Chapter 5 Our 2007 Performance and 2008 Plan

The Postal Service is required by the Government Performance and Results Act of 1993 (GPRA) to establish strategic goals, develop reliable and verifiable performance measurement systems, set performance targets, and report results. The Postal Service must also describe its strategies to achieve the targets, and these are provided in the Updated Strategic Transformation Plan 2006-2010, published in December 2007. This chapter is intended to meet GPRA requirements.

For 2008, two new indicators have been added — Net Income and the Rate of Formal EEO Investigations filed. For 2009, the Postal Service is reevaluating all goals and indicators and considering alternatives consistent with new accountability and measurement requirements contained in the new law. The most visible change will be the addition of more comprehensive service performance goals.

Improve Service

Service performance — expressed in terms of on-time delivery — is the critical first step in meeting and satisfying customer needs. A key metric that the Postal Service uses to measure service performance is the percentage of single-piece First-Class Mail that is delivered on time.¹ First-Class Mail has delivery service standards for overnight, 2- and 3-day service within the contiguous 48 states, depending primarily on distance.

Domestic First-Class Mail service performance currently is measured by the External First-Class Measurement system (EXFC). EXFC measures delivery performance from collection box to mailbox delivery. The system is managed independently by a contractor using test mailpieces sent to a nationwide panel of receivers. It currently is not a system-wide measurement of all First-Class Mail performance.² The system mirrors actual customer experience, and over time has become more rigorous. It will be expanded to cover virtually all 3-digit ZIP Codes by 2009.

Source: IBM Global Business Services

Since 2006, the First-Class Mail On-Time results reported for GPRA have been those used internally for the National Performance Assessment (NPA), the Postal Service’s Pay-for-Performance system. Because NPA is designed to measure an individual’s performance on factors within his or her control, results for 2-day and 3-day service exclude a period during December when air transportation capacity is significantly reduced. In recent years, the calculation has changed slightly due to the reduced length of the exclusionary period, the impact of Hurricane Katrina, and the addition of international mailpieces.³

First-Class Mail service performance improvement is based primarily on continuous improvement programs designed to make incremental but lasting changes in postal operating processes using increasing amounts of data to identify key areas of opportunity.

Prior to 2006, the First-Class Mail On-Time results reported for GPRA were different than those used for NPA and did not have an exclusionary period. The service performance history above has been re-stated to be consistent with the new reporting conventions. First-Class Mail On-Time results for 2007, without the exclusionary period, are 95.6% for overnight, 92.4% for 2-day, and 89.5% for 3-day.

The Postal Act Of 2006 Requires Significant Changes

The Postal Act of 2006 created two broad categories of postal products, market dominant and competitive. For market dominant products, which include First-Class Mail, single-piece First-Class Mail International, Periodicals, Standard Mail, Package Services,⁴ and Special Services, it required service standards to be modernized, and more detailed performance measurement and reporting. Service performance for market dominant mail services are subject to review by the Postal Regulatory Commission and will be reported in the Annual Compliance Report.

Completion of this new set of service standards, performance measurement, and reporting systems requires consultation and cooperation between the Postal Service and its stakeholders. One of the biggest challenges will be resolving issues concerning the chain of custody (“start-the-clock”) between commercial mailers and the Postal Service. The Postal Service will develop a hierarchy of service performance categories to simplify goals and accountability for field operations. Intelligent Mail will become a primary service performance measurement tool, complementing EXFC. Mail with electronic documentation and IM barcodes will be tracked continuously throughout the operating system. In-process scanning of letters, cards, and flats will be enabled throughout the network. The infrastructure to provide package and bundle visibility is coming into place.

Timely and reliable delivery is the foundation for customer satisfaction and revenue generation. The Postal Service will evaluate other measures of service performance as stakeholder and business needs evolve. Customer outreach programs, including one of the nation’s most extensive customer satisfaction measurement surveys, are outlined in chapter 2 and are critical to improving service to meet customer needs. The Postal Service will also reevaluate customer satisfaction surveys to meet expanding requirements.

¹The Postal Service does not report on performance for products that the Postal Act of 2006 classifies as Competitive Products. However, it will continue to track performance internally and manage performance improvement.

²EXFC continuously tests a panel of 463 3-digit ZIP Code areas selected for geographic and volume density. These areas represent 90 percent of originating First-Class Mail volume and 80 percent of destinating First-Class Mail volume.

³Criteria for the First-Class Mail On-Time Performance calculation.

⁴Bulk Percel Post is classified as a competitive product.