This measure is the net of total operating revenue minus total operating expenses. It replaces Total Revenue as a corporate objective. Operating revenue includes all postage, fees, and other funds obtained from the sale of products and services. Operating expenses include all expenses other than prefunding retiree health benefits and adjustments to Workers Compensation liabilities that result from changes in discount rates or actuarial assumptions. It is a measure of profitability within management’s control.
The 2011 objective is based on numerous projections of the economy, mail volume, revenue growth, and planned cost reductions.
To achieve the plan, the Postal Service will continue to maintain excellent service in all products as the foundation for generating revenue. Advertising mail is beginning to rebound with the economy, and a number of initiatives are in place to take advantage of this, including improved outreach to small business customers and Internet marketers. Efforts will also continue to improve customer awareness of products, building on the successful Priority Mail advertising campaign in 2010. It will also expand and streamline customer access, and continue to pursue customer contracts to generate additional profitable volume.
To reduce costs, the organization will continue to focus on reducing work hours, as well as the cost of each work hour used by making full use of non-career resources and by minimizing overtime usage. Network optimization will accelerate to capture savings by consolidating redundant facilities, and reducing lease and operating costs. Detailed efforts and opportunities to grow profitable revenue and improve efficiency in 2011 are included in the Comprehensive Statement.
The total number of deliveries is the product of the number of delivery points (approximately 151 million) multiplied by the number of delivery days (303). The result is approximately 45,753 million deliveries. This is divided by the total number of work hours used in all employee categories, including managers and executives (1,134 million). The result is the number of annual deliveries completed per work hour used.
The 2011 plan of 40.4 deliveries per work hour is very aggressive. Since 2008, the number of deliveries per work hour has increased from 32.9 (2008) to 36.0 (2009) to 38.6 (2010). This performance is primarily the result of unprecedented work hour reductions and process improvements over this period.
The ability to meet this objective will depend on further automation, driving disciplined process improvement in all aspects of the business, and achieving more extensive consolidation of facilities. The Postal Service will continue to engage employees in all functions in the drive to improve processes, making them better, faster, and more efficient. Lean Six Sigma, a structured regimen for eliminating non-value activities, will continue to be the main framework of process improvement efforts. Ongoing work to adopt requirements of the Sarbanes-Oxley Act (SOX) is also uncovering opportunities to improve efficiency.
This Postal Service will also continue to capture opportunities through employee attrition. Up to 300,000 employees will be eligible to retire between now and 2020. As they leave, managers will reposition employees to make full use of existing resources and minimize new hires.
Opportunities to reduce work hours exist in all postal areas as opportunities are created by improved work methods, consolidation, and workload reduction. The Postal Service is also closely examining opportunities in administration, which includes more than six percent of total work hours.
