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Toward a Sustainable Digital Transformation: How CEOs and PMGs of Small-to-Medium Posts and Parcel Delivery Organizations Can Avoid Common Technology Pitfalls

May 8, 2017 10:41:45 AM / by Assurety Consulting posted in Postal Mail and Shipping Tracking, Commercial Mailers

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As mail volumes continue to decline and parcel volumes increase, last-mile performance is on the mind of posts and mailers across the globe. Changing buying habits and expectations driven by digital mobility devices have put small-to-medium posts and parcel express delivery organizations in a reactive mode. Much of this change in attitude is good, except that most posts and parcel express delivery organizations have always been operationally focused and not market focused.

Currently, market place leaders are using posts and commercial delivery organizations for the last mile. Will that continue to be the case when the ecommerce becomes the predominant commerce, and volumes are high enough for the Amazons or Ali Babas of the world to fill up their own trucks and deliver? In our opinion, what will make a difference and keep posts and delivery organizations in business is their focus on continous and constant last-mile delivery optiminzation, which in our opinion is only possible through a technical strategy and organizational culture change. 

In practice and in our experience, most smaller and medium-sized national posts and commercial parcel & express organizations lag industry leaders like the USPS, Deutsche Post, RR Donnelley and Fed Ex by as much as twenty years in terms of technological sophistication. The major strides made by leading posts, big commercial mailers, and express delivery companies are grounded in digital transformation: using digital tools and hybrid-digital products and services to drive efficiency in both operational and customer service arenas.

If digital is the means to improvement, revamped foundational infrastructure is the criterion by which digital products and services will flourish. In our experience, Tier 2 postal and delivery organizations often have broken strategy and siloed decision-making, as depicted in the example below.

 

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An organization in which operations, address governance, payment, and delivery exist as isolated functions.
(Click for full size)

In Practice

Assurety has more than a decade of Express/Parcel and Post transformational, digital, and cloud experience in service to global logistics and delivery organizations. We have encountered one major common theme in this endeavor: most senior managers are always operationally focused, investing in COTS or custom solutions driven more by pain points and less by long-term sustainable business and technical strategy. We continually find crippled implementation of operationally-focused solutions by heads of separate business verticals within a delivery organizatin, instead of a market-driven approach to the entire organization’s sustainability and growth.

As a result, many tech investments in areas like CRM, transportation, payment, and tracking fail to provide their intended benefits due to a lack of communicated vision and purpose to both internal and external stakeholders. As a result, the consumer experience suffers, directly impacting large business and ecommerce customers. Over time these issues cause many posts and delivery organizations to lose large clients. Lack of vision and strategy and absence of easy to use digital solutions, self serve consoles, and management science driven service also hurts the consumers showing up at post offices for retail business.

Strategy is Paramount

For smaller players to move toward table stakes with top performers, we advocate for an approach that places strategic reinvention ahead of operational improvements. Without the correct business strategy, technical strategy, and infrastructure, as well as organization-wide communication of the purpose of market-oriented shift, sustainability will continue to encounter risks. Organizations must firmly plant a transformational vision in the minds of both external customers and internal stakeholders for successful outcomes.

Developing a Business Vision and Technical Strategy

Parcel and Postal operators must take a hard look at the state of the industry and re-invent their operations from the ground up to at least mirror and ideally exceed standards set by top performers in commercial delivery.

With the mindset of an entrepreneur starting a new business venture, management should set a well-defined strategy and documented vision around several key functional areas. Both technical and Huma resources and culture of the organizations needs to be part of the change strategy.

integrated-vision-20.jpg 

Complete integration across the mailing organization
(Click for full size)

Main Components: Mail, Parcel, and Digital

Mail volumes and revenues are declining across the industry, driven by internet substitution, mis-delivery, and regional and demographic factors. These trends aren’t going away anytime soon. Optimizing mail for profitability should remain a main concern in strategy-setting.

Parcels, on the other hand, represent the fastest-growing opportunity in delivery. ecommerce is becoming commerce and big data and digital are the new oil. People usually refer to the “last mile” in the context of delivering products to the customer’s door. Online shopping has been outpacing retail growth for some time now, and with internet usage and internet of things (IoT) adoption making it easier than ever to place orders, posts and parcel delivery organizations need to get in front of this burgeoning revenue stream as quickly as possible.

Digital products represent the forefront of customer touchpoints and have moved from a novelty or convenience to a requirement for meeting customer expectations. Consumers are now accustomed to digital package tracking, mobile commerce, and app-based scanning and confirmation of delivery. From a technological standpoint, both back-end and customer facing systems deserve equal priority.

Strategy and Metrics for Measuring Quality

Organizations should establish key performance indicators for each item in a wide spate of operational disciplines. Technology must enable data capture, measurement, and analysis both for identifying immediate performance improvements and long-term patterns. By recognizing trends in information across the postal operation, plans and techniques can be adjusted over the long term to bring the organization closer to its vision. Only then will digital solutions and consumer-focused products and services improve overall revenues and cut costs. A few representative business practices for measurement:

  • Customer Experience
  • Marketing
  • Sales
  • Products classification
  • Product innovation
  • Acceptance & Verification
  • Induction
  • Processing
  • Transportation
  • Delivery
  • Financial services

Develop IT Systems for Comprehensive Management

Once a comprehensive strategy is in place, governance and monitoring are best accomplished through a robust IT structure.

Start with a focus on developing intelligent barcodes and address management driven platform as the foundation upon which all other technologies, hardware, and software should reside.

A custom-tailored approach makes the best sense versus departmental selection of out-of-the-box solutions. Organizations must develop and manage foundational systems surrounding address quality, barcode intelligence, scanning capabilities, personnel training, and automation, all to address strategic goals of improvement in:

  • Customer experience
  • Marketing
  • Product development
  • Innovation
  • Employee performance
  • Operational and delivery performance, etc.

A Big Change in Thinking

The natural tendency is to focus on line-item functional and performance improvements rather than a complete overhaul of organizational strategy. However, the implications of industry-scale last-mile advances necessitate complete reinvention.

A trusted consultancy can walk through each aspect of these changes with your organization to ensure success. Look for a partner with both commercial enterprise and government Postal contracting experience to get perspective from both sides of the last-mile equation.

Call 866-750-4924 or email Assurety today to discuss opportunities for your organization.

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