines were generally followed.
However, we found the Postal Service overstated annual cost savings by about $791,000 for the Kalamazoo P&DC and about $1 million for the Lansing P&DC. Specifically, it misstated transportation and management workhour savings. We estimated the Kalamazoo P&DC and Lansing P&DC consolidations will save about $7 million and $9.9 million per year, respectively.
What The OIG Recommended
We recommended the vice president, Network Operations, re-evaluate transportation and management workhour savings contained in the Kalamazoo and Lansing AMP feasibility studies and make adjustments during the first post-implementation review. We also recommended the vice president, Network Operations, adjust transportation and other operational requirements to ensure the Grand Rapids P&DC and P&DF meet service commitments.
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Source: Consolidation of the Kalamazoo, MI, and Lansing, MI, Processing and Distribution Centers | USPS Office of Inspector General