Background

This report presents the results of our self-initiated audit of manual letter processing operations at the Industry Processing and Distribution Center (P&DC) in the City of Industry, CA. We conducted this audit to provide U.S. Postal Service management with timely information on operational risks at the Industry P&DC.

The Industry P&DC is in the Santa Ana District of the Pacific Area. During fiscal year (FY) 2019, it manually processed 1 million letters, 4.4 million flats, and 9 million parcels. Mail is processed manually when its dimensions or address quality prevent it from being processed on mail processing equipment. It is much more cost effective for mail to be processed on mail processing equipment rather than manually. In FY 2019, average productivity for letters processed on mail processing equipment was 7,299 mailpieces per hour while the average productivity for manually processed letters was 1,163 mailpieces per hour.

We selected the Industry P&DC for review based on our analysis of manual letter productivity as measured by the Management Operating Data System (MODS). The Postal Service uses MODS data to plan workload, forecast workhours and mail volume, track mail processing activities, evaluate the efficiency of facilities, and estimate staffing requirements. In addition to its operational uses, the Postal Service uses MODS workhour data to calculate totals for many of the cost pools within the Clerks and Mail Handlers Cost Segment. Postal Service management and the Postal Regulatory Commission rely on accurate and precise product cost estimates to set postal prices and to reliably determine whether revenue for products and mail classes cover attributable costs. The Industry P&DC’s FY 2019 manual letter productivity of 104 mailpieces per hour was significantly lower than the national average productivity of 1,163 mailpieces per hour.

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