1. Measuring Postal Performance
May 16, 2013

2. Balanced Scorecard Framework

3. The Importance of a Strategic Vision
Measurable
Objectives:
“Marching Orders"
Strategy
Formulation:
What is the firm in
the business
of doing?
• Digitising Australia Post
• Connecting your business
• Connecting your community
• Digital access
• New marketplace initiatives
• Brand reputability
Australia Post

4. Cascading Measures of Performance
Strategic
Tactical
Operational
Grow logistics revenue
Develop 3 logistics
alliances
Open 10 logistics
distribution centers

5. What Makes Postal
Performance Different?
Universal Service Obligation & Public Service / Public Good
Quality postal service within their territories at affordable prices (EU)
At least 85/97 percent delivered next/three working day(s) (Sweden)
Dual identity: Public service / Business that must pay its own way.
Those who stand to lose the most are the most isolated and vulnerable
Network Effects
How well is it configured?
How well am I using my network?
Connectivity – Capacity - Adaptability – Resiliency
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6. Customer
Performance
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7. Traditional Measures of
Customer Performance
Traditional measures of performance
Product or product line IRR/ROI, ROIC
Revenue goals, Market share, Market position
“profitable-product death spiral.” - profitability by product = index of benefit to
both the company and the customer.
Consequences
Product overlaps/competition within product line
Product line thinning
DHL: Portfolio of time-definite products simplified and strengthened
7

8. Product Portfolio Approach
Doing products right, and doing the right products
Portfolio approach
Consumers desire assortments of products rather than individual items
Identify products that optimize the entire portfolio.
Incorporate attributes specifically identified as attractive by consumers
What is the right portfolio of products for postal operators?
How do we know we are doing the right products?
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9. Customer Performance
and Product Mix
Concept of
Customer lifetime value (CLV)
Customer equity (CE) = discounted value of future sales for all customers
“Selling more products to the same customers.”
Performance Strategy
Create close connections or emotional ties with the consumer.
Positioning In Relation to the Competitor
Measuring:
“Knowing your customer”
Customer value and satisfaction
Customer loyalty and retention
Customer equity, turnover, margins, profit, etc.
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10. Japan Post
We are dedicated to assisting people all over Japan
lead more enjoyable lives.
We sincerely provide services that people can trust and rely on.
We will constantly redefine “Atarashii-Futsu” by evolving to meet the
changing needs of our customers, serving people nationwide, one by one.
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postal,
banking, and
insurance services

11. Product Mix and
Product Co-dependence
Product co-dependence in the product portfolio
Level of interaction between products in the portfolio
“Leather Case Compatible with Apple iPhone 5”
High versus low co-dependence?
Swiss Post: My Newspaper
Bpost: Home delivery of meals
UPS: Broadens B2C platform with acquisition of Kiala
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12. Meeting Customer Needs &
Leveraging Assets
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Customers
• Individuals/ Households
• Businesses
• Mailers
Internal Assets
• Retail Network
• Delivery Network
• Distribution Network
• Data
High Satisfaction + High Margins

13. Meeting needs and
Leveraging Networks
(distribution – retail – delivery – data)
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LeveragesNetwork
Leverages Customer Relationship
Custom
Newspaper
Home Services
Freight
SIM Cards
Fulfillment
Low
Low
High
High
Logistics

14. Operations
Performance
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15. Measuring performance – an integral
process to managing operations
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Manage
Operations
Plan operations
Execute
operations
Measure operational
performance
Adapt operations

16. Operational performance is measured
across four performance indicators
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Operational Performance
Indicators
1. Service
2. Costs
3. Efficiency
4. Profitability
Plan operations
Execute
operations
Measure operational
performance
Adapt operations

17. The performance indicators are
reflected at various levels of a
(networked) enterprise
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Costs
Service
Efficiency
Profitability

18. Specific effects of network layer on
performance indicators
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R
E
P
S
M
Network Layer Elements
Primary Performance
Indicator Influenced
Real Estate Plants, Facilities
Costs
Service
Equipment,
Fleet
Sorting & material handling systems,
trucks, planes
Costs
Service
People, Skills Clerks, drivers, planners, managers.
Costs
Efficiency
Profitability
Service
Sort Plans &
Schedules
Sort & operating plans,
transportation & other schedules.
Efficiency
Profitability
Measurement
Mgt & Planning
Evaluation, planning & forecasting.
Efficiency
Profitability

19. Measures of service performance
Adapt network infrastructure to match volume levels
Measures:
% on time
Network capacity utilization
Work in process and staged inventories
Reduce time in transit
Measures:
Speed of lanes – ground and air
Eliminate manual processing
Measures:
Machinability factor
Address readability/interpretation
% damage shipments
Eliminate wrong addressing
Measures
% undeliverable as addressed (UAA)
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R E
P
S
M
E

20. Measures of cost performance
Integrate networks (e.g., express and deferred, or air and ground)
Measures:
Duplication of services between networks
Value of network assets (e.g., vs. revenues)
Transportation costs and fuel consumption
Reduce labor costs
Measures
Fixed to variable labor
Workload planning and scheduling
Reduce equipment/fleet operating costs:
Measures
Fuel efficiency of fleet
Mean time between maintenance
Mean time to repair
Reduce handlings
Measures
Total pieces handled (vs. first handling pieces)
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R E
S M
PE
S E

21. Measures of efficiency
Adapt the networks to meet traffic flows and levels
Measure:
Asset utilization
Distributed capacity
Work in process and staged inventories
Increase sorting efficiency through technology
Measure:
Machine throughput / machine jams
Read rates
Mis-sorts (e.g., out-of-sequenced DPS mail)
Machinability/rework
Improve delivery efficiency
Measure:
Density of delivery
In-office vs. street time
Continuous improvement / six-sigma
Measure:
Process deviations/ Trending
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MS
E
S
P M

22. Measures of profitability
Improve revenue per piece - Shift product mix
Measures:
Ratio of high yield products (heavier weight segments)
Ratio of letters to parcels
Improve revenue per piece - Shift customer mix
Measures:
Ratio of business to residential deliveries
Improve revenue per piece – Defer delivery
Measures:
Shift from air to ground; use multimodal
Promote low-cost non-urgent deliveries to increase density
Measures:
Consolidated shipments and asset utilization
Urban vs. rural deliveries
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M E
M
R E
M

23. Tradeoffs of costs and service
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60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
500 465 430 400 365 330 300 280 250
Service
Revenue
Number of Plants in the Network
Studies show that reducing network (operating costs) will affect service,
and may reduce revenues

24. Leverage the potential of your
network
Intelligent network configuration and
management for optimum performance
Connectivity
Measures:
o Multiple paths between nodes
o Alternate processing nodes
Capacity
Measures:
o Network-wide capacity vs. node-level capacity
Adaptability
Measures
o Adaptive sort and distribution
Resiliency
Measures
o Contingency plans
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25. Managing information to monitor and
improve performance
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Static Operating
Environment
Dynamic Operating
Environment
• Managing according to historic demand averages
• Spikes in demand met with additional infrastructure
• Fixed operating schedule
• Resource commitment is pre-planned and pre-allocated
• Plans based on mid to long-terms projections
• Managing deviations from the norms
• Spikes in demand are anticipated and are “business as usual”
• Variable operating schedule
• Resource commitment is dynamically allocated
• Near real time visibility, and rapid planning capability
Low HighHigh Performance Business
Infrastructure-Based
More (Under-utilized) Resources
More Stability
Information-Based
Fewer (Better utilized) Resources
More Frequent Planning
Leveraging your enterprise’s information to monitor and improve operational
performance (service, efficiency, profitability, costs)

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