US Postal Service: A DARPA Case Study
Imagine your that business struggles lead to the loss of your employees’ retirement benefits.
That’s what some postal workers have to face. In 2018, the United States Postal Service (USPS) defaulted on nearly $7 billion needed to fund retirement benefits.
The USPS is guilty of failing to adapt to changing times. Other agencies, like the Social Security Administration, are also struggling with outdated business models. Both are losing money and it is doubtful they will survive in their current form. Your mailbox is now home to what my father (an ex-mail carrier) called Advils – advertisements that gave him a headache to deliver. Your mailbox is now your largest spam folder and you cannot stop these unnecessary deliveries – and they need to be thrown away by hand. The proliferation of online banking, bill pay and other services has rendered the US postal service obsolete – except in the case of advertisements, which are the biggest moneymaker for the US Postal Service these days.
The US Postal Services pension benefits cannot be funded with operations and the obligations are getting greater as retirees are living longer. This won’t just impact current employees but every retired employee when future obligations cannot be funded. Chances are you know somebody that will take a hit here.
My earlier blog talked about the need to adapt ((ATTACH LINK WHEN PUBLISHED)) and why you need to do this to stay relevant and survive.
If you want to do more than simply survive, you should go DARPA as I mentioned in my blog “Don’t Jst Adapt, Go DARPA.” DARPA stands for the Defense Advanced Research Projects Agency and is a government agency that arrives at innovations today to solve problems in the future. DARPA is fresh thinking that is not jaded by today’s solutions and their ideas challenge the status quo.
Let’s talk about the USPS and its challenges.
The USPS is an independent agency of the federal government and first began delivering mail in 1775. It is also one of the few government agencies formally authorized by the US Constitution.
In 2018, the USPS had 634,000 employees and owned more than 232,000 vehicles to operate nearly 35,000 post offices nationwide. The employee count is down to 517,000 employees in 2021.
In 1993 I had an internship in Washington DC at the USPS Office of Fleet Management that provided me great insights on the challenges facing USPS management. Also my father worked as a mail carrier for over 20 years. I saw firsthand his frustrations as a union employee working for such a large organization.
The USPS has had twelve straight years of losses with a $3.9 billion net loss for 2018, a $4.9 billion loss in 2021 with 2022 posting a $56 billion dollar profit due to dramatic increases in its revenue driven by congressional support. And the future looks bleak as volume reductions will only continue. It is believed the real reason for the losses is the 2006 Congressional mandate that the postal service pre-fund retiree health benefits – something that no other public or private US entity is required to do.
But even without the pre-funding requirement I believe the business model is unsustainable long-term. Further decreases in first class mail and increased expected benefits costs due to longer life expectancy will only exacerbate revenue losses and retirement benefits costs.
The US Postal Services is trying to fit its historical manual services and products into the digital age. Bills and payments once sent by letter are no longer being sent through the mail. We now have automatic recurring payments, online banking, automated bill pay and email.
We should understand that the USPS is not a private or public company but a government agency. There may be limitations on the USPS leadership to modify the current business model. I believe that it is this very fact that makes it a fascinating DARPA case study.
Going DARPA
This is the information age and manual processes are being automated or phased out wherever possible. And I believe the rate of efficiency and automation will only increase in the future.
The USPS may believe they are in the letter and package delivery business. But I believe they are in the information delivery business and can leverage technology to better serve the public, become more efficient and get out of the red.
Instead of delivering mail, the US Postal Service should deliver information. Not to the external mailbox but an internal mailbox associated with each house. Every house will get its own inbox (e.g. SteveJones@1234MainSt.NY,NY 12345.USPS). This inbox would be a repository for everything directed to this house on Main Street in New York. Everybody at the house can get their own unique email inbox.
This inbox would be the cheapest and most efficient way to ensure information is received to an address. It also represents the mailbox and can only be used to deliver information (not physical mail any longer) to a specific house.
The USPS should take the necessary steps to ensure the same level of privacy and confidence to the public that the current letter delivery service offers. Perhaps the information needs to be hosted by an independent private company. Consumers need to have confidence that their information is protected or they won’t use the service.
When somebody moves, the inbox contents are transferred to the new inbox where they have moved. Each user should be able to customize their inbox for archiving their information. Maybe separate folders by year for bills, notifications, social, work, etc. They can even take their information via flash drive to store on their personal computer hard drive.
The USPS should no longer manually deliver letters or packages. For those without a computer and wanting to send information, a fee would be charged to scan and email the contents of a letter for you. The letter will then be returned to the sender.
Package delivery would be outsourced to the private package delivery companies who do this better than the USPS anyway. Any letter that was required to be physically received would need to be sent using a private delivery service.
We are now efficiently delivering information using technology. In this new business model we now need a fraction of the 600,000 employees and 200,000 vehicles. These valued and skilled employees need to be redeployed.
But we do need storage and servers to deliver the data. And people to scan and email when a physical letter is sent. For those without computers, computer libraries should be setup so the public can access their address inbox. Training for those that are unfamiliar with email needs to be provided.
This business model can be funded with tax revenue that is currently being used to bail out the US Postal Service. Or perhaps we can charge a nominal fee for every business that needs to send information to an address (e.g. invoice).
And all current and past-due benefits due to employees need to be paid. This was a promise made to hardworking employees that lived up to their commitment to deliver mail.
Consumers still get the same information, just not in letter form. And the information is in a preferred form for using, storing and retrieving. And we are saving a lot of trees.
It is not hard to go DARPA if you just open your mind to the possibilities. If your business is struggling with a dysfunctional mode or outdated service, you should consider going DARPA to arrive at innovative solutions.
Hopefully somebody is going DARPA right now on the Social Security benefits.
Sources:
https://fee.org/articles/social-security-is-facing-a-421-trillion-shortfall-trustees-report-says/
https://about.usps.com/who-we-are/financials/annual-reports/fy2018.pdf
https://libn.com/2018/11/14/usps-reports-loss-for-12th-straight-year/
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