USPS OIG Report: Coordination and Optimization Technologies and Postal Applications

September 6, 2018 (RARC-WP-18-014)

  • Coordination and Optimization Technologies (COTs) — a combination of algorithms, data analytics, machine learning and platform technologies — can make parcels delivery more efficient, flexible and customer-centric.
  • Applications of COTs could help the Postal Service expand the capabilities of its delivery network — paving the way for new parcel services and collaborative delivery models — and better position it in the last mile of the future.
  • Examples of postal application of COTs include: local same-day pickups and deliveries, customized delivery time-windows, collaborative same-day delivery combining postal and non-postal carriers, and leasing part of the postal last-mile infrastructure with shippers or other delivery companies.

COTs are playing a critical role in driving innovation in parcels delivery, such as on-demand deliveries by independent drivers or the in-store fulfillment of ecommerce orders. COTs also elevate customers’ expectations for faster, customized deliveries.

The Postal Service already employs some COTs to improve its delivery operations: one example is the dynamic optimization of its Sunday parcels delivery routes. The OIG worked with an academic institution with an urban logistics research center to identify applications that illustrate how COTs could further help USPS position for the future and become a nimbler “any-time, anywhere” parcels delivery platform.

A more flexible last mile. The Postal Service could leverage real-time delivery route optimization software to pilot the real-time pickup of parcels and potentially offer local same day delivery along some of its existing routes. It might also consider the feasibility of letting parcels recipients select time-windows on parcels routes.

Collaboration in urban last mile delivery. In collaboration with U.S. cities, the Postal Service could pilot a new, flexible delivery model that would enable sustainable faster delivery in high density urban areas. The model would involve the creation of new parcel distribution points — called microhubs — closer to recipients. A COTs platform would coordinate pickup and delivery by USPS carriers complemented as needed by on-demand delivery partners. European posts are already testing this model.

Leasing part of the urban last mile infrastructure. A COTs platform would monitor the available capacity of underutilized USPS facilities, such as sorting centers or urban post offices. Excess space would be leased to mid-sized merchants interested in moving fulfillment processes closer to customers. Similarly, USPS could lease the use of its parcel lockers to local crowdsourced delivery companies and retailers.

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Source: USPS Office of Inspector General

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