Usps Case Study
Executive Summary
The USPS is at a point where it does not have the financing available to maintain its operations. One reason for the annual net losses is due to the declining rate of first-class mail. The second reason has to do with the required prepayment of $5.5 billion per year toward retirees’ healthcare costs. In order for the USPS to overcome this deficit, they will need to consider their short time frame, government restrictions and labor union backfire in considering the best alternative. One alternative would be to privatize postal services operations which would allow the USPS to change its pricing structure, yet it would potentially significantly reduce market share. A second alternative would be to undergo a system-wide reorganization that would include reducing the number of working days from 6 to 5, reducing staffing by 25% through attractive retirement packages and putting a freeze on new hires and salary increases. While this alternative may have great short-term effects, the reorganization lacks long-term potential and may put the relationship with the labor unions at risk. The third alternative considered involved the expansion of online services. While other countries have experienced success in offering more electronic services, this alternative lacks the level of savings potential of the other two alternatives. After analyzing these three alternatives, it is recommended that the USPS move forward with the reorganization of its operations. This option can be implemented the fastest and has a large savings potential. Additionally, it is recommended that the USPS start to look for new ways to expand its services online, however, the main priority should be to trim its expenses. If the USPS is not successful with the recommended action plan, the USPS should start taking action to privatize its operations. While this contingency plan could take years before the actual plan can be put into motion, the savings potential will be quite large for the
The USPS is at a point where it does not have the financing available to maintain its operations. One reason for the annual net losses is due to the declining rate of first-class mail. The second reason has to do with the required prepayment of $5.5 billion per year toward retirees’ healthcare costs. In order for the USPS to overcome this deficit, they will need to consider their short time frame, government restrictions and labor union backfire in considering the best alternative. One alternative would be to privatize postal services operations which would allow the USPS to change its pricing structure, yet it would potentially significantly reduce market share. A second alternative would be to undergo a system-wide reorganization that would include reducing the number of working days from 6 to 5, reducing staffing by 25% through attractive retirement packages and putting a freeze on new hires and salary increases. While this alternative may have great short-term effects, the reorganization lacks long-term potential and may put the relationship with the labor unions at risk. The third alternative considered involved the expansion of online services. While other countries have experienced success in offering more electronic services, this alternative lacks the level of savings potential of the other two alternatives. After analyzing these three alternatives, it is recommended that the USPS move forward with the reorganization of its operations. This option can be implemented the fastest and has a large savings potential. Additionally, it is recommended that the USPS start to look for new ways to expand its services online, however, the main priority should be to trim its expenses. If the USPS is not successful with the recommended action plan, the USPS should start taking action to privatize its operations. While this contingency plan could take years before the actual plan can be put into motion, the savings potential will be quite large for the