How important is managing delivery costs to your business?
On average, almost 50% of a postal organisation’s operational costs relate to physical delivery - "the last mile". As a result, cost-cutting programmes are increasingly focused on reducing delivery costs.

Improve productivity to manage your delivery costs
The reality is that postal delivery is still a labour intensive process despite new technologies such as mail sequencing. And postal deliverers' salaries average 83% of delivery costs but can account for up to 90%.

So, if 40% of your total operating costs are labour costs associated with delivery, improvements in delivery labour productivity can make a huge difference to your overall financial result.

Indoor processing and outdoor delivery
Indoor processing typically includes the final mail sort to postal delivery round, and sequence sort into postal delivery order. The "last mile" is the physical delivery to addresses. In indoor processing, there is a clear relationship between volume and processing hours – the greater the volume, the more hours required to process. The relationship is not so strong in outdoor delivery.

While particularly high or particularly low volumes will increase or decrease the total delivery time on a delivery round, most variations in volume have little impact on actual workload.

Relationship between volume and workload in indoor processing

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Relationship between volumes and workload in outdoor delivery

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Transend's view is that reducing delivery costs and managing labour requires workload models that can objectively set the required resource levels. This in turn, enables delivery office managers to daily better match labour hours to workload.

Managing the workload
To determine your labour resource requirements you'll need to identify the correct size for each postal delivery round. This will then balance your under-utilised labour (during low volumes) with the need to pay over-time (during high volume days).

Workload management begins with measuring delivery rounds and is most accurately done using Global Positioning Systems (GPS) technology. Measurement includes:

• distance of actual delivery route
• distances to and from route
• distances on and off street (20-60% of route may be off street)
• classification of address points
• number of steps, gates, secure doors and other barriers or challenges for the delivery person.

This type of postal delivery measurement combined with volume data by delivery round enables an objective calculation of base labour resource. It also ensures that, on average, delivery rounds are equal in workload. Unequal delivery round sizes are difficult to manage and create significant disharmony amongst delivery staff.

Increased individual productivity
The same tools used to calculate equivalent delivery round sizes can also analyse the productivity of individual rounds within and between delivery offices, as well as reviewing resource allocation decisions as volumes change due to seasonal or longer term trends.

While there are some challenges in delivery round measurement, Transend’s global experience indicates that once the initial measurements are done, analysis is not difficult. Existing sources of volume information are usually highly accurate and baseline resourcing can be easily established.

Put simply, postal delivery measurement is an investment in the delivery system that once undertaken can require little updating to remain relevant.

Unions are frequently raised as a reason not to change existing practice, but Transend contends that fairness and equity of workload are key union requirements. Postal delivery measurement therefore provides an objective way of comparing jobs within the delivery function.

We believe the effort is worth it. Determining baseline resourcing for delivery rounds can allow you to experience productivity improvements, reductions in overtime, individual performance management and the ability to forecast and plan resources to manage peaks and troughs.

Transend can provide tools to:

• objectively size and re-balance round hours 
• determine daily resource and overtime requirements
• forecast and plan resourcing
• measure productivity and cost.