USPS Impact on Supply Chains

11/2/20

Have your deliveries or shipments been delayed by United States Postal Service (USPS)?

At the last APICS Greater Detroit Supply Chain Connect forum in October, the group discussed the impacts on USPS resulting in revenue losses , delivery footprint and relationship with Amazon.

APICS Greater Detroit supports supply chain professionals with the information and education they need to remain competitive in today's world.

USPS plays an important role in the supply chain, especially for many small businesses. Below we'll look at some of their current challenges and mitigation strategies for the upcoming peak season.

Detroit USPS service has been impacted more than others by the pandemic. Per clickondetroit.com The USPS released new data that ranks Detroit’s postal delivery in last place. The data was released due to a federal court order and was part of a new report on USPS performance released by Sen. Gary Peters, who has been investigating USPS delivery delays since July.

According to the data, mail delivery in the Detroit region was about 15% slower than the national average during the first week of October with only 70.69% of First-Class Mail delivered on time, ranking the city at 67 out of 67 USPS regions. Mail delivery throughout the rest of Michigan was 0.5% slower than the national average at 86.1% on-time deliver.

What is the impact of unpredictability in your supply chain? Certainly customers can be upset, as well as shipments from suppliers being delayed impacting the ability to produce products.

Like customers, small businesses value on-time delivery. Per supplychaindive, A 2019 USPS Inspector General Report found that businesses with fewer than 10 employees spend an average of $359 per month on shipping. The majority of these "micro-businesses" use USPS more frequently than any other carrier and value on-time delivery and cost equally. Also, USPS is a major last-mile subcontractor for nearly all major carriers — meaning to some extent that slowing down the USPS slows down them all.

Mitigation Strategies

So what can you do to anticipate further USPS slow downs and minimize the impact on your supply chain? Here are a few suggestions.

  1. Review other carriers such as FedEx, UPS and other local delivery companies. Transitioning to other carriers isn't physically difficult - but could likely meaning higher prices of $3 to $5 more per shipment. Local deliverers might not have peak surcharges, so important to shop around for the best rates and service.

  2. Optimize what you can control, especially during peak seasons. Per Satish Jindel, president of ShipMatrix, every shipper has the ability to save 10% to 12% by optimizing what they can control, like eliminating split shipments or identifying customers who place frequent orders in close proximity and combining them.

  3. Budget for peak season surcharges. You might not be able to avoid surcharges, but you can plan for them in your budget. A shipper with a firm understanding of their parcel network and peak season shipping needs will be better equipped to estimate unexpected or changing peak surcharges, thereby reducing overall cost.

  4. Negotiate lower peak surcharges. Try to go straight to the carriers and negotiate to reduce or waive these fees. Keep in mind that discounts applicable to these surcharges do not apply to additional peak charges unless explicitly listed. Per parcelindustry.com during the past two peaks, there have been cases where FedEx and UPS waivers have been offered to some shippers if they agreed to provide a forecast of peak volume and take a penalty for missing the forecast.

As we continue through the pandemic and election season, USPS will likely continue to struggle to meet on-time delivery standards and supply chain professionals will need to develop a plan to mitigate risk and deliver for customers.

Looking for more information on best practices for managing supply chains? APICS Greater Detroit is offering the upcoming globally recognized certification classes: Certified in Production, Inventory Management Part 2 starting on 11/7 and the Certified Supply Chain Professional starting on 12/5.