USPS OIG Report: Establishing New Retail Access Points

Background
The U.S. Postal Service’s retail network is larger than McDonald’s, Starbucks, and Walmart combined — with over 46,000 physical retail access points. These access points are locations where customers can purchase Postal Service products. They include traditional brick-and-mortar post offices and alternate access points such as self-service kiosks, contract postal units, community post offices, village post offices, and USPS approved shippers.

Population shifts, business growth, and technological developments continue to impact customer preferences and the Postal Service’s retail footprint. The Postal Service recognizes the importance of cost-effectively aligning retail access points with these changes because it costs the Postal Service at least twice as much to collect one dollar of revenue at a Post Office compared to most alternate access points.

The Retail and Customer Service Operations group and other headquarters and field staff are involved in establishing new retail access points. Headquarters manages this program and evaluates proposals from the field for new post offices, contract postal units, and village post offices based on financial and service considerations. Field staff members are tasked with submitting evaluation proposals for alternate access points to headquarters based on identified needs.

The Postal Service opened 591 new retail access points in fiscal year 2016 — 102 contract postal units, 16 village post offices, and 473 approved shippers. Recent events, however, may limit future openings — on July 8, 2016, arbitration between the Postal Service and the American Postal Workers Union resulted in a 1 year moratorium on opening any new approved shippers, contract postal units, and village post offices.

Our objective was to evaluate the Postal Service’s process for establishing new retail access points.

What the OIG Found
The Postal Service needs to improve its process for establishing new retail access points. The Postal Service does not always factor in its entire retail network or those of its competitors when assessing the need for new retail access points. Its assessment is not comprehensive because it does not have robust data analytics capabilities to evaluate new retail access point proposals. It also lacks a centralized system for tracking and recording the proposals, related documentation, and decisions. In addition, Postal Service policies for establishing retail access points do not reflect current best industry practices.

Leading practices emphasize the importance of advanced data analytics capabilities (such as location analytics that helps identify potential expansion opportunities based on local demographic, economic, competitive, and customer data) and updated policies when considering new retail access points.

We recognize the challenges and sensitivities faced by the Postal Service when attempting to optimize its retail network. Ongoing issues related to the Postal Service’s data analytics capabilities and policies, however, could delay program improvements and negatively impact retail financial and operational performance and the customer experience.

What the OIG Recommended
We recommended management develop comprehensive data analytic capabilities across all retail channels to evaluate proposals for new retail access points; develop a centralized system for tracking and recording new retail access point proposals, key documentation, and decisions; and update existing policies for evaluating the need for new retail access points.

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Source: USPS Office of Inspector General

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