Frank talk.

Frank Talk

The U.S. Postal Service (USPS) has had plenty of captains - in the 1980s, five postmasters general did stints. But for the past three years, one individual has run this vast office, overseeing the maintenance of a $48 billion annual budget, the work of 760,000 employees, and the delivery of 540 million pieces of mail a day.

Anthony M. Frank, the 69th postmaster general (the first was Benjamin Franklin), intends to cut costs and make mail delivery more efficient. When he was appointed in February 1988, he promptly instituted a six-year strategic plan calling for 100 percent of the United States' mail stream to be processible through automated means by 1995.

Ambitious, certainly. But accomplishable, says Frank, if businesses and individuals in this country are willing to cooperate and help share USPS's tremendous workload. In the latest postal rate case, proposed in March 1990 and implemented February 3, 1991, Frank and USPS put money behind their plans in the form of discounts for those mailers who make their mail automatable. In this interview with Association Management, Frank outlines the options available in the new rate system, how nonprofits can make the most of them, and what further changes we can expect in the decade ahead.

Association Management: What suggestions do you have for nonprofit organizations to help them minimize the effects of the 1991 rate increases on their budgets?

Frank: The main thing is to be aware of possibilities. I was president of First Nationwide Bank, a subsidiary of Ford Motor Company, prior to being named postmaster general. In 17 years there, I never was in the mailroom. I didn't even know where it was. I knew I was intelligent and could do my job there. But I never thought I could influence mailing.

Executives think like that a lot. They feel there's nothing they can do about the cost of mailings. Yet there's a great deal you can do, not only about costs, but about efficiency.

And as associations, you can serve members' needs, too, by looking at new ways to reduce costs and passing those along to members. The USPS can communicate savings to your members through you.

Bar codes. We deliver 41 percent of the world's mail, and now we do about one third of it through bar coding - those grocery-store-like labels you find on envelopes these days. Ben Franklin could read 600-700 envelopes per hour, and we still have those standards for manual sorting today.

But an optical scanner that reads bar codes processes mail at faster than 30,000 pieces per hour. Obviously, whatever you can do to make mail automatable will make the work easier for us and save both parties money. And bar coding machines are getting less and less expensive; most will pay for themselves within a year through automation discounts.

If you want a shock, go look at the bins of undeliverable mail at your local post office. These are dreams extinguished, presentations and sales not made. All of you are probably getting at least 9 percent nondelivery through poor or inaccurate addressing. One third of all mail has at least one flaw in the address.

Mailing list accuracy. So the first step in lowering costs and getting automation off the ground is to practice list hygiene. Perhaps include a return envelope with a mailing periodically so that you get feed-back on whether people still want to receive your material or whether they're even still at the office you mail to.

The USPS has services for cleaning lists, and they're not expensive. Our National Change of Address service is available on computer tape or electronic telecommunications. We have 200 computer address change centers that collect change of address information sent in to the USPS every week. When you send us your list, the service corrects incorrect listings and provides more information so that bar coding may be completed. For smaller firms, at $9 per 1,000 addresses, we'll analyze a diskette of your list, clean it up, and add necessary information for bar coding purposes. The number to call for information on those services is [phone].

We hope to have at least 40 percent of U.S. mail bar coded by the business that sends it by 1995. Publication number 67 from the USPS outlines our strategic plan and how you fit in. It really amounts to removing barriers to bar coding, which list cleaning does.

When you get to the point of considering bar coding equipment for your association, remember to ask vendors if their hardware and software are certified by USPS's Coding Accuracy Support System and purchase only such equipment. USPS also publishes a list of vendors specific to small and mid-sized businesses. You can get it by calling the information number above.

Letter size economies. Mail size is also important. Flats [mail larger than 11 1/2 inches by 6 1/8 inches] cannot be accurately read by an optical bar code scanner at this time, though we're working on that. Clearly, mail made into a letter-sized unit will cost you less to process with bar coding discounts.

This spring we hope to propose a discount for flat mail that can be processed by bar code readers, and we expect to implement that discount sometime in 1992 when technology has made such processing more viable.

Timing. And last but not least, talk to your local postmaster about the timing of your mailings. Everyone has anecdotes about disparities in mail service. One mailing may take two days, while another mailed at the same postal class takes at least three. This is due to your mailing timing. If you always mail on Fridays now, for example, and so does every other business in your area, a talk with your postmaster may reveal [an alternative] mailing date [that will result in] speedier service.

You might also arrange with postal service staff to have different ZIP+4 designations for each department in your association - particularly if you have many staff members. That way, mail coming into the association doesn't sit around waiting to be routed to the proper department.

AM: What can association executives do to make sure they are treated fairly by the U.S. Postal Service?

Frank: President Bush's 1992 budget substantially cuts subsidies for nonprofits, especially 501 (c) (3)s. While the USPS is the instrument of many such subsidies, we don't give them ourselves. If I were an association executive, I would be lobbying for greater subsidies, because the USPS cannot lobby.

Last year during rate case testimony, I testified that 5-6 percent of nonprofit mail was abusive, meaning that material not relating to an association's nonprofit mission was included under nonprofit rates. It's crazy to let that kind of thing prejudice officials and legislators against the nonprofit mailer. So if I were with an association, I would also concentrate on lobbying for more and better-enforced nonprofit mailing regulations.

AM: When can we expect the next postal rate case, and what might be included in it?

Frank: We are developing more choices for mailers between now and 1995 than they have had in all the previous 200 years of postal service in this country. But more options mean greater complication, big changes, and sometimes greater costs.

We hope to extend the interval between rate cases to three years as in the past, but we've got big changes going on. And postal rates will continue to rise as long as most of our costs are made up by labor and transportation, because both are subject to inflation. Eighty-three percent of our costs are for labor now, and half of the remaining 17 percent goes for transportation.

We would like our rates to go up at less than the rate of inflation, and there will be further discounts available as we automate, because that saves labor.

The fact is that while we propose rates, the Postal Rate Commission and our board of governors actually dispose them. We do not set rates - that would be too easy. The Postal Rate Commission is required by law to review our proposals for 10 full months and decide on recommendations to pass on to the board of governors.

The commission's recommendations this time were somewhat different than what we'd proposed. They're less disposed to favor third-class [mail] than the USPS is. They also feel they've done everyone a favor by keeping the first-class stamp at 29 cents, but many people don't agree. This rate will do more to bring back the use of the penny than anything else. AM: What technologies and trends will the postal service focus on in the coming decade?

Frank: We have four strategic planning areas into which most of our improvements and research fall. These are * address systems (address reading and recognition research); * general mail facilities (integrating islands of automation within individual facilities and then integrating facilities into networks); * employee development (enhancing staff's ability to use automation); and * development of a customer-focused information-based orientation (more service and information technologies).

As for specific improvements, we have people working on machines that read handwritten ZIP codes on envelopes. Currently, the machines we're experimenting with read 75 percent of handwritten ZIP codes accurately.

We're developing keyboards that convert handwritten addresses to bar codes and new readers that find bar codes in a wider area of an envelope, really anywhere in the address block of a letter.

The advanced bar code will also be coming into common use - it codes not only the five-digit ZIP code area and the ZIP+4, which is the block or building of the addressee, but all the way down to the actual address within the building. This new bar code won't be too much of a problem to add to existing equipment.

Of course, we're concentrating on bar coding flats as well and will be field-testing automated processing of flats by May 1991. That will lead to new discounts, as I mentioned.

Finally, we are enhancing our mail characteristic data base - an information bank collected from studying individual mail pieces - that helps us discover patterns in U.S. mail. In fiscal year 1990 we studied 75 different characteristics on each of more than 90,000 pieces of mail.

The more we research the format of mail and find automated ways to process it, the more efficient and cost-effective we can be in moving it along.