These changes include:   changes in the marketplace and the role of industry that have resulted in  declines in mail volume and changes in mail mix;   the evolution of the Service’s processing and distribution infrastructure,  and the advent of processing automation, that has led to an  infrastructure consisting of processing and distribution plants that differ  markedly from one another; and  changes in demographics and modes of transportation that affect the  optimal location of the Service’s plants. The Service Is Pursuing Several Initiatives in Response to Changes but Challenges Remain

To achieve a more efficient and flexible infrastructure in response to  changes in the marketplace, the evolution of the mail processing  infrastructure, and shifts in demographics, the Service is exploring broad  infrastructure realignment, while at the same time pursuing several  initiatives to address inefficiencies in its current infrastructure. It is expanding automation,  improving material handling operations, creating a comprehensive  transportation network, and introducing standardization programs in an  effort to reduce workhours and increase productivity. The Service also faces  challenges in reducing excess capacity while maintaining service  standards, including workforce rules, and stakeholder resistance to plant  closings. However, increased automation  contributes to excess capacity and it is not clear how the Service intends to  reduce this excess capacity as its operations become more automated. This has raised concerns among  mailers. Third, the Service’s strategy excludes  stakeholder input, is not sufficiently transparent and accountable, and  lacks performance measures for results of decisions. The Service’s Strategy for Realigning Its Mail Processing and Distribution Infrastructure Is Not Clear

The Service’s strategy for realigning its mail processing and distribution  infrastructure has not been clear because the Service has outlined several  seemingly different strategies over the past 3 years. These changes were to include consolidation of plants, redefined roles for  plants, reduced transportation costs, and a streamlined network. “Why? 2. The Service has stated that one way to increase  efficiency is to realign its processing and distribution infrastructure. In addition, we discussed the cause and effect of mail volume  declines with Service officials. First-Class Mail is a Postal Service trademark. Comments from the U.S.
Why GAO Did This Study

With declining mail volumes, increasing compensation costs, and a more competitive marketplace, the need for the U.S. Postal Service (Service) to increase efficiency and reduce expenses is a matter of increasing importance and concern. According to the Service, one area where it can become more efficient is in its mail processing and distribution infrastructure. The objectives of this report are to (1) describe major business and demographic changes and their effect on the Service's mail processing and distribution infrastructure; (2) describe what actions the Service is taking in response to these changes, and what challenges exist; and (3) discuss the Service's strategy for realigning its infrastructure.

What GAO Found

Several major changes have affected mail processing and distribution operations including marketplace changes, such as declines in First-Class Mail and increased competition; increased automation and mail processing by mailers; and shifts in population demographics. Effects of these changes include excess capacity in the mail processing and distribution infrastructure and variations in productivity among plants. The Service is exploring ways to realign its infrastructure by closing annexes, consolidating operations, and employing tools to model its infrastructure needs, while at the same time attempting to increase efficiencies in its current operations by expanding automation, improving material handling operations, creating a comprehensive transportation network, and introducing standardization programs. Also, there is a large range in productivity among plants. Reducing this range is difficult due to the complexity of operations and differences in plant layout. In addition, the Service faces challenges in eliminating excess capacity, while maintaining service standards, due to workforce rules and resistance to plant closings. Questions remain about how the Service intends to realign its processing and distribution infrastructure and workforce. The Service's strategy for realigning has not been clear because the Service has outlined several seemingly different strategies over the past 3 years. None of these strategies include criteria and processes for eliminating excess capacity, which may prolong inefficiencies. Also, the strategy lacks sufficient transparency and accountability, excludes stakeholder input, and lacks performance measures for results.