Postal Product Innovation and New Opportunities for Postal Commerce

2 USO Postal Operator Electronic Substitution/Diversion Liberalization Postal Reform Operations driven Optimized for efficient delivery of a few traditional products (minimum cost given required service quality) Rigid Cost structure, relatively high labor cost Rigid Infrastructure (expensive to change) Extensively regulated

3 USO Postal Operator – ”The Postal Service must design and deliver products that meet customer needs in a rapidly changing market. It must control costs to remain competitive.” USPS STP 2008 – Competing on cost/price and products Private operators and carriers – Competing on cost/price and products Competing on the cost basis is conceptually straightforward but difficult to execute given immutable constraints Competing on the product basis is hard both conceptually and operationally How to compete on the product basis is the main purpose of this talk How to respond to competition?

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5 Responding to competition: RM Luisa Fulci – Royal Mail (March 13, 2008)

6 There is no disagreement.. All Posts and mailers agree: Postal product innovation is the key But how???

7 1.Designing new product 2.Evaluating new product operational feasibility  Access requirements 3.Evaluating new product economic feasibility  Costing and pricing 4.Marketing and selling new product  Distribution channel  Enabling access to new products 5.Production (delivering new product) Note: – First three activities are essentially information gathering and processing – Fourth activity can be viewed also as information processing – Production is a set of physical and information processing activities that involves mail collection, induction, sorting, transportation, delivery and data services

8 If we make computers to play far more significant role in postal product innovation and consumption, we can substantially improve its quality and speed and product adoption by end users (mailers and recipients) How to make computers to play such role in product innovation? Hint: If we can only teach our computers the notion of “postal product” – what is the “postal product” from human and computer perspectives? Analysis of all known postal products (existing and planned) reveals that they have a deep structure that can be formalized for computer consumption while preserving their essential human processability Postal product can be described as a collection of named attributes which have measurable values Postal product can be represented for computer consumption using modern mark-up language like XML

9 Model Mail creation, induction, processing and delivery driven by standardized information interfaces between all parties involved Model to emulate: e-commerce – ubiquitous computing – connectivity – information presentation standards (XML/HTML)

10 Structure of postal product Physical elements – Physical parameters (dimensions, volume, density, material characteristics) and content (restricted for certain services) – Geography of induction and geography of delivery – Priority & (where there are options) routing information – Timing and frequency of collection and delivery Information about – Events that occurred during mail item processing – Other mail items linked to the mail item being served – Objects linked to the mail item being served (box, signatory, …) – Other mail sent, received or replied to by sender or recipient Rules – Conditions imposed on physical and informational elements (mail unit, mail unit content, mail unit attributes, money) If (attribute x meets this condition) Then (do this) – Remedies for when service could not be delivered as specified

11 Postal product access requirements Postal Product Access Requirements – Mail Item make up (data, format and placement) – Computerized data to accompany mailing, its timing, messaging and protocol requirements (Statement of Mailing Submission, Manifest, PostalOne documentation etc.) – Grouping and containerisation requirements (pre-sort and mail unit packaging rules) – Pricing and payment requirements Rates and accounting rules – Validity period

12 What is EPPML? Acronym for: Extensible Postal Product Model and Language EPPML delivers standardized definition of postal products – UPU and CEN TC 331 Standards A postal product expressed in EPPML: – Is an information object (for computers) – Can be represented by elements organized as an extensible collection of measurable attributes – All postal products represented in EPPML have a common structure across all carriers/posts (defined by EPPML standard schema)

13 Designing new product Postal product design must encompass and leverage collective customers’ knowledge rather than simply "marketing existing products to them".

14 Capturing mailer’s needs and constraints Mailer Domain Mailer’s Needs and Cons- traints (XML) Mailer’s Needs and Cons- traints (XML) <MailerNeeds xsi:noNamespaceSchemaLocation=… PB <MailerNeeds xsi:noNamespaceSchemaLocation=… PB Tracking Induction Every Day None Induction Every Day None Chicago Mail Operations Weight (Kg) 6 Delivery Time Tuesday Comm. owner

15 Designing New Postal Product

16 Evaluating new postal product operational feasibility with EPPML Postal Operator Domain Postal Product (XML) <PostalProduct xsi:noNamespaceSchemaLocation=…... CD FFE5-912E <PostalProduct xsi:noNamespaceSchemaLocation=…... CD FFE5-912E Weight Range Induction 0-30 Kg Kg Induction 0-30 Kg Kg 0-2 Kg Max. Transit Time 2 d 5-7 d 2 d 5-7 d 2 d 1 d 2 d marketing Confirmation of events Induction First processing Delivery Induction First processing Delivery Induction operations Access Requirements

17 Evaluating new product economic feasibility with EPPML

18 Creating mail with EPPML Mailer Postal Product (XML) Mailer’s Needs (XML) Mailer’s Needs (XML) Post Mailer’s Constraints (XML) Mailer’s Constraints (XML) Mail Production System mail tray Instructions for Mail Production (XML) Instructions for Mail Production (XML)

19 Working in Concert PostMailer UPU Server product (XML) product (XML) product (XML) New Products New Mailing schema (XML) schema (XML) schema (XML) Constraints XML CDI mail tray SMS Operations Needs (XML) product (XML) product (XML) product (XML) Needs and Preferences Instructions (XML)

20 Mailer DomainPostal Domain On-demand Postal Products Postal Product (XML) Postal Product Management Mailer’s Needs (XML) Mailer’s Needs (XML) Mailer’s Constraints (XML) Mailer’s Constraints (XML) Comm. owner

21 Benefits for Posts Operations – Improved quality of mail created by computer assisted systems (cost savings) Mail make up, Mail packaging, Statement of Mailing Submission (electronic manifest), Postal Revenue Protection Information – Mailer and postal constraints can be automatically analyzed and incorporated into postal product design – More information from mailers enables better: Operations planning, Dynamic capacity management, Network rationalization and process optimization Marketing – Demand-driven postal products – Product distribution using existing, well established and understood electronic channels (Internet) – Individualized postal products for customers of any size Finance and governance – Distinguish market dominant vs. competitive products – Improved and accelerated cost accounting

22 Summary We explored a new vision for mail that extensively leverages computers and Internet – e-Postal commerce or EPPML-enabled mail e-Postal commerce offers unprecedented opportunities in postal product innovation By effectively integrating customers and Posts e-Postal commerce creates: – new automated distribution channel for postal products – mail provably consistent with postal products access requirements reducing operational cost for mailers and posts – Virtual private channel between customers and Posts Challenges: – cultural change to radical and open innovation – rigidity of postal operations and infrastructure – regulatory framework EPPML framework is complete and we are working on demonstrable hardware and software In discussions with Posts for potential pilots