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Open letter to the U.S. Postal Service

The U.S. Postal Service is a national institution that needs to be preserved, says business contributor John J. Alexander. However, they could take a few lessons from the private sector ... Here's an open letter to their leadership.
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An open letter to the management of the U.S. Post Office from John J. Alexander ...

Patrick R. Donahoe
Postmaster General and Chief Executive Officer
patrick.r.donahoe@usps.com -or- patrick.donahoe@usps.gov

Paul Vogel
President and Chief Marketing/Sales
paul.vogel@usps.gov

Dear Messrs Donahoe and Vogel:

I am writing to ask you to reconsider cutting local delivery services as a move to address the USPS’ budget shortfall and financial distress. I agree with your statement that “the post office, despite its flaws, is a national institution that deserves to be saved.” But submit that there are lessons learned from private sector businesses that could both save the post office in the short term and make it more competitive in the long term. Private companies have always faced competition. Some competitors are broadly similar and give customers a choice of near-equals.

More threatening is competition based upon new technology which increases productivity, lowers prices, allows for better service, or like email provides new features, or some combination of all of these. It is no secret that this is what the Post office has been facing for some time. In the face of increased competition, private-sector businesses refocus to improve the value proposition for customers and look internally to decrease operating costs. These moves protects market share, drives sales and ultimately increases cash flow. Companies may also narrow their focus on market segments where their business processes create the most customer value rather than serve less unattractive customer segments - if not critical to the overall business.

You will note that decreasing basic service is not on this list. Making a business service less attractive to customers is not typically a strategy employed to help save a business faced with competition. Such a strategy can only cement in the minds of customers that the business does not understand its customer’s needs and intensify customers search for and switch to alternatives. The other factor, as you have already identified, is cost. The USPS is not alone here either in dealing with high labor and related costs. To survive, it must be competitive on cost and productivity measures. Your competition’s cost structure is a matter of public record so benchmarking is straightforward – as is the necessity to renegotiate union employee compensation and work rules. It is a matter of survival to both the USPS and its approximately one-half million workers.

Cost and productivity should be the first place focused upon to decrease costs. May I suggest that the postal service reconsider and develop new strategies based upon services which customers value most such as fast local delivery. In addition, strategies based upon out-of-the-box thinking are needed. Strategic partnerships to deliver mail ought to be evaluated.

There may be natural alliances based upon regular deliveries to similar geographies that lend partnerships with competitors such a FedX and UPS. Other partnerships with those who deliver newspapers and groceries may also support cost reduction and service. As delivery costs rise (including fuel, labor, equipment wear and tear), there should be opportunities to leverage demand for deliveries across all the companies which deliver to the same area. i.e. does is make sense for USPS, newspaper, FedX, PeaPod (or Coburns Delivers), all to run trucks to the same locations? Said another way, there ought to be opportunities to decrease costs for all companies willing to develop new competitive solutions while maintaining or potentially increasing service levels for customers which, in turn, should help the USPS survive and prosper in the face of all types of competition.

Sincerely,
John J. Alexander

John Alexander is President of Business Development Advisors, Founder and Chair of the Twin Cities Angels, and business author of the Angel Investment Tax Credit. Email him at: John@BusDevAdvisors.com

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