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INSIDE: SHIPPING KNOW-HOW FROM THE EXPERTS Page 22 NOVEMBER-DECEMBER 2011 www.MailingSystemsTechnology.com

The Best of Both Worlds — A hybrid approach to mail presort. Page 20

Time to abandon print and mail valuation strategies that are dependent on volume? Page 10

Looking Forward The USPS’ financial problems, the challenge of integrating electronic methods with hardcopy mail, and greening your mail operations: Our survey respondents weigh in on the future of the industry. Page 16


Volume 24 Issue 6

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Features 16

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The State of the Mailing Industry Part two of our annual survey covers your opinions on the USPS, national issues and how your mailing operations are faring. By Amanda Armendariz

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The Best of Both Worlds A hybrid approach to mail presort. By Debbie Pfeiffer

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Shipping Know-How from the Experts SPECIAL

More and more mail centers are adding shipping duties to their ever-growing list of responsibilities. This special supplement of Mailing Systems Technology will help you navigate this new terrain.

Departments

Columns

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Real-Life Management Want to Increase the Productivity of Your Team? The Key Is You!

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Editor’s Note We Asked, You Answered

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Reality Check The Next “What’s Next?”

Software Byte Preparing to Be Squeezed

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Pushing the Envelope Farewell to the Icons of the Industry

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The Trenches It’s Not Volume, It’s Value

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Everything IMBC Mailers and the Proposed Rate Changes

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Follow us on Twitter @MST_PARCELMedia

Postal Affairs Thriving Beyond 2012

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Ship It The Latest on the Rate Increases

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NOVEMBER - DECEMBER 2011 a www.MailingSystemsTechnology.com

Stay connected! Meet other industry peers, contribute to our thought-provoking discussions, or start one of your own. Join our LinkedIn group today!

Make sure you sign up for our monthly e-Newsletter so we can keep you posted with news alerts and updates! www.MailingSystemsTechnology.com


editor’s note

with Amanda Armendariz

Mailing systems technology PUBLISHER Marll Thiede

EDITOR

We Asked, You Answered It’s hard to believe that this is our last issue of 2011, and we’re already looking forward to 2012! As in years past, this final issue of the year is always an interesting one in terms of our survey results. I’d like to first of all thank everyone who responded to our questions; the results were certainly eye-opening! One of the things that stood out to me the most was the fact that, unlike in previous years’ surveys, now more than half of our respondents think the USPS should be privatized. This appears to be a powerful shift in thinking among members of the mailing industry. Prior to all the USPS’ financial troubles, people reacted vehemently against privatization. Why ruin a good thing, right? But now, it’s a whole different ballgame; the USPS is in trouble, mail volumes are declining and revenue is not enough. Something needs to be done; apparently, some of our respondents think that privatization is the answer. Only time will tell, of course, so it will be interesting to see how that pans out. Another interesting tidbit from the survey results — and one that I consider to be a positive — is that more and more respondents are recognizing the value of e-communications and taking responsibility for them within their job sphere. “Wait a minute,” you say. “Aren’t electronic methods of communications the death knell for the mailing industry?” Quite the opposite, actually — if electronic methods of communication work alongside with hard-copy mail, businesses have a dynamic duo that produces the best results from their customers. So it’s a definite plus that people are recognizing that these two distinct mediums work together, and are taking proactive steps to integrate them. Mail is not dead, and it likely never will die. It will change, of course, and adapt to the increasingly technological landscape, but it is here to stay. The challenge will be in getting it to reach its full potential. We certainly have an interesting few years ahead! As always, thanks for reading Mailing Systems Technology.

Amanda Armendariz amanda.c@rbpub.com

CONTRIBUTING WRITERS Kevin Conti, Wes Friesen, Jim LeRose Christopher Lien, Rob Martinez, Kim Mauch Kate Muth, Debbie Pfeiffer Mike Porter, David Robinson Wanda Senne, Ron Wiener, Joe Wilkinson

CIRCULATION

Rachel Spahr rachel@rbpub.com

ADVERTISING 608-241-8777 Ken Waddell ken.w@rbpub.com

GRAPHIC DESIGN Kelli Cooke

2901 International Lane • Madison WI 53704-3128 608-241-8777 • Fax 608-241-8666 rbpub@rbpub.com www.MailingSystemsTechnology.com

Volume 24, Issue 6 Subscriptions are free to qualified recipients: $20 per year to all others in the United States. Subscription rate for Canada or Mexico is $40 per year, and for elsewhere outside of the United States is $45. Back issue rate is $5. Send subscriptions to: Mailing Systems Technology, PO Box 259098, Madison WI 53725-9098; or call 608-241-8777; fax 608-241-8666; e-mail rbpub@rbpub.com or subscribe online at www.MailingSystemsTechnology.com. For high-quality reprints, please contact our exclusive reprint provider. Scoop Reprint Source 800.767.3263 ext. 144 www.scoopreprintsource.com. All material in this magazine is copyrighted ©2011 by RB Publishing Inc. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to Mailing Systems Technology, RB Publishing Inc. or its staff becomes property of RB Publishing Inc. The articles in this magazine represent the views of the authors and not those of RB Publishing Inc. or Mailing Systems Technology. RB Publishing Inc. and/or Mailing Systems Technology expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine. Mailing Systems Technology (ISSN 1088-2677) [Volume 24, Issue 6] is published six times per year, (January/February, March Buyers Resource, March/April, May/June, September/October, November/December) by RB Publishing Inc., 2901 International Lane, Suite 100, Madison WI 53704-3128, 608-241-8777. Periodical postage paid at Madison WI and additional offices. Postmaster: Send address changes to: Mailing Systems Technology PO Box 259098 Madison WI 53725-9098


Real Life Management Want to Increase the Productivity of Your Team? The Key Is You! “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort” –Paul J. Meyer continually increasing productivity is always important — even more so in the tough economic times we continue to live in. The good news is that by being intentional, almost every team has the potential to increase their productivity. before sharing ideas on how to improve productivity, let’s first define it.

Productivity defined Productivity is a measure of how efficiently resources are being used. Productivity is simply a measure of outputs (goods/services produced) divided by Inputs (resources used): P = o (goods/services) I (resources) For example: Assume last month that it took 10,000 labor hours to produce 500,000 mailpieces. What is the productivity measurement? P = 500,000 mail piece = 50 mailpieces per labor hour 10,000 labor hours

How to Improve Productivity There are two basic approaches to improve a productivity measurement. one, increase the volume of goods/services without increasing the amount of resources used. The second approach is to produce the same volume of good/services, but accomplish it with fewer resources. one way to try to improve productivity is to conduct a “factor analysis,” i.e. look at the following seven factors and identify areas for improvement. For example, perhaps the better utilization of technology could increase productivity. The solution may be to provide training to employees that will help them better understand how to use technology to increase their productivity.

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Some of the factors that have a bearing on productivity include: 1. Technology. The wise use of automation and more sophisticated software can help us complete our work with fewer labor hours. Just this month I have been able to reduce (redeploy to another department) an FTe on one of my teams due to new software that is more efficient than the existing software. 2. Capital (tools, equipment, etc). Having state-of-the-art equipment that fits your operations can open the door to significant reductions in manual effort and resources. 3. Methods. Learning and applying best practices as well as pursuing process improvements can drive improved efficiency and productivity. You can learn better methods by attending conferences like mailcom and national Postal Forum, getting involved with professional organizations like mail Systems management Association and Postal customer councils, and regularly reading trade journals like this one. 4. Quality. Improving the quality of work outputs can lead to better productivity. Why? It’s cheaper and more efficient to do the work correctly the first time and avoid re-work. John Wooden’s quote “be quick but don’t hurry” is applicable. Also, by instilling a quality mindset, I have found the teams take more pride in their work and become more engaged and productive. 5. Management. being a better servant leader and showing more care for your team members will pay dividends. collaboratively developing a shared vision and challenging yet achievable goals will help inspire your team to higher levels of performance. Solicit ideas for improved productivity from your team members. They will feel respected, and you will glean some great ideas along the way. 6. Motivation of workers. Providing positive recognition and showing more care for your employees will lead to a higher morale, higher motivation — and higher productivity. I agree with


With Wes Friesen

Tom Peters who said “The simple act of paying positive attention to people has a great deal to do with productivity.” Remember to measure productivity and celebrate improvements along the way. Celebrating progress builds a sense of achievement and a desire to keep getting better. 7. Skills/expertise of team members. The on-going training and development of your team members is key to enhancing productivity. I have addressed this in detail in prior columns. A few ideas include the usage of some team meetings for training, cross training, participating in trade associations, sending people to conferences and relevant seminars, university courses, mentoring — the list goes on.

“The productivity of work is not the responsibility of the worker, but of the manager” –Peter Drucker Let me share a final tip to improve the productivity of your team. Paul Gauguin wisely said, “Stressing output is the key to productivity, while looking to increase activity can result in just the opposite.” Focusing on effectively and efficiently producing output while minimizing resources used will result in increased productivity. Good luck as you partner with your team and intentionally pursue a higher level of productivity and performance! a Wes Friesen, MBA, CMDSM, EMCM, MQC, ICP, CCM,CMA, CM, CFM, APP, PHR is the Manager of Revenue Collection & Community Offices for Portland General Electric, a utility in Portland, Oregon that serves over 820,000 customers. Wes teaches university classes and is a featured speaker at national Conferences like National Postal Forum, MailCom, CS Week and others. Wes can be contacted at Wes.Friesen@pgn.com. Check out his personal website for free information (www.wesfriesen.com).

www.MailingSystemsTechnology.com a NOVEMBER - DECEMBER 2011

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Software Byte Preparing to Be Squeezed There continues to be a lot of “belt-tightening” lately. At homes, businesses, and soon the United States Postal Service will also begin tightening its belt in a new area — compressing its processing network. beginning in as early as march 2012, the USPS will begin a significant and what is surely to be tangibly felt reduction in processing facilities. The list of processing facilities that are being considered is posted on the USPS website and contains over 250 facilities across the country. That is more than half the current network today. The reason for this compression is twofold. First, the current delivery network was built to process overnight delivery of First-class mail. Standard mail is now the largest mail class by volume, with First-class mail declining 24% over the past four years. The second reason is delivery cost. According to the USPS at a recent mTAc (mailers Technical Advisory committee) meeting, it costs the USPS $10 million per day to support a processing network that was designed for a different time and different mail use than today. by compressing the network, the USPS hopes to further reduce it’s operation spending to match the reduced volume and revenue. Publisher’s Note: The U.S. Postal Service requires the following statement be published for Mailing Systems Technology (Periodicals Class) mailings only. Mailing Systems Technology has had a (Periodicals Class) permit since January 1989. U.S. Postal Service STATEMENT OF OWNERSHIP, MANAGEMENT AND CIRCULATION Required by 39 U.S.C. 3685 1. Publication Title ................................................................Mailing Systems Technology 2. Publication No. .................................................................1088-2677 3. Filing Date ........................................................................September 26, 2011 4. Issue Frequency .................................................................Jan-Feb, March Buyers Resource, Mar-Apr, May-June, Sept-Oct, Nov-Dec 5. No. Of Issues Published Annually .....................................6 6. Annual Subscription Price (if any) .....................................Free 7. Complete Mailing Address of Known Office of Publication (Street, City, County, State and ZIP + 4)(Not Printer) 2901 International Lane, Suite 100, Madison, Dane County, WI 53704-3128 Contact Person ............................................................ Rachel Spahr, (608)241-8777 x 5082 8. Complete Mailing Address of the Headquarters of General Business Offices of the Publisher (Not Printer) ....... 2901 International Lane, Suite 100, Madison, WI 53704-3128 9. Full Names and Complete Mailing Address of Publisher, Editor and Managing Editor (Do not leave blank) Publisher (Name and Complete Mailing Address) .............Marll Thiede, RB Publishing Inc., 2901 International Lane, Suite 100, Madison, WI 53704-3128 Editor (Name and Complete Mailing Address) ..................Amanda Armendariz, RB Publishing Inc., 2901 International Lane, Suite 100, Madison, WI 53704-3128 Managing Editor (Name and Complete Mailing Address).......... Amanda Armendariz, RB Publishing Inc., 2901 International Lane, Suite 100, Madison, WI 53704-3128 10. Owner (If the publication is owned by a corporation, give the name and address of the corporation immediately followed by the names and addresses of all stockholders owning or holding 1 percent or more of the total amount of stock. If not owned by a corporation, give the names and addresses of the individual owners. If owned by a partnership, or other unincorporated firm, give its name and address as well as those of each individual owner. If the publication is published by a nonprofit organization, give its name and address). (Do Not Leave Blank). Full Name .............................................................. Complete Mailing Address Ronald Brent .......................................................... RB Publishing Inc., 2901 International Lane, Ste. 100, Madison WI 53704-3128 Marll Thiede ........................................................... RB Publishing Inc., 2901 International Lane, Ste. 100, Madison WI 53704-3128 Gregory Rice .......................................................... Executive Management, Inc. 2901 International Lane, 2nd Floor Madison WI 53704-3128 11. Known Bondholders, Mortgages and other Security Holders Owning or Holding one Percent or more of Total Amount of Bonds, Mortgages or Other Securities .. None 12. (Must be completed if the publication title shown in item 1 is a publication published and

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compressing the delivery network effectively in half is no easy task. The USPS needs buy-in from numerous stakeholders, not the least of which is it’s unions and their customers. This network compression means significant changes to service performance and the USPS has already notified both the Postal regulatory commission, it’s unions, and the mailing industry (via mTAc) of the proposed compression. However, there is still another important stakeholder that needs to be considered in this, and that is the software development community. With $10 million at stake per day, the USPS has already stated they are anxious to get moving as quickly as possible to compress the network. During the August mTAc meetings, it was even suggested that the entire network compression be done by December 2012. other recent discussions with USPS operations seem to imply a phased approach over the next two years. regardless of the final date, everyone at mTAc appeared aligned to the idea that an initiative of this magnitude needs to be done collaboratively. mail preparation by PAve (Presort Accuracy validation and evaluation) certified software, as outlined in the Domestic mail manual, is entirely dependent upon and tied to current Labeling Lists. These owned by a non-profit organization). For completion by nonprofit organizations authorized to mail at special rates. The purpose, function and nonprofit status of this organization and the exempt status for federal income tax purposes has not changed during preceding 12 months. 13. Publication ........................................................................... Mailing Systems Technology 14. Issue Date for Circulation Data ............................................ September-October 2011 15. Extent and Nature of Circulation ......................................... Controlled

Nearest

Average No. Copies Each Issue During

No. Copies of Single Issue Published

Preceding 12 Months to Filing Date a. Total No. Copies (Net Press Run).........................34,890 .......................... 35,324 b. Legitimate Paid and/or Requested Distribution (By Mail and Outside the Mail)

1. Paid Requested Outside-County Mail Subscriptions Stated on Form 3541.

(Include advertiser’s proof and exchange copies) .....33,303 ........................... 33,090 2. Paid Requested In-County Mail Subscriptions Stated on Form 3541. ..................... 0 .....................................0 3. Sales Through Dealers and Carriers, Street Vendors, Counter Sales and Other Non-USPS Paid Distribution .............. 0 .....................................0 4. Other Classes Mailed Through the USPS ............. 0 .....................................0 c. Total Paid and/or Requested Circulation [Sum of 15b (1,2,3 and 4)] ..................................33,303 ........................... 33,090 d. Nonrequested Distribution (By Mail and Outside the Mail) 1. Outside-County as Stated on Form 3541 ........... 666 .................................699 2. In-County as Stated on Form 3541 ...................... 0 .....................................0 3. Other Classes Mailed Through the USPS ............ 13 ...................................17 4. Nonrequested Copies Distributed Outside the Mail ............................. 783 ............................... 1,218 e. Total Nonrequested Distribution ..........................1,462 ............................. 1,934 f. Total Distribution (Sum of 15c and 15e) .............34,765 ........................... 35,024 g. Copies not Distributed (See instructions to Publishers #4 (page #3) ........................................................................... 125 .................................300 h. Total (Sum of 15f and g) ......................................34,890 ........................... 35,324 i. Percent Paid and/or Requested Circulation (15c/fx100) .......................................................... 95.8% ............................ 94.5% 16. Publication of Statement of Ownership for a Requester Publication is required and will be printed in the November-December 2011 issue of this publication. Rachel Spahr, Circulation Manager/September 26, 2011. I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).

PS Form 3526-R, September 2007


With Christopher Lien

Labeling Lists provide the active, originating ZIP code to destination processing facilities for labeling and preparation purposes. For example, L005 is the Labeling List that outlines the 5-digit scheme sortation for pallets and sacks of Periodicals, Standard mail and Package Services flats and irregular parcels destined for multiple 5-digit ZIP codes served by a single delivery unit. In all, there are 18 Labeling Lists that are used by PAve — certified software for proper mail preparation and induction. Any change to the processing facility network means a change to these Labeling Lists. And with over 200 facilities being considered for compression, that could mean significant software and underlying Labeling List changes in order to reflect a dynamic shift in mail preparation and induction rules. earlier this year, the USPS and the mailing Software Development Group (a working group within IDeAlliance) initially agreed to a 2012 release schedule for Labeling Lists and other critical postal preparation tables. This release schedule is publicly available on rIbbS (https://ribbs.usps.gov/). In the schedule, it was agreed that Labeling Lists would be released six times per year. However, if the USPS intends to move forward with the processing network

compression, that release schedule itself may need to also be compressed and thus software vendors and their users could be squeezed into a state of rapid-fire software updates. The mSDG members are continuing to work with the USPS in seeking an implementation plan that can take into consideration minimally disruptive software changes in conjunction with a sufficient window of time to implement Labeling List changes. recognizing that a mailing is presorted in data days or weeks before the actual induction of a physical product, it is important to have a sufficient transition window established between where mail is inducted today and where it will be inducted later in 2012 and beyond. meanwhile, software users need to stay informed about these facility changes. Users should work with their current software provider to understand the planned release schedules and check with their local acceptance office to see what changes are being considered for local entry of mail. a christopher Lien is President of bcc Software, Inc., a beLL + HoWeLL company.

www.MailingSystemsTechnology.com a november - December 2011

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The Trenches It’s Not Volume, It’s Value It’s time to abandon print and mail valuation strategies that are dependent on volume. most of us who have been in this industry for any length of time have spent our careers focusing on higher productivity through automation, faster speeds and feeds, and volume discounts. visualizing something that is radically different is a pretty difficult thing to do. but that’s exactly what needs to happen soon. We are all aware that competition from email or other electronic communication channels has had an impact on print and mail volumes. And over the last few years, the economy has played a huge role as well. The recession and electronic delivery have combined to put the postal delivery systems in a real bind. These are the challenges that tend to demand most of our attention these days. behind the scenes, but an even more challenging development, is the fact that people have begun to think differently about business communications. I’m not so sure the industry has come to grips with that yet.

Who Do You Serve? What Do They Want? The recipients of your mail go by many different names: customers, members, prospects, subscribers, constituents, insureds, rate-payers, employees, citizens, consumers, account-holders, etc. but one thing they all have in common is that, when it comes to customer communications, today they have a sense of empowerment and they are demanding more say about which organizations communicate with them, how often and in what way. Your mail recipients are tired of what most of them call “junk mail,” whether that is defined as irrelevant and poorly targeted direct mail advertising, unnecessary notices, duplicate catalogs, unwanted bulletins, or indecipherable terms and conditions. regardless of what you call your audience or the nature of the communication you are mailing, there are some who just don’t want it. And they are frustrated and disillusioned by postal mail because those wasteful pieces just keep coming. And who can blame them? Truth be told, if I didn’t know so many people whose livelihood depended on the generation and

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delivery of mail, I’d be trying to turn off some of my unwanted material too, just as I have done with email. The Internet has shown consumers they can have some control over the receipt of electronic messages and they want to exercise similar control over printed communications.

A Lesson about Valued Mail Ah, but you say, “customers have been resisting conversion to paperless billing and statements for 10 years. This proves it — they want paper!” That is true. Those bills and account documents represent value to the customers and many of them prefer those worthy documents to remain on paper. I think that is an important lesson. To build a more secure future for printed business communications and avoid an uncontrollable free fall of volume, more mail has to be seen as valuable. The way to increase the value of mail is to listen to the recipients. Give them that control they want. Allow them to opt out of certain types of mailings, permit the selection of documents to be delivered through a different channel, or let mail recipients specify a decrease in the frequency of distribution. even more so, mailers need to step up and make the hard decisions that they know will result in lower volumes while at the same time raising the value of the mail that remains. Aggressively eliminate duplicates, suppress current clients from customer acquisition mailings, remove deceased individuals from mailing lists, stop mailing monthly statements for zero-balance or no-activity accounts, remove excess verbiage that doesn’t apply to the recipient as a way to reduce page counts, utilize data such as customer buying history or other demographic information to remove low-probability prospects from mailing lists, and make marketing pieces more meaningful, useful and wanted. Those that make a living selling print and mail will have to educate their customers and price their services according to the increased value they can provide instead of wooing clients on a cost-per-page basis. This takes some extra work. but these companies are often creative and innovative. Some of them will figure out how to be profitable by selling higher-value mail


With Mike Porter

Making a Fundamental Shift Raising the value of postal mail • Eliminate redundancy • Refine targeting • Add personalization • Encourage two-way conversations • Honor user communication preferences • Remove low sales-probability prospects • Utilize variable data • Lower mailing frequency • Clean lists of duplicates, deceased and incarcerated • Use demographic data for targeting

that is produced in lower volumes to clients that recognize the shift that is happening in business communication strategies. The rest will continue to compete on price for the work they can get from businesses that are also clinging to the methods of the past. a Mike Porter is President of Print/Mail Consultants; a consulting firm that helps print and mail facilities maximize their potential. Get more thoughts about document operations and industry trends by subscribing to the free newsletter, “Practical Stuff” at www.printmailconsultants.com

www.MailingSystemsTechnology.com a NOVEMBER - DECEMBER 2011

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Everything IMBC

With Kevin Conti & David Robinson

Mailers and the Proposed Rate Changes The USPS’ 2012 Price changes have been filed with the Postal regulatory commission, and you might ask, what does this have to do with the Intelligent mail barcode (Imb)? Well, lots. In our last article, we talked about the USPS’ desire and, more accurately stated, its need to have mailers migrate from the PoSTneT barcode to the Imb and, better yet, the full-service Imb. In this price filing, the Postal Service announces that it plans to continue offering the full-service Imb discounts of $3.00 per thousand for First-class mail and $1.00 per thousand for Standard mail when the full-service Imb is used. In addition, the USPS is living up to its promise to provide scan data to full-service Imb users. In fact, it is going one better on this as in the proposed rate change, “the prices for confirm service are being set to zero, because the Postal Service intends to end confirm service once existing customers’ subscriptions end. The service will become a feature of the classes of mail that include letters and flats when the mailers use an Imb that contains a mailer Identification (mID) code that has been registered to receive scan data.” Yes, the translation of this means that the scan data provided through conFIrm will be made available to ALL users of the Imb, basic and full-service.

So What Does That Mean for Me? Does this mean that PoSTneT users (currently about 20% of the mailers) will not have access to conFIrm data? no, not in the short-term. PoSTneT users will have access to scan data (conFIrm) until the end of their current subscription and will be able to get extensions through 2012. However, beyond December 2012, scan data will no longer be available for POSTNET users.

Keep in mind that conFIrm data is provided in a flat file and must be converted into information that is often preferred in a specific format, depending on the user. Given the value of this scan data to businesses seeking to better understand the value of their communications, and the customer behavior based on those communications, having the conFIrm data in a usable format is of key importance. Fortunately, there are several service providers that can deliver the scan data in a desired format.

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In addition, the Impb (package barcode) is also included in the proposed rate change, which was expected since the USPS had previously announced their intentions to dramatically improve their parcel tracking capability. once fully Impb is fully implemented this objective is accomplished. Another full-service Imb perk included in the proposed rate change is that the annual permit mailing fee will be waived as long as 90% of the mail volume of each mailing meets Full-Service Intelligent mail barcode standards, for First-class mail, Standard mail, bound Printed matter, First-class Package Service and Parcel Select Lightweight. So, we are seeing the interest of the USPS to have mailers convert to the Imb so nothing in the proposed rate change comes as a total surprise. In addition, we’ve heard from the USPS that all future “mail sales,” promotions or incentives would require eDocumentation at a minimum and preferably full-service Imb (which, as you may recall, includes eDoc). The USPS’ interest in the Imb has to do with its ability to reduce costs associated with the processing of mail. Yes, there are other advantages in terms of adding value (such as the monitoring and measuring of mail for volume-based incentives). but, the most significant driver is the ability to drive costs out of the system and improve service levels at the same time. one example of driving out costs is the current challenge the USPS faces with paper based postage statements. There are significant costs associated with processing paper based postage statements from data entry errors due to illegible handwriting, incorrect information or mis-keying as statement data is entered into Postalone! Hence, the USPS is pushing hard for software providers to work together to make it as easy as possible for mailers to provide eDocumentation. Stay tuned for our next article as we’ll share more about the USPS’ use of the Imb for cost reduction, but we’ll also share how mailers and customers are benefiting with the use of the Imb. a Kevin conti is Director of mailing Solutions at Pitney bowes Software. David robinson is currently the Director of Address Quality for Pitney bowes.


Postal Affairs

With Kim Mauch

Thriving Beyond 2012 If you’ve watched the news this fall, 2012 may seem like the end of the postal world as we know it. USPS revenue has plummeted. With mail volume down and many postal facilities listed for closing, it can be scary to be a mail service provider. But with 9.2 million jobs in the direct marketing business alone, mail is an important part of the US economy. With a little bit of planning, you can strengthen your business and weather the postal storms on the horizon.

Higher Prices USPS will raise prices again this January. Fortunately, they have announced that this increase will stay within the CPI cap. Mail prices will go up around 2-2.5%. Expect that larger pieces, such as flats and parcels, will get the majority of these increases. USPS is shuffling around some rate categories, and prices for First-Class Parcels (now called First-Class Package Service) will get a significant bump.

Facility Closures and Delivery Delays Over 4,000 local post offices and around 250 mail processing facilities are under review and may close. This means that the place you normally submit your mail may not be open by the end of 2012. Talk to your entry offices to see if they are on the list. Identify and visit other entry offices that you can use as a backup. Along with closures could come different entry times and mailing delays. Make sure you know when your office is open and any mail acceptance windows. Prepare your customers. Let them know that it may take a few extra days to get the mail delivered. If time-to-delivery seems slow or isn’t dependable enough, try using a service like OneCode Confirm to see where your mail is held up. You can use this data to help your customers schedule their mailings properly to meet any important deadlines or sale dates.

5-Day Delivery It will take an act of Congress, but there is a real possibility of mail delivery five days a week instead of six. Fortunately, this only affects delivery — USPS plans to keep post and entry offices open on Saturdays. For time-sensitive mail like prescriptions, missing a day of delivery could make a world of difference. Talk to your customers to see if 5-day delivery will affect them. If so, suggest starting the mail process a day earlier, or look at faster delivery services such as First-Class Mail.

they will conclude that direct mail doesn’t work. Take a more proactive approach and provide them with your valuable experience in the mailing industry. Not sure what to say? Take some time to really look at the mail you get. What are you drawn to? What do you open? Take what you learn and help your customers get more results. Some may be willing to try a few new layouts, or new messages on their normal mailers, to see if they get a better response. Take a note of what works and what doesn’t, and you’ll have the tools to suggest changes to your other customers. Most mail these days is advertising, so making your customers’ mail stand out can make a big difference in their bottom line. Being a mail service provider has never been easy, and when USPS suffers, it’s natural to be concerned. But you can make some small changes that can have a big impact on your bottom line. Start thinking about your strategy now to get a leg up on the coming year. a Kim Mauch is a subject matter expert in mailing preparation and submission at Satori Software. Contact her at kmauch@ satorisoftware.com.

PRODUCT SPOTLIGHT Rethink Your Ink! Mail Green remanufactured ink cartridges for Pitney Bowes, Hasler, Neopost and Data-Pac postage meters deliver quality, reliability and performance comparable to OEM at a fraction of the cost. Mail Green leverages the superior design of the Original Equipment Manufacturer’s cartridge and adds value through proprietary remanufacturing processes, highly efficient USPS compliant ink formulas and outstanding customer service. Thinking about new ways to cut operational costs? Think Mail Green. Mail Green www.gomailgreen.com orders@gomailgreen.com 866.760.6027 ext. 104

Changing Content of Mail Americans used to get personal letters almost every week. Now we get a personal letter about once every two months. People still go to their mailbox every day, but they are less likely to open every single piece of mail, especially mail that doesn’t look interesting. If your customers send boring mail and get poor results, www.MailingSystemsTechnology.com a NOVEMBER - DECEMBER 2011

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Ship It

With Jim LeRose

The Latest on the Rate Increases In an unprecedented demonstration of corporate “understanding” and “good will,” insiders recently learned both UPS and Fedex were expected to announce they sympathize with the struggles many of their preferred customers are facing due to the ailing US economy and therefore both have decided to “help out” by cancelling next year’s rate increase. This new strategy proves beyond a doubt UPS not only loves logistics, but they love their customers too. not to be outdone, and in the style of Wal-mart, Fedex is contemplating “rolling back” its rates to 2010 levels. oh happy day! Shippers should not discount the importance of this seemingly dreamlike event. If you are touched by this demonstration of thoughtfulness, then don’t forget to send a card or thank you letter to the heads of these organizations (unlike accessorial charges, their address is quite easy to find at www.ups.com or www.fedex.com). Sound like rubbish? You bet it is. The absolute fact: your rates are going to skyrocket in January faster than President obama’s blood pressure during a viewing of the nation’s unemployment report.

Goin’ Up, Up, Up Why do rates increase every year despite economic conditions? There are five reasons: 1. because most UPS/Fedex customers won’t bother to do anything about it. 2. many are intimidated and fear repercussions for even trying. 3. There is a perception that there are no other choices. 4. The majority of UPS/Fedex customers don’t understand the impact rate increases have on their businesses 5. many believe since they have a contract rate increases do not apply.

Here’s the good news; you do not have to grin and bear this increase. There are steps you can take to pay a lot less for transportation in 2012 and you should never be afraid to confront your carrier. It would be un-American not to engage competition. While the world is bracing for a double-dip recession, millions are concerned about falling home prices, high unemployment, our nations debt and political gridlock. I can’t help solve those problems but I can tell you how to lower your transportation costs in 2012 by 30% or more.

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Here are five contacts you should make immediately to offset the impending doom of higher shipping rates: 1. Equaship – www.equaship.com This bright new star in the shipping business helps to level the playing field for smaller shippers. Apple computer and your local mortgage broker pay the same rates — all of which are publicized online. no secret deals for anyone and no accessorial charges — ever. 2. DHL – www.dhl.com This is the largest shipping company in the world for a reason. If DHL were a country, they would have the sixth largest economy. Want to really drive down international shipping costs by 30% or more and speak with a company whose only focus is on international shipping? call DHL and speak with a trained certified International Specialist (cIS). 3. Vanguard Global – www.vanguardglobal.com Shipping to canada? This award winning service will consolidate your shipments, expose delivered costs up front (and reduce them) speed delivery to canadian recipients (virtually everything gets delivered in two days) and lower your costs by 30% or more even if you are getting a 60% discount from UPS/Fedex. 4. Advantaship – www.advantaship.com The first-ever shippers savings club. For a small monthly fee, get access to huge discounts (previously reserved for large shippers) for a multitude of services with no volume commitments. Join a growing number of shippers who are taking control of shipping expenses. 5. Get a multi-carrier TMS solution installed to help select the best method of shipping from among all of these services (including UPS, Fedex and USPS). As I reported at PArceL Forum in october, (email me at jim.lerose@agile-network.com if you want a copy), this technology alone will save you another 30% or more! Google the term “Transportation management Software” and find a provider today. I hope this information helps you Ship better and Save money. Jim Lerose is Principal of Agile nYc metro and President of Advantaship.com. Jim has been a transportation industry consultant for over 25 years. His clients have saved millions on transportation costs. Agile has helped companies such as JP morgan, Audiovox, Intuitive Surgical, Panasonic electric, Petco and over 1,000 others. Jim welcomes your comments and can be reached at jim.lerose@agile-network.com or 888-214-1763.


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THE CHANGING

FACE Industry trends — past, present, and future page 20

10 tips for automating your mail and package tracking.

Page 24

Adopting new customer communication methods.

Page 22

A new approach to postal costing.

ING MAK THE PIECES FIT

Upgrading your software? Questions you should ask — and pitfalls to avoid page 16

OF MAIL Not to worry — direct mail is here to stay page 22

to Software The fightadaptations to remain USPS relevant support a changing in the 21st century page 8 page 14

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THE STATE OF THE MAILING INDUSTRY Part two of our annual survey covers your opinions on the USPS, national issues and how your mailing operations are faring. By Amanda Armendariz I find that our annual surveys are always an interesting peek into the state of the mailing industry, and this year’s was no exception. As I tallied the data, it was refreshing to see the differences — as well as the similarities — between last year’s results and 2011’s. Some numbers were almost identical, such as the number of respondents who support ending Saturday delivery since it will have no effect on businesses. Other numbers were quite different; far more people advocated privatizing the USPS in this year’s survey, compared to last year’s. Perhaps the constant headlines about the financial pickle the USPS is in has caused some to rethink their stance? It’s not surprising that mail center managers listed their number one challenge in running their mail operation as budget and financial issues. It is no secret that this economy, while recovering slightly, is still a long way away from the financial stability of years past. Perhaps this is why almost half of our respondents reported not planning on purchasing new equipment until 2013; over a full year away! Even more concerning is the fact that when we asked respondents what the mailing industry would look like in five to 10 years, a decent portion of the responses were some form of, “Will we even be around then?” But take heart — I’m not here to be the voice of doom and gloom, and these survey results are not all bad. In fact, many of them are downright heartening. Seventy-one percent of people say management recognizes the value of mail and respects what they do; that’s a definite plus. More and more people taking control of e-communications? That’s also a positive, since if mail is to survive, it must work with electronic communications, not in competition with them. All in all, after reading these survey results, I’m confident that while the mailing industry may change drastically in five10 years, it will still be here, and it will still be a viable, thriving, healthy form of communication for businesses.

The Breakdown of Respondents:

78%

Manager/Supervisor with responsibility for company's mail facility.

22% 16

NOVEMBER - DECEMBER 2011 a www.MailingSystemsTechnology.com

Work for a company that provides lettershop, presort or list management services and does not sell equipment or software.


You Know You’ve Got opinions: the usps How’s the Service?

What’s Your Biggest Problem with the USPS?

24% 21% 31% 23% 23% 14% 11% 08%

2011

57% 61% 50% 54% 58% 56% 62% 59%

1. Inconsistency 2. Regulations Confusing or Burdensome 3. Rates/Pricing 4. Timely Delivery (tied for #3) 5. Communications/Information

16% 16% 17% 19% 17% 25% 21% 25% 3%

2%

2%

4%

2%

5%

6%

Should We Privatize the USPS?

53%

47%

Yes

No

2010

1. Regulations Confusing or Burdensome 2. Inconsistency 3. Communications/Information 4. Rates/Pricing 5. Mail Acceptance

8%

’ 0 4 ’ 0 5 ’ 0 6 ’ 0 7 ’ 0 8 ’ 0 9 ’ 10 ’ 11 excellent Good fair poor

This is almost the exact opposite ratio as our 2010 survey, where 46% voted for privatization and 54% were against it.

Respondents were asked to rank the United States Postal Service on a variety of factors and give their insight on common issues the USPS is facing.

Thoughts on Ending Saturday Delivery 33%

I support it, although it will be disruptive to our mail delivery requirements

47% 10% 02%

I support it and it will have no effect on our mail delivery requirements or needs

27% 45%

Somewhat worried

28% Not worried; mail will always be around

I don’t care either way

Do you think the USPS is making the correct moves in changing how they do business to respond to the increase in electronic communications and the economy?

How worried are you about the USPS not being able to meet its financial obligations if some drastic changes (such as eliminating the pre-funding requirements, etc.) are not made? Very worried

I don’t support it because it will be disruptive to our mail delivery requirements or needs

I don’t support it because I personally like having Saturday delivery

08%

Money Problems

30%

No

70%

Yes

Did you participate in the USPS’ mobile barcode promotion?

26%

Yes 74%

No

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For Those Who Participated: 03% The discounts I received were greater than expected

19%

The discounts I received were about what I expected

For those who didn’t participate, why not? 26%

Too much work required for too little payback

37% 19% 18%

The government cannot let this valuable enterprise go under. It would be devastating to the world’s economy. They need to start treating us as valued customers like any other business does, not the opposite. Privatization would go a long ways towards reversing their “we are doing YOU a favor” mindset.

The discounts I received were less than expected

78%

Other Thoughts on the USPS:

QR codes aren’t really relevant to our audience

Didn’t hear about it in time to make necessary changes to mailpieces Other

USPS needs to advise business of promotions well in advance. They should actively notify their customers so more companies can participate in promotions. USPS personnel should actively work with their companies to see how they can improve service they provide to them and look for opportunities where they can save money. Overall they do a good job — our mail is delivered in a timely manner with little mailpiece destruction or mis-delivery. USPS needs to eliminate one day of service. It's a holdover from years past and is not necessary. however, they do need to have one late night at the post office during the week and possibly have a couple of weeks in December where they offer deliveries on Saturdays and extra late nights for packages/mail like we do now. The USPS needs to have more flexibility in order to adapt to the changing market. That said, they also need to streamline the rules and regulations; there are way too many. The USPS will eventually put me out of business with their continued rate increases. I cannot afford to keep raising my prices to cover the USPS increases. The USPS is a great entity; it cannot be totally eliminated by electronic anything. It takes a lot of people to fulfill the needs of the mail. They are doing a great job.

Two of the most popular “other” responses included: • Didn’t hear about it • Don’t need it/doesn’t apply to our business

Top heavy. Customer service is “out the window”. TOO MAnY employees are there “just for a paycheck,” and don’t know or care where the money comes from to cover that paycheck. Deregulate and let them run like a business and be efficient.

YOUR ThOUghTS On nATIOnAl ISSUES Do the Do Not Mail initiatives have validity?

A Tall Order: Educating Consumers on the Value of Mail Make it valuable to consumers — consumers determine the value of mail, not the mailing industry. Just tell the customers to use common sense so they realize that even with higher postage rates the USPS still offers great deals. Emphasize the important role mail can have in cross media campaigns. Mail is viewed as a legacy system with no validity in today’s society, but it does have a real impact when utilized properly. They need to show the ROI on a mailpiece.

40% 60%

No

Yes

Mail is probably the only source of communication for millions of Americans. The baby boom population is growing by the thousands every day and we all grew up with print media; our job to teach the new generation the values of print media. Print more appealing mail. Keep the validity of mail on people’s minds and continue to educate. We all know — mail works. Address their concerns and demonstrate the mail’s value. Advertise the stats: economic value, number of jobs, impact if it left, value of growing tree farms for paper which helps the environment, use of soy-based ink. It’s a shrinking industry but in order to survive they must re-focus on their biggest users (Business). The biggest thing that the mailing industry can do is promote the security and timely delivery of mail. Direct more offers and programs at small businesses.

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Which best describes your opinion on what your company is doing in terms of mail to be more environmentally friendly?

What best describes your attitude about electronic communications?

09%

43% 48%

My company is looking and acting on all possible ways to be more environmentally responsible.

11% 04%

I embrace e-communications and have taken responsibility at my company to assist in or manage them

49% 36%

I embrace e-communications but have not done anything at my company to assist in or manage them

My company is looking and acting on some ways to be more environmentally responsible, but could do more.

I am against e-communications because I am fearful there will not be a job for me in the future

My company is not concerned and not taking any steps to be environmentally responsible.

I am against e-communications because I personally like information in hardcopy format

Your Mail operations What is your #1 challenge in managing your mail facility? • Budget/Financial issues • Compliance with Postal Regulations • Volume Spikes/Changes

What statement best  describes the overall attitude in your company about the mail center?

They understand the importance of mail and respect what we do

What statement best describes the attitude of management in your company about the mail center?

04% 09

%

03%

23%

61%

They understand the importance of mail and respect what we do

04% 09%

02%

17% 71%

They don’t understand the importance of mail but are respectful of what we do

They don’t understand the importance of mail but are respectful of what we do

They understand the importance of mail but disrespect what we do

They understand the importance of mail but disrespect what we do

They don’t understand the importance of mail and are disrespectful of what we do Other

They don’t understand the importance of mail and are disrespectful of what we do Other

13%

How has the economy affected purchases of equipment and software for the mail center?

05% 15%

09%

23%

No effect Freeze on purchasing all or most products Freeze on purchasing some products Allowed purchases to decrease operating costs Other

First quarter 2012

12% 27

%

10%

29%

07%

Yet this year

If the economy had a negative effect on purchases, when do you anticipate your company will free up monies to make purchases again?

Second quarter 2012

Third quarter 2012

Fourth quarter 2012

4 7 % 2013 www.MailingSystemsTechnology.com a november - December 2011

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S

avvy mail-management executives are realizing that the solutions they’ve been using for years to automate mail sorting to capture presort savings, while good, often leave real room for improvement when it comes to maximizing profits. mailers are finding new ways to lower postage costs and improve the return on their mailing investments by taking a fresh look at the latest alternatives available today.

Trends in mail

Despite many organizations’ attempts to push customer communications into less expensive electronic channels, consumers still like their physical mail — even when they configure and reconfigure their mail/electronic mix. Yet tough economic times, huge hopes and expectations for electronic communications and aggressive green campaigns have contributed to a significant dip in mail volume. In the US, the USPS introduced several postal rate changes designed to better correlate cost with processing expense. It created the Intelligent mail barcode (Imbc) to provide new efficiencies and tracking features, and implemented more stringent enforcement of its rules and regulations. overseas, a trend toward mail privatization also began to alter the landscape for international mailers.

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The market conditions and changes in mail volume have put pressure on organizations, challenging them to look for ways to decrease operational and postage costs.

Trends in mail Sortation

most mailers have taken somewhat of a “set it and forget it” approach to mail sortation, especially when it comes to gaining presort advantages. neither careless nor cavalier in “setting it,” their analyses were rigorous. They took into account factors including mail volume and ZIP code density, mailing patterns, labor and space requirements, speed of delivery and concerns over privacy and control. They considered in-house and external options; weighed the benefits of hardware and software sortation solutions; and considered high-speed sorters, manifesting options and presort services suppliers. Their decisions were carefully considered; however, once they established a process, focus turned elsewhere and the new solutions became standard operating procedure.


Industry changes create opportunities for mailers

It’s now time to rethink those carefully considered choices. changes in technology, mail volumes, mail patterns, USPS processes and economic conditions are causing mailers to take a closer look at where additional savings and efficiencies can be found. Also, they are finding ways to improve customer service, even as they reduce costs. Key areas of opportunity include presort services, technology upgrades and hybrid solutions.

Presort Services: A collaborative Approach

many organizations work with an external mail presort services provider, which offers the advantage that mail can be comingled across businesses to achieve critical mass for more five-digit discounts. This is attractive for mailers whose mail volumes aren’t sufficient on their own or whose ZIP code concentrations are low. As organizations look to reduce expenditures on plant, equipment and labor, presort services offer all the discounts without the onsite expense. As mail services specialists, presort providers have outstanding perspective on working through changes in postal rules, regulations and enforcements, mailing and shipping trends and the latest innovations in technology and mailing solutions. Presort services providers can also help organizations assess their total mailstream volumes. As a result of the shift in mail volumes, for some mailers, the in-house sortation solutions selected some years ago are no longer the best fit. For example, when mailings are fewer or further between, in-house savings may be negated by the amount of time that labor and equipment sits idle. While speed was once a concern for businesses that were considering working with an external mail presort services provider, today’s presorters are turning mail processing around faster than ever. The top presort services providers now typically do two layers of sorting. Providers will pick up outgoing mail and process it with specialized equipment that reads the mailing address, validates address accuracy, applies the barcode, then sorts and trays mail according to USPS specifications. Then an organization’s mail is commingled with mail from other mailers, which provides all mailers, regardless of size, with a greater depth of sort. This double-sort process expedites delivery by moving mail closer to its end destination while maximizing the amount of mail that benefits from five-digit discounts.

new Technology Introduces exceptional efficiency

There are new technology choices for mailers to consider when sorting mail in-house. Today’s top sorters are fast and can process as many as 45,000 pieces per hour. operational throughput enables companies sorting in-house to do so with fewer machines and less labor. Higher throughput also means that more mail can be sorted and out in the same day, which means faster responses, with a particularly valuable cash-flow result for transactional mail. new sorter technology is better equipped to meet stringent USPS regulations. For mailers with lower volumes, new lower speed sorters are available with a smaller footprint. Flats sorters are also helping mailers take advantage of additional savings.

mail integrity is enhanced on today’s sorting equipment too. new software connects sorters and inserters to streamline mailpiece creation and improve quality controls. Adding a scale into the sorting process automatically catches and redirects pieces that are over- or under-weight. These technologies help to ensure that any exceptions are flagged closer to production and can be corrected quickly — saving time, labor and expense. mail sorted in-house can also be tied into a reprint process for any mail that needs to be rerun.

Hybrid Solutions – The best of both Worlds

In a shift, some smart mailers are recognizing they can have the best of both worlds. It’s possible to maintain an onsite solution — upgrading hardware and software solutions to maximize operational throughput while adding integrity and security — and use an external presort service where volumes or ZIP code concentrations fall short of the best discounts. For these mailers, a portion of the volume is processed and presorted in-house and delivered direct to the USPS. The remaining volumes are presented to a presort service provider where they are comingled to qualify at the five-digit level. Thus, mailers can maintain high levels of control of their mail while maximizing postage savings. The new Full Service Imbc means that whether they deliver direct to the USPS or route mail through a presort service first, it’s possible to keep track of the mail every step of the way. Hybrid mailers like the control they have in presorting in-house and the additional discounts they can reap by pushing residual mail out for presort servicing.

Selecting the right Sortation options for business needs

What makes the most sense for each organization is a function of many different factors. However, there are enough differences today in mailing trends, presort equipment, software and solutions, that for many organizations a re-evaluation is worth a look. Key considerations include: • mail characteristics and volume • mail patterns — frequency, distribution, concentration among ZIP codes • regulations and consumer protections such as cArD Act, HIPAA and more • The benefits of mail tracking capabilities • The cost-benefit of in-house labor and equipment versus an external presort services solution High-volume mailing is an expensive proposition and postage is the largest contributor to overall mail costs. It pays to re-evaluate the mail process and configure it for optimal postal savings. by working with a provider that offers a hybrid approach to presort mailing, organizations can determine the best fit for efficiency, security and savings for their businesses. a Debbie Pfeiffer is vice president, Pitney bowes Presort Services.

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Shipping Know-How from the ExpErts


More and more mail centers are adding shipping duties to their ever-growing list of responsibilities. This special supplement of Mailing Systems Technology will help you navigate this new terrain.

Shipping Options for Mail Centers

By Joe Wilkinson, Director, Transportation, envista As more and more corporate mail centers are asked (or forced) to serve double duty as shipping centers (including outbound, inbound and returns) for their internal stakeholders, the number of questions we receive from our clients on how to best manage this process is ratcheting up. The number of topics under this heading could fill several books. So, for the moment, let’s focus on the most basic question: what mode and carrier(s) best fit your specific situation? In most cases where mail centers are taking over responsibility for shipping activities, the volumes are significantly lower than those shipped by large distribution centers or fulfillment center operations. Volumes sufficient to warrant Less Than Truckload (LTL) shipments are extremely rare. For this reason, we will focus on small parcel shipments.

The options: FedEx and UPS – The two remaining national parcel carriers have a number of associated strengths — and several weaknesses as well. For relatively heavy residential deliveries (10+ lbs.) and most commercial l deliveries where time-in-transit (TiT) is an issue, the two 800-pound gorillas can provide an excellent value, provided of course you are operating under an optimal pricing agreement. Likewise, FedEx and UPS provide a number of significant valueadds. While the USPS has made improvement to its track and trace capabilities, it still lags behind the private carriers. Various delivery confirmation options, declared value, return service options and (for the moment at least) guaranteed service give UPS and FedEx advantages over the USPS. The downside is the additional accessorials and surcharges applied for every conceivable variable, with the result of a higher average cost versus the USPS. USPS – Despite its recent challenges, the United States Postal Service continues to drive value for a large number of shippers. The USPS must visit every valid delivery address daily, so incremental volumes do not substantially increase delivery costs. As a result, the USPS is able to service residential addresses without adding additional charges such as the residential and delivery area/ extended area surcharges. As always though, there is a trade off. USPS times in transit are typically higher than the private carriers. Technology and integration are typically considerations as well, as the USPS does not have the resources to provide the same professional services as the private carriers. Also, the USPS does not offer the same sort of service guarantees as FedEx and UPS, though this is becoming less of an issue as the private carriers continue to pull back from service guarantees. USPS Consolidators – USPS Consolidation is a relatively simple model. A private carrier services the pickup and linehaul segments of a move and then drops into a USPS DDU (Destination Delivery Unit) for final delivery. Many shippers are familiar with FedEx’s Smartpost service. UPS had a similar service by the name of UPS Basic, which was recently rebranded and modified operationally to Surepost, as well as a service for lightweight packages called Mail Innovations. Surepost service mirrors Smartpost in that the USPS will provide final delivery for all Surepost packages (UPS provided final delivery for a large percentage of UPS Basic packages). While UPS claims

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Surepost will provide better times in transit relative to Smartpost due to improved network efficiencies and the fact that consolidated shipments aren’t “staged”. However, it is too soon to substantiate this claim. one key difference is that UPS mail Innovations provides billing at one ounce intervals for packages below one pound. This can be an important factor for shippers of lightweight items. Regional Carriers – many of our clients have been voicing recent dissatisfaction with the big two private carriers. An increasing sense that carriers’ actions are reflective of the duopolistic nature of the current parcel environment is causing shippers to look for alternatives. regional carriers may be the answer to this need. Prices can be considerably lower than the national carriers; in some cases as much as 30% lower. regional carriers are motivated and typically willing to offer customized rating solutions and flexible operational parameters for shippers of sufficient scale. However, a regional carrier solution is not without its challenges. not all areas of the country are serviced by regional carriers. This makes developing a shipping strategy solely around regional carriers difficult. The regionals are starting to recognize the opportunity in today’s market. To capitalize on this opportunity they must find a way to expand their collective geographic reach to cover the entire country; integrate operations, track and trace, and invoicing; and develop a mutually acceptable revenue sharing model. If the regional carriers can overcome these obstacles, as we believe they will, they could achieve the goal of operating independently while competing collectively. When this happens we will see another threeplayer parcel market, which will be the tide that raises all shippers. This is, of course, just a primer on the issues that must be considered. but before you address the details of your new responsibilities, take a step back and consider the bigger picture. Are you optimizing modes? Are you taking into account carrier mix in your strategic plan? If not, it may be time to refocus your efforts on the big picture.

Common Mistakes When Negotiating Your Parcel Contract

by rob martinez, MQC, CMDSS, President & CEO, Shipware LLC Having negotiated thousands of parcel agreements over the past 22 years — on both sides of the negotiating table — I’ve seen countless shippers make many negotiating mistakes resulting in overcharges into the hundreds of millions! Here are several common mistakes to avoid so you benefit in your next parcel contract negotiation.

Poor Preparation one of the biggest mistakes I see repeatedly is a shipper coming to the negotiation table unprepared. very often, carriers know more about a shipper’s distribution than the shipper. not too surprising since the carriers “own” your shipping data. However, there are many useful sources of information you can use to prepare for a negotiation. At a minimum, analyze invoice or manifesting data to better understand your transportation and accessorial costs, services used, weights, dimensions, zones, international destinations and other package characteristics. Unless you do your homework, you might as well not show up to the negotiating table. Apart from losing credibility in the negotiation, you give the other side an unfair advantage.

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No Benchmarking An important component of preparation is the effective use of benchmarks. benchmarks provide data points from other companies for comparative purposes. For example, imagine going into a negotiation knowing that you were being charged 20% more than three out of four shippers with similar spend and package characteristics. How much better prepared would you be when your carrier rep says, “You’re getting the best deal in our district”?

No Formal Tool for Procurement many parcel contracts are negotiated outside any formal process, and often leave money on the table as a result. Formalizing requirements and pricing requests in a request-forProposal (rFP) or other bid process can lead to significant savings. by its very nature, rFPs enhance leverage by creating a competitive bid environment in which both the incumbent and nonincumbent carriers see the same set of facts. The rFP process allows shippers to control the negotiation, request target pricing of both transportation incentives as well as accessorial concessions, and establish requirements including terms and conditions.

Overreliance on Current Carrier Shippers need to realize that their need to reduce costs and a rep’s desire to earn higher commissions are conflicting motivations. carrier reps are compensated, evaluated and promoted in part on their ability to sell your business at the highest margins possible. If you’re solely relying on your rep to act as your “advocate” within the carrier pricing departments, you are likely overspending. one of the worst negotiating mistakes a shipper can make is to exclude the non-incumbent carrier from contract discussions. The single best way to reduce costs is to leverage competition. With no threat of losing your business, what is a carrier’s motivation to lower costs? In fact, businesses that routinely shift between and/or split their business with both carriers get the best pricing. The carriers commonly classify pricing requests into one of three sets of customer types: 1) retention, whereby the carrier gets the majority of the available business; 2) Penetration, carrier already gets business but there’s some opportunity to gain additional volume; and 3) conversion, the carrier has no or little presence. Guess which set of customers get offered the deepest discounts? conversion: the shipper that gives a carrier the least business. If you primarily use only one carrier, and it’s been years since negotiating your agreement, there’s a good chance your loyalty is being unrewarded. remember — if your goal is to reduce costs, your best friend during carrier negotiations is often the other carrier.

Ignoring the Fine Print many shippers spend too much time focusing contract negotiations on driving deeper incentives and ignore terms and conditions. Terms are equally as important as discounts in driving cost savings. moreover, many incentives are mitigated due to terms like minimum shipment charges, general rate increases, accessorial charges, late payment fees and other such contract “gotchas.” A single word within a carrier agreement can result in significant rate hikes. As an example, UPS recently created a new set of list rates called “Standard” rates. However, these new “standard” rates are anything but standard. The new tariff is as much as 35% higher for air services than its “Daily” rates!


Go It Alone nine out of 10 shippers are overpaying for UPS and Fedex services by a minimum of 10%. If you feel you’ve gotten as far as you can with your carriers, perhaps it’s time to seek outside help. morgan Stanley/PArceL’s “Annual best Practices Survey” reported that volume shippers obtain significantly better discounts through consultants, as much as 49% lower. most third party market experts are willing to conduct a no obligation, complimentary assessment of your current rates and terms to assess potential savings. Several firms will also benchmark and score each component of your pricing agreement.

Don’t Make Time for Carrier Meetings The relationship you forge with your carrier isn’t made during contract negotiations, but rather throughout the year. carrier reps often lament that some of their customers do not make time for them to demonstrate additional value. many shippers only contact the rep when there’s a billing issue or to address the occasional late or lost shipment. However, shippers can derive tremendous value in scheduling routine meetings with your carrier reps. carrier reps work with many other companies and can help you better manage your spend through best practices and leveraging value-added services and technologies, and integrating additional product offerings like LTL, mail, ocean, warehousing and other carrier services. review powerful management and service performance reports. Determine ways to reduce address correction and other often preventable fees. review electronic invoicing options best suited for A/P needs. challenge your carriers with ongoing rate improvement initiatives and zone skipping opportunities, and addend your pricing agreement as needed. As a best practice, however, I encourage shippers to meet frequently with the carrier reps — both the incumbent (at least quarterly) as well as non-incumbent (at least annually). In summary, there are many negotiating pitfalls to avoid when negotiating your carrier agreements. Take the time to develop a valuable relationship with your current carrier, but be sure to invite the non-incumbent carrier to participate in annual bids (and give them a real shot!). To maximize savings, do your homework — including meaningful benchmarking — and direct carrier negotiations through a formal bid. And take the time to understand and negotiate terms in addition to discounts. Finally, explore using market experts if you think you might need help with contract negotiations. At a minimum, take advantage of their complimentary benchmarking and market assessment.

What Every Mailer Needs to Know About the Differences Between the Carriers by ron Wiener, Equaship

These are the truisms of parcel shipping: most organizations have an ingrained mythology around which carrier(s) are the best for shipping parcels. but because there are many differences between carriers, none is “the best” or even the lowest-priced in every scenario.

november - December 2011 a www.MailingSystemsTechnology.com

most organizations believe that they have a great discount with UPS or Fedex — usually because their account rep told them so. Savvy organizations compare shipping rates with their industry peers, and often learn that their UPS or Fedex discounts are not as good as they can be. negotiation is king. In most organizations there is a complete disconnect between what operations thinks they are paying for UPS and Fedex shipping, what Accounting actually pays every week, and what marketing thinks they’re earning or losing on shipping charges to their customers. only very large organizations have IT platforms and/or costly shipping consultants to analyze their true costs of shipping. Smaller shippers tend to rely on base rate comparisons, never noticing or even seeing the 20% to 35% in adjustments and accessorial fees on actual billing statements. If your company ships to residential addresses, UPS/Fedex will add another $2.45 to $2.75 residential Area Surcharge (rAS). If any of your customers are located in an area that UPS/Fedex consider “rural” — which includes 25% of the US population — expect another $1.85 to $3.00 Delivery Area Surcharge (DAS). In areas that you’d probably consider rural, expect another ding for extended DAS (and these get super-sized for Alaska, Hawaii and other US territories). make a tiny mistake on the recipient’s address, or accidentally use UPS/Fedex to send something to a Po box or APo/FPo address and it’ll cost you another $11 per incident, plus the cost of return shipping if they can’t deliver it. everyone knows that UPS/Fedex now add a Fuel Surcharge (FS) to every parcel. but the accessorial fee most likely to go unnoticed — and it can be a massive one — is the so called “dim weight” fee (dimensional surcharge) for bulky but low-density parcels containing things like pillows or lampshades are charged based on dimension, not actual weight. For example, a 12-pound set of bicycle wheels shipped via ground in a 28” x 26” x 13” box is rated as a 58 pound parcel by UPS/Fedex. UPS and Fedex can apply dozens of accessorial surcharges to your packages. USPS and equaShip structure their pricing to avoid confounding accessorial fees. For example, neither charges rAS, DAS, extended DAS, Fuel Surcharge or Address correction fees. equaShip doesn’t have any dim weight charges at all (USPS does on Priority mail). If you haven’t compared carriers in a while, you might want to do so in January when UPS, Fedex and USPS will all post significant increases. You’ll generally find that USPS has lower prices than UPS and Fedex for items less than six pounds. The bottom line is when you use USPS or equaShip you will see all your costs up front. If you use UPS or Fedex, ask your accounting department for invoices and compare your true costs with what you think you’re paying today. Then work with your marketing team to see if you’re charging your customers correctly for shipping, or switch carriers to lower your costs. Read more of this supplement online! Jim LeRose of Agile Network gives his commentary on: “Multi-Carrier Shipping Solutions For The Mail Center – Suddenly In Vogue?”


ApplicAtion Article

Total Shipment Visibility

A Pitney bowes’ customer with a medium-sized mailing operation was shipping packages, but from non-integrated systems across multiple departments. While not considered a “production shipper,” this customer’s aggregate volume was significant. However, lack of cost controls, efficient workflow and poor visibility to carrier performance presented a significant challenge that was solved through the implementation of Pitney bowes’ SendSuite Live.

As there were no business rules governing how and when small parcels were shipped, the company feared they had little control as to when express services were being used. In one case — through an internal audit — this client discovered product samples were being processed with premium, time-definite services, when a deferred option would have been fine with the consignee. The accounting for these expenses was also problematic: one department’s administrative assistant was paying for shipping with a personal credit card. Furthermore, they lacked visibility to carrier performance. because multiple departments were processing shipments using non-integrated software or stand-alone websites, tracking was only being done at the department level. Service failures and lost or damage packages were not properly credited back to the company through the carriers’ claims process.

Through its presence in the mail center, this customer turned to Pitney bowes to discuss how to integrate its parcel volume with its mail volume. Pitney bowes was able to offer this company support and integration of all its mail and shipping processes through its SendSuite Live product. Utilizing SendSuite Live’s flexible integration templates, Pitney bowes designed a solution which gave the mail center complete visibility to all shipments being processed by all departments. next, Pitney bowes integrated the application’s Desktop Template to allowed individual users to process shipments, at predetermined service levels — all while correctly accounting for the expenses. because this customer had better visibility to their shipments, lost and damaged claims were properly filed, saving them considerable money. Implementation, including additional integration with the company’s crm system, took less than a month. SendSuite Live now enables the customer to compare carriers’ rates, track shipments to its final destination and determine carrier performance. This new process eliminated the fractured, ad hoc processes the company used and replaces it with one holistic system that gives them total visibility across the entire enterprise. To further streamline the accounting and payment process, this company chose to use Pitney bowes’ Purchase Power to aggregate all of its carrier invoices into a monthly statement. much the same way, the customer accounted and paid for postage, Pitney bowes pays the carriers as the invoices arrive and the customer now pays one invoice monthly, letting the company’s money work longer. Pitney bowes developed and integrated solutions to take the benefits of SendSuite Live into the mail center and on the desktop. The customer realized Pitney bowes had the capability to conceptualize and deliver the shipping solution they needed — and do so quickly and efficiently.

Pitney Bowes, Inc 1 Elmcroft Road Stamford, CT. 06926 sendsuiteliveinfo@pb.com

www.MailingSystemsTechnology.com a november - December 2011

27


Reality Check

With Wanda Senne

The Real State of Affairs “James Ross Clemens, a cousin of mine, was seriously ill two or three weeks ago in London, but is well now. The report of my illness grew out of his illness; the report of my death was an exaggeration,” -Mark Twain, May 1897.

SO

too, the report of the USPS’ demise is much exaggerated. Will the USPS change? Absolutely! Will the USPS adapt and incorporate technology, as it works with its key stakeholders, to define an efficient mail processing network and infrastructure to match the projected workload? Absolutely! Since July 26, 1775, the USPS, the second oldest agency in the US, has survived technology that pessimists claimed would be its doom: the telegraph, the telephone and the fax machine. With the adoption of the Internet, and consumer adjustment to that technology, the USPS and our industry is facing a “new normal.” As we consider the new normal for the USPS in 2012, what other similarities does the USPS have with riverboat captain, writer, speaker and inventor Samuel Langhorne clemens, a.k.a., mark Twain?

First, Twain was also part of our $1.138 trillion industry (sales revenue representing over seven percent of the nation’s GDP and over six percent of the nation’s jobs); he was a printer’s apprentice, typesetter and in the publishing business. Second, he had serious financial difficulties resulting in bankruptcy — which he later resolved and paid his creditors (even though not legally required to do so). Third, he was an innovator and inventor enthusiastic about discovery and technology. Did the USPS perceive its connection with Twain? Is that why five postage stamps have been issued in his honor? maybe not. The important questions are: Will congress correctly perceive the facts that have been presented to them over, and over, and over again, and finally take corrective action that will help, not hurt, the viability of the USPS and the mailing industry?

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It is perhaps just too sweet to hold onto the postage dollars that are snuggly wrapped up in the US Treasury instead of returning the $6.9 billion in Federal employees retirement System overpayments — after all, anything that “scores” the Federal budget doesn’t show well on the report card, does it? Do you remember the main premise of Twain’s Huckleberry Finn? It is a young boy’s belief in the right thing to do, though most believed it was wrong. Well, in the case of the FerS overpayment, as well as the situation with the prefunding of the retirement health benefits, most intelligent, honest and aware young and old boys and girls recognize and believe that correcting these errors IS the right thing to do. I know that I’m writing to the choir, and as I consider what 2012 will pose for our industry, I realize that a reality check of major proportions is necessary to avoid rumors of the USPS’ demise. Did you know that Twain was born during an appearance of Halley’s comet, and he predicted that he would “go out with it” as well? His prediction was accurate. He died the day after the return of Halley’s comet on April 21, 1910. Halley’s comet is due back on July 28, 2061, and the USPS will noT go out with it! The USPS will still be delivering mail well beyond 50 years from now, and I hope that they will be doing so in a corrected legal framework much sooner; and without a comet-jarring event. I look forward to hearing the shout, “mark Twain” — the call made when a riverboat is in safe water (two fathoms) — as the USPS navigates the twists and turns, the current and many obstacles and opportunities facing them in 2012. a Wanda Senne is the national Director of Postal Development for World marketing. contact her at wsenne@worldmarkinc.com or 770-431-2591.


ApplicAtion Article

Customer Loyalty Means Customer Revenue

the first in a series on using message relevancy to drive customer loyalty mike maselli, vice President of marketing and Product management bell and Howell

With the increasing popularity of transpromotional mailings and electronic delivery, enabled by rapidly evolving technologies from data processing through printing and finishing, there are many opportunities to increase customer loyalty, message impact and revenue through meaningful communications. Increasing revenue often comes down to acquiring and retaining more customers. companies tend to dedicate a significantly larger percentage of their marketing budgets and efforts to targeting new prospects, so much so that the personal connections formed early on are often lost over time and customers consider alternatives. For some companies, maintaining an on-going connection with the customer is dependent on the one communication vehicle that reaches them on a regular schedule — the monthly bill or statement. With the lowering cost of entry for technologies and services that transform static documents into dynamic communications, the monthly bill or statement can now become a personalized information vehicle. With the right messages, it can help foster customer loyalty and drive new revenue opportunities. Creating target customer profiles In the early days of personalized communications, companies would line up their best product and service offerings and then try to determine which customer segments would be most receptive to the offer. Defining solution messages is relatively simple

— much more so than creating useful customer profiles — and does not require new technology or complicated analysis. However new, easier-to-use tools are enabling marketers to flip the model and first build dynamic customer profiles that better reflect the target audience. Data culled from crm systems is used to identify customer characteristics that influence message reception, and then analyzed to define the products and services to promote. marketers are investing in building the tools, skill sets and infrastructure to deliver better and more personalized communications. Some things to consider when creating customer profiles and relevant communications include: Use what account types and behavioral information you have Account information helps to ensure that you don’t promote services that a customer already has, and transactional information allows you to zero in on areas where they are already spending money. Learn more about your customers An increasingly popular solution is the use of geodemographic techniques to create lifestyle segments. Age is one of the characteristics that you can use to help predict a customer’s delivery preferences. Across all income categories, younger households send and receive less transactional mail

because they are more active users of electronic alternatives, and those under 35 years old tend to have fewer investment and insurance policies and related documents because they often do not own the assets associated with these transactions. Leverage payment history and methods customers will respond better to messages delivered in their preferred medium. For example, a customer may receive a print mailpiece, but prefer to pay online; or they may prefer an electronic statement and pay electronically on your website or via a bank’s website. The point is that improving customer relationships involves a multichannel strategy that brings the message to the customer when and where they want. customer loyalty develops over time, and if done right can translate into tangible business results. creating flexible, targeted customer profiles is the first in a series of steps that help you achieve your marketing and business objectives. What’s next: developing a relevant message. © 2011 Bell + Howell Company. All rights reserved. BÖWE BELL + HOWELL and the Böwe Bell + Howell logo are trademarks or registered trademarks of BBH, Inc. All other trademarks and service marks are the property of their respective owners. Specifications are subject to change without notice.

Bell and Howell www.bellhowell.net marketing@bhemail.com

www.MailingSystemsTechnology.com a november - December 2011

29


Pushing the Envelope

With Kate Muth

Farewell to Icons of the Industry

T

his fall, the postal community lost two of its giants within just a few weeks of each other with the passing of murray comarow and Tim may. They were icons of the industry, and two of the postal community’s founding fathers. murray was the executive director of the Kappel commission, formed by President Lyndon Johnson to reorganize the old Post office Department into today’s self-sufficient Postal Service. He wrote eloquently and passionately on the Postal Service he clearly loved, even when it gave him fits. Tim was general counsel for the Post office Department, appointed by the same President Johnson in 1966. He went on to a distinguished career in the private sector as an attorney with Patton boggs, representing many mailers and associations. They say you earned your merit badge once you had been cross-examined by Tim in a rate or classification proceeding before the then-Postal rate commission. many people in the Postal Service and stakeholder community considered these men to be mentors and friends, even if they found themselves on opposite sides of a policy debate or a ratecase proceeding. Their deaths reminded me of what a unique community the postal world is. even as we disagree with each other and argue over strategic issues, we often discover that we all want the same thing – a healthy and viable postal system. A former boss of mine in the mailing industry often noted his respect for the leaders of the postal unions, even when he vehemently disagreed with them. They worked hard to represent their members’ interests, and we were working hard to represent our members’ interests. So even when heated rhetoric was flying in newsletters and in press interviews, we all understood that we were doing our jobs. To borrow a famous quote from The Godfather, “It’s not personal, Sonny. It’s strictly business.” With this attitude, it’s easier to have a drink or share a meal with someone with whom you disagree. This keeps the lines of communication open and allows us to hear an opinion different from our own. This approach helps to build a community, which is something I think the mailing industry should be proud of. I was fortunate enough to be taken under murray comarow’s wing when I first started as a young trade reporter covering the Postal Service and the mailing industry. He generously shared his knowledge with me and he listened to my opinions, which cer-

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tainly were not well-formed when I first started in this business. He encouraged me to reach out to a wide range of postal executives and stakeholders, to learn as much as I could from them, and to listen, really listen. murray was famous for gathering disparate parts of the postal community at his favorite lunch spot, the cosmos club in Washington, D.c., and engaging them in conversation and debate. It would not be unusual for murray to gather the chief financial officer of the USPS, a privatization proponent from a libertarian think tank and a lobbyist for one of the unions. And everyone would listen to each other and speak with civility, which was one of murray’s many gifts to the postal community. civility is often missing in the capitol Hill debate on postal reform. our legislators appear to have stopped listening to each other and have taken to shouting their positions in two-minute sound bites. Unfortunately, this is the way business gets done in Washington, D.c., these days. Positions are formed on one end or the other of an issue, and it is getting harder and harder to come together to find that middle ground. It’s almost like our lawmakers would rather let the problem worsen – let an infrastructure collapse – rather than give an inch to the other side. This is no way to run a country. I’d like to make my new year’s wish a little early this year. I hope that we can tap the wisdom of our industry’s founding fathers and talk, debate, disagree and listen to each other. And when we discover that we all want essentially the same thing – a healthy U.S. Postal Service – let’s figure out a way to make it happen sooner rather than later. The demise of the Postal Service would be catastrophic to commerce and communications. And we’d not only disappoint the postal community; we’d let down an entire nation. a Kate muth is President of muth communications, a writing, editing and consulting firm. contact her at katemuth@comcast.net.


SucceSS Story

Sigler Printing Has a Singular Success Pat veverica, What’s Your Plan, LLc

next, he wanted to better understand Uv ink and whether that feature was necessary. “being a traditional cartridge guy, I was naturally suspicious of the claims vendors make about Uv ink and the applications it was best suited for,” states oleson. He continues: “We put an aqueous coating on about 75% of the pieces that we mail, so printing on top of it posed a challenge. We couldn’t afford smearing or streaking, which would cause the piece to be rejected by merLIn,” noted oleson. After comparing quotes and features from multiple vendors, oleson made his choice. The mcS eagle Uv inkjet system met his criteria at a very affordable price. “I also thought it was a superior product,” claimed oleson. Jeff oleson of Sigler Printing had a problem. Their two inkjet printers were at their end of life. The printers couldn’t handle the USPS requirement for the 65 bar Intelligent mail barcode. Sigler produces a lot of mailings, some of them 2 million pieces and above. They needed a solution. So olsen, being a savvy business Solutions Analyst for the company, did what he does best: he researched his options. And he ended up with significant savings and a more streamlined operation as a result.

oleson recalls his experience: “once we installed the mcS eagle in Q1 of 2011, we were blown away by the results. We had planned to take only one of the old inkjets out of service, but the mcS system was able to perform the work of both of them in the same amount of time. We were able to change over quickly between jobs, reducing our setup time by 50%. And with the mcS 4.25” print head, we can rotate pieces by 90 degrees, running a #10 envelope at twice the speed,” he recalls.

oleson’s first requirement was to find an inkjet that was versatile. It had to be adaptable to various stocks and coatings. Sigler handles a wide variety of pieces, from envelopes to postcards, to self-mailers and catalogs. The printer not only had to be versatile, it had to be able to switchover easily between jobs.

beth cross, the charismatic President of Sigler companies, chimes in: “We’re always looking for ways to streamline our operation, and the mcS system gave us noticeable improvements in both speed and output. I’m also pleased that our operators like it. They would tell you that it’s very intuitive and straightforward,” she noted.

And what about quality? “We can run at full speed, and the Uv ink is cured by the time the piece hits the exit conveyor. This is a huge improvement and alleviates the concerns about merLIn acceptance. The quality is exceptional, giving us darker, crisper print. And our ink consumption is down by 33%,” claims oleson. output increased by 30-50%. Ink consumption down by 33%. better quality. now that’s a success story! congratulations, Sigler! Glenn Toole, VP Sales and Marketing, MCS. Inc., can be contacted at 301-990-6500 or glenn.toole@mcspro.com, or visit www. mcspro.com for more information. About Sigler Companies Sigler Companies is the parent company of Innova Ideas & Services, a creative services agency with offices in Des Moines and Ames, Iowa; Sigler Printing, a premier printing and production house; and Signify, a branded apparel and merchandise business. Sigler Companies was founded in Ames in 1958 as Sigler Printing. In its 53year history, the company has continued to expand its capabilities, and currently offers clients across the United States a comprehensive marketing communications solution of creative services, printing and promotions. Sigler Companies is privately held. Additional information is available at www.siglercompanies.com.

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