September 15, 2006

 It’s the END of the network as we know it

 It’s the END of the network as we know it

 It’s the END of the network as we know it

 And I feel fine……

Okay, maybe not everyone feels fine about END. I just couldn’t resist using that R.E.M. song! END stands for Evolutionary Network Design and represents the latest initiative by the USPS^® to restructure their delivery network to reflect current demographics, transportation changes, and the deployment of postal automation equipment. This is a massive project, and like many other major initiatives in this industry, this one also has a lot of people concerned.

END actually started out as NIA, the Network Integration and Alignment project, however, the USPS changed the name to END to more accurately reflect the fact that this is an evolving project. In fact, it’s a bit ironic since no one is really sure exactly when we’re going to end the END. To understand why it’s an evolutionary project, we need to first understand how the network works and why we need to change.

When the USPS put the current distribution network in place, they did it based on demographics of the country essentially during the 1960s, and also with the understanding that First Class Mail was going to continue to be the predominant class of mail. However, who could have predicted that Standard Mail would overtake First Class and that places like Las Vegas would explode in population growth? Furthermore, concepts such as drop shipping and advancements in postal automation equipment are putting significant demands on the USPS to change their distribution network. Thus, the USPS is faced with evolving their network to more closely match today’s demands.

The problem, of course, is how do you rearrange 30,000 facilities that collectively process 200 billion pieces of mail annually? Furthermore, what about all the equipment that needs to be moved and the employees that work in the current facilities? And the big question: how do you do this while at the same time still process all the mail that continues to flow into the system?

This problem is so complex that the USPS actually had to find someone to create a modeling tool to simulate their network. I recall one discussion during MTAC where someone compared the analysis to trying to restructure all the atoms in the universe. Think about it; a 30,000 node network with four major classes of mail, 675 processing facilities, 147 million delivery points, and over 700,000 employees, working to process mail for delivery six days a week. That’s an equation that would give even Stephen Hawking a headache!

One of the key changes as a result of END is the noticeable reduction in facilities. Currently, we have 675 processing facilities that are broken down into a hierarchical network.

Current Network: 675 total facilities

269 Processing & Distribution Centers (P&DC)

195 Customer Service Facilities (CSF)

21 Bulk Mail Centers (BMC)

11 Logistics & Distribution Centers (L&DC)

66 Supporting Annexes

14 Hug & Spoke Programs (HASP)

79 Airport Mail Centers (AMC)

15 REC Centers

5 International Service Centers (ISC)

Redesigned Network: 407 total facilities

71 Regional Distribution Centers (RDC)

258 Local Processing Centers (LPC) / Destination Processing Centers (DPC)

60 – 70 Airport Transfer Centers (ATC)

5 – 8 REC Centers

Much like the proposed rate case, the shape of the mail piece is a significant factor in END. The new network is designed around mail piece shape instead of class as it basically is today. Consider the opportunity of doing just one truck stop containing multiple classes of mail instead of today’s system where a truck load can consist of three or more stops to induct all the mail.

Standard mailers will immediately notice the elimination of the BMC network under the new plan. This new strategy leverages the RDCs instead, which is where the new APPS (Automated Package Processing System) machines are located. The LPCs and the DPCs will handle the letter flat shaped mail and will likely contain the new FSS (flat sequence sortation) equipment. In fact, the DPCs will probably be a destination entry facility where most mailers would enter their mail.

As the name implies, END is evolutionary, meaning that this is a long project that will evolve over time. And of course, every time we talk about closing or restructuring a postal processing facility, there is no shortage of concerns and opinions. Hopefully, though, as we see service improvements, more flexibility to respond to volume fluctuations, and cost reductions, we’ll all be able to say that the END justified the means.