OIG Finds Inefficiency in USPS Manual Processing

Though it’s generally understood that manual operations are less efficient than those that are mechanized or automated, a September 21 report by the USPS Office of Inspector General further highlighted the chronic inefficiency in Postal Service manual distribution operations.

Overview

The OIG described its objectives at the start of the report:

“Our objective was to assess the efficiency of the US Postal Service’s manual mail processing operations.

“Mail is processed manually when its dimensions or address quality prevent it from being processed on mail processing equipment or to meet service standards when machines are at capacity.

“Processing mail manually is less productive (which is calculated by dividing mailpieces processed by workhours charged) and more costly than processing mail on machines, impacting overall efficiency.  Specifically, the Postal Service’s automated processing is six times more productive for letters and flats and nearly four times more productive for packages than processing manually.

“... This audit is a follow-up, in part, to the [OIG’s] 2020 audit of US Postal Service’s Processing Network Optimization and Service Impacts.  In that audit, we found that the Postal Service had been less efficient at processing manual mail each year since FY 2014, as mail processing workhours had not decreased at a rate consistent with decreased mail volume.  From FY 2014 through FY 2019, the Postal Service’s productivity in the number of mailpieces processed manually decreased by 21 percent.

“This audit was designed to further determine the causes of this decreased efficiency and included the review of manual processing operations across letters, flats, and packages.  We reviewed manual mail processing productivity data — including volume and workhours — and employee availability data from October 1, 2019, through June 30, 2021.  We judgmentally selected sites with low performing manual letter, flat, or package operations compared to nationwide productivity.  In total, we performed reviews at nine mail processing facilities nationwide.”

Findings

What the OIG found wasn’t surprising.

“We found the Postal Service is not processing manual mail at optimal efficiency as productivity in its manual operations continued to trend downward from October 2019 to June 2021 (see Figure 1).

 

“Productivity decreased nationwide by 8% between FY 2019 to FY 2020 and by 10% during the first three quarters of FY 2021 compared to the same period last year (SPLY) (see Figure 2).

 

“For letters, productivity in manual processing decreased nationwide by about 5% from FY 2019 to FY 2020, but increased by 4% in the first three quarters of FY 2021 compared to the SPLY.

“For flats, productivity in manual processing decreased nationwide by about 4% from FY 2019 to FY 2020, and by 6% in the first three quarters of FY 2021 compared to the SPLY.  In each of these periods, volume decreased at a higher rate than workhours.

“For packages, productivity in manual processing nationwide remained the same in FY 2020 compared to FY 2019, but decreased by about 11% in the first three quarters of FY 2021 compared to the SPLY.  Through the first three quarters of FY 2021, manual package processing workhours did not increase at a rate consistent with increased volume; workhours increased 28% while volume only increased [redacted]. ...

We identified through observations and interviews that inefficiency in manual mail processing can be attributed, in part, to lack of management oversight and employee availability and staffing issues.  Postal Service management did not use available tools to oversee the efficiency of manual mail operations and did not always implement policies and procedures impacting volume and workhours for manual operations.

Using tools and data.  “Postal policies require mail processing facility managers to ensure that they are meeting productivity goals and to use those goals to determine staffing assignments and help supervisors monitor productivity.  However, Postal Service management did not use their productivity data or targets to oversee the efficiency of its manual mail operations. ...

Policies and procedures.  “Management did not always implement policies and procedures to properly account for volume and workhours in manual operations and keep machinable mail out of the operation. ... In addition, management did not monitor on a daily basis the timekeeping practices of employees to ensure they were using the correct operation codes to account for the work performed.

Scanning.  “... At all four of the mail processing facilities where we reviewed manual package operations, management did not always ensure packages were scanned to capture the number of mailpieces processed manually. ... Without scans, facility managers could not account for this package volume introduced directly from automation that required additional workhours to process and, as a result, productivity may have been higher than reported.

Volume.  “Facility managers estimate the volume of manually sorted letter and flat mail based on a percentage of actual pieces processed on machines and compare this estimate against actual workhours to measure productivity.  Postal policy requires all processing facilities to update their manual letter and flat volume estimates yearly to account for the flow of letter and flat volume into manual operations. ... The last significant update to manual volume estimates by facilities nationwide occurred in 2016.  Since 2016, only 10.7%, or 25 of 233 mail processing facilities, have updated manual letter and flat estimates. ... As a result, the Postal Service cannot verify that mail flow changes have been accounted for and that accurate volume estimates are being used for manual letter and flats operations.

Machinable mail.  “Supervisors are responsible for ensuring that only manual mail is in the operation and that machinable mail is returned to automation.  To avoid unnecessary manual sortation, Postal Service procedures require facilities to maintain a ‘gatekeeper’ in manual letter operations to ensure machinable mail is not sorted manually.  At two of the three mail processing facilities where we observed manual letter operations, there was no ‘gatekeeper’ because management did not assign this responsibility to anyone.  In addition, at five of the six mail processing facilities that we physically visited, we observed machinable mail in manual operations, including package operations.

Rejects.  “Postal Service standard operating procedures require employees at mail processing machines to re-run rejected mail prior to sending to manual operations.  At three of the six mail processing facilities that we physically visited,  rejected mail was not always re-run on mail processing machines prior to being sent to manual operations. ... The Postal Service employee indicated that retrieving rejected mail from the machine, rather than waiting for it to be transferred to them for manual sortation, is a common practice to keep them busy.

“As a result of not providing sufficient management oversight and following established policies and procedures, manual operations are likely not operating efficiently and machinable mail is being processed at a lower productivity rate and higher cost.

Staffing and training.  “Postal Service management at all nine mail processing facilities identified employee availability and staffing issues stemming from the COVID-19 pandemic and hiring freeze as factors impacting efficiency in manual operations. ... Some managers stated that employees were rapidly hired or moved to cover staffing in manual operations without adequate training. ...

The Postal Service needs effective and efficient operations to fulfill its mission of providing prompt, reliable, and affordable mail service to the American public.  The trend of declining productivity in manual mail processing may continue if inefficiencies are not addressed. ... Addressing the issues identified in this report would assist the Postal Service with bringing mail processing facilities below the national average for manual processing productivity up to the national average, increasing efficiency in manual processing operations, and reducing 9.8 million workhours, resulting in savings of about $395.6 million.”

Recommendations

The OIG offered five recommendations to USPS management to address the findings in its report:

  • Direct facility management to review Postal Service productivity data and use it as a tool to monitor efficiency in manual operations as required by Postal Service policy and procedures. 
  • Evaluate current productivity targets for manual operations, properly align them with performance, and communicate those targets to facility management and employees.
  • Account for workhours and workload in manual operations in accordance with Postal Service policy. At a minimum, require facility management to:
    • Communicate to employees the importance of changing operations on the time clock and the importance of scanning all packages, via stand up talks and/or communication boards.
    • Place time clocks in areas that are easily accessible when employees change operations and monitor changes daily.
    • Monitor manual package processing operations routinely throughout the day to visually confirm scans occur in each manual process that requires workhours to handle a package.
    • Update manual letter and flat volume estimates yearly to ensure accurate volumes are being recorded.
  • Direct facility management to assign a “gatekeeper” within each manual operation to reduce the volume of mail being processed in manual operations that could be run on mail processing machines.
  • Communicate to employees the importance of re-running rejected mail on processing machines before sending to manual operations, via stand-up talks and/or communication boards.

The OIG added that

“Management generally agreed with the finding; agreed with recommendations 1 and 2; partially agreed with recommendations 3 and 5; and disagreed with recommendation 4, the monetary impact calculation, and the assumption that all machinable mail processed in manual operations is a handling error.”

Observations

The OIG’s findings are not surprising, as professionals in the mailing industry have long known that USPS manual operations are the epitome of inefficiency.  Similarly not surprising are the identified shortcomings in management and documentation of manual distribution.

Particularly notable, however, was the comment from one employee who spoke to the OIG, commenting to the effect that some of the inefficiency in manual operations was the result of what was essentially busy work.  How such practices square with management claims of being understaffed for the work on hand is a good question.

More broadly, the OIG’s findings reflect a pervasive culture where attention to the requirements for efficient operation is neither present nor expected.  Rather, in a workroom populated by unionized workers subject to no performance standards, supplemented by minimally-trained temporary help, and overseen by ineffective supervisors, the absence of interest in efficient operations is to be expected.  In turn, neither those involved nor executives atop USPS management are motivated to curb the costs of inefficiency because those costs are simply passed through to ratepayers.

As the USPS continues to tout the Postmaster General’s 10-year Plan as the agency’s salvation, it’s notable how its emphasis is on higher rates and slower service rather than on the cultural and operational conditions found by the OIG.  By omitting anything in the Plan that would set standards for employee performance, the PMG may have avoided trouble with the labor unions, but he did no favors for those who pay for his agency’s chronic and persistent inefficiency. 

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