2. Manage Costs: Total Factor Productivity

The Postal Service is expected to provide timely, reliable delivery. It is also expected to provide service as efficiently as possible in order to provide reasonable prices to customers. The Postal Service uses Total Factor Productivity (TFP) as an overall measure of its efficiency. It is similar to the Multifactor Productivity measure used by the U.S. Department of Labor.

Postal productivity has improved for the last five years, resulting in significant cost savings. As a result of these efficiencies and the Civil Service Retirement System cost reductions from P. L. 108–18, postage rates were last increased in 2002 and will not be increased until 2006.

There are no adjustments to the goals, objectives, indicators or measurement systems planned for 2005. However, changing economic conditions and competitor initiatives may influence postal workload and productivity performance.

*Quarter I, FY 2005 results will be available on http://usps.com/financials/ following the February 2005 Board of Governors meeting.

Figure 4-2 Total Factor Productivity Performance
Cumulative Five Year Trend, FY2000 – 2004