2010 Comprehensive Statement on Postal Operations - USPS.com

The <strong>2010</strong> Annual Performance Report and 2011 Annual Performance Plan
DELIVERIES PER WORK HOUR
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.
<strong>2010</strong> Plan <strong>2010</strong> Result 2011 Plan
N/A 38.6 deliveries 40.4 deliveries
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 (<strong>2010</strong>). 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.
Financial Measurement Details
Operating Income measures the net of total operating revenue minus
operating expenses. Operating expenses excludes the prefunding
of future retiree health benefits and non-cash changes to the
Workers’ Compensation liability that results from changes to interest
rates or actuarial assumptions. The addition of Operating Income
as a corporate indicator will focus attention on the importance of
profitability and cash flow that is within management’s control.
To measure income and all other aspects of financial performance,
the Postal Service employs a disciplined process conforming to the
rigorous requirements of SOX. Accounting systems and financial
reports are independently audited. Financial and accounting
programs are also subject to audit by the Office of Inspector General
and the Government Accountability Office, and financial procedures
are protected against abuse by the Postal Inspection Service.
The Postal Service’s fundamental financial objective is to generate
income sufficient to fully fund operations and expand the delivery
network, while continuing to invest in improvements for the future.
Since creation of the modern Postal Service in 1970, postage prices
have increased at about the rate of inflation, despite large increases
in costs such as fuel and health care. Postal Service prices are lower
than most foreign posts, often dramatically so, even though the
United States is larger and more geographically diverse than most.
Deliveries per Work Hour is an efficiency measure that compares
the number of deliveries of all types (city, rural, highway contract
route, Post Office Box, and Caller Service) with the total number
of work hours used in all employee categories, including all field
and headquarters managers, executives, and officers — even the
postmaster general. This measure gets to the root of the challenges
to the postal business model — the growing number of delivery
points with declining mail volume.
This replaces TFP, which is solely an aggregate measure and not as
useful for managing and motivating performance, which is a primary
function of the Annual Performance Plan. Compared with TFP,
Deliveries per Work Hour is a more basic measure of productivity
while being a more versatile tool for managing productivity
performance at functional and unit levels. TFP is a very technical
measure that cannot easily be understood by non-specialists,
and can also vary widely on an annual basis. It is best used for
measuring trends over several years. The Postal Service will continue
to measure and use TFP where it is appropriate.
<strong>2010</strong> Performance Report and 2011 Performance Plan | 7