Mail Sorted

15 April 2007

Sophisticated mailrooms can have more in common with factory operations capable of driving real business efficiencies. Richard Thompson examines how outsourcing the mailing function can help businesses to achieve postal cost optimisation

TODAY'S BUSINESSES ARE UNDER RELENTLESS PRESSURE to drive down costs whilst simultaneously maintaining the most stringent accuracy targets for document creation and despatch. In such a climate, there is a particular need to optimise mail production and despatch processes.

Postal mail remains a vital and vibrant communication tool. It was only relatively recently that commentators talked of email rapidly eliminating mail but there is no pure substitution going on. Mail volumes in the EU have remained relatively constant, compared to tremendous growth in the number of email messages. Email has grown explosively, creating a new market for itself - but mail and email have found a way to co-exist.

Household originated letter mail has dwindled but this type of communication began falling away some 50 years ago with mass take-up of the telephone. Indeed, far from eliminating mail, research has shown that those households with Internet connection actually receive a greater volume of post than their non-connected counterparts, and online shopping has resulted in huge new mail markets that simply didn't exist 10 years ago.

Mail remains vital and, while deregulation of the postal market may not have brought about radical change, the newly competitive environment has received a measured thumbsup from business customers. A recent report by Postcomm revealed that business customers believe competition to have contributed towards lower prices, greater choice and better quality of service from Royal Mail.

Sort to discount
An experienced outsourcing partner will advise businesses on this choice of services and will identify the best mail distribution options available to capitalise on today's liberalised scene.

One obvious area of opportunity is in the sortation of mail. In simple terms, the finer the degree of sortation, the bigger the postal discount that businesses qualify for. The advantage of outsourcing such a process is that the solution provider can then devote time to monitoring market developments and alerting the customer to new services and pricing structures.

At the departmental level, the use of digital franking meters can also make a significant difference to the bottom line. For example, Royal Mail recently announced a 2p discount for all mail sent via franking machine. Across an enterprise such discounts can quickly make a tangible difference.

Digital franking also enables changes to postal legislation to be swiftly accommodated. One such example is Royal Mail's recent requirement on returned post. From October 2006, businesses requiring direct mail to be returned to sender in case of failed delivery must mark envelopes with a return address. Technology can play a great part in reducing the administrative burden, automating the process and maintaining professional standards.

PiP
Technology is also assisting with adaptation to the recent PiP legislation. The PiP pricing structure targets three formats of post - letter, large letter and packet - with the price of postage dependent on the size, thickness and weight of the posted item. The latest technology will automatically assess the length, width and thickness of a mail piece to determine which PiP format it belongs to. Businesses able to adapt in this way could realise savings of up to 40 per cent on postage costs.

So, there are immediate and obvious postal savings to be made - savings that an outsourcing solutions provider can identify, monitor and refine as necessary. However,looking purely at postal cost is something of a false economy. Real savings only begin when the entire document production process is integrated and automated.

Postal 'factories'
Today, the most sophisticated mailroom operations are adopting processes more commonly found in manufacturing environments to achieve efficiencies and excellence. These sites are known as Automated Document Factories (ADF). Just as process optimisation can transform the world of manufacturing, so it can be a tremendous differentiator in the world of high volume document production.

In essence, an ADF is a document manufacturing model that applies factory production techniques to improve process efficiency and reduce costs. An ADF helps manage the end-to-end digital production of transactional documents such as statements, insurance policies, direct mail and cheques. It combines computer-controlled devices and process management software with high levels of automation, data collection and in-line finishing, with minimal manual intervention. The result is the transformation of a labour-intensive, time-consuming manual process into an efficient, technology-driven production model.

An ADF provides a single point of control for the entire document production process, from data creation, print job acquisition and input through printing, assembly and mailing, which enables a real-time view of the various stages of production and the ability to quickly intervene when necessary. By automating manual steps, the ADF workflow reduces the likelihood of errors or delays. Mail operations are assured that the right contents are inserted in the correct envelope and mailed to all of the correct recipients - a vital consideration for transactional mailers and, increasingly, marketers.

Print and mail operations migrate to ADFs for many different reasons, whether in-house, or via an expert third-party business process solutions partner. With an ADF, print and mail operations can make the most of existing assets and extend the life of legacy applications, support multivendor, multi-platform operations and improve overall operational control and efficiency to meet or exceed service level agreements. In addition, with the onslaught of regulatory and privacy legislation, as well as the customer's desire to maintain a level of privacy with their data, an ADF can be leveraged to meet and exceed legislative, audit and privacy mandates.

Forward-thinking companies are also utilising their communications data to make moreinformed business decisions. Much of this data can be housed as part of the ADF because the operation has control and access to the data. Leveraging tools that track the outbound mail and inbound customer response can be extremely useful to an organisation to make smarter decisions for business concerns. These decisions might include who to target for a particular campaign, whether to send out a payment reminder, or whether customer service might be improved through instant access to an image of the precise document sent to the customer.

In today's competitive, just-in-time market, achieving profitability means finding more effective ways to streamline operations, increase integrity and reduce costs. Several technical and business issues are converging to make the ADF a viable solution for improving profitability:
..Industry consolidation: A result of mergers and acquisitions is that larger companies must assimilate disparate locations, platforms and technologies. Success depends on how well enterprises can integrate multiple date-streams, applications, platforms and systems.
..Regulatory compliance: Organisations must meet escalating government and regulatory compliance requirements such as Sarbanes- Oxley, and this is driving the need for the most stringent document and mail-piece integrity and accurate cost accounting.
.. Pressure to reduce costs: Experts estimate that document costs account for 6 to 15 per cent of revenues, and postage accounts for over 70 per cent of the cost of finishing. There is a need for tighter controls, tracking and reporting to reduce costs and meet tougher SLAs.
.. Improving competitiveness and response times: Achieving breakthroughs in efficiency and productivity means reducing roduction cycle times, handling and lead times.

Marketing tool
With the growing emphasis on personalisation inside and outside the envelope, organisations are recognising that transactional mail comprises more than statements or massproduced documents. They are strategic marketing tools that use customer-rich information to drive revenue. This is also driving the need to maintain solid audit trails and controls to meet privacy rules and regulations. Whatever the requirement, the key point is that ADF solutions are now available, affordable and can be implemented in a modular fashion. An effectively implemented ADF can speed delivery, improve accuracy, reduce costs and facilitate more personalised and effective communications, especially when it is implemented as part of a larger business process that adds value to customer communications and enriches customer relationships.

Certainly, today's liberalised postal market is becoming geared towards companies willing to embrace available technologies to make the life of the postal carrier easier and more efficient. Those with the foresight to treat mail and messaging as a fully integrated function can expect to see significant savings - whether at the departmental level, or across an entire enterprise.

.. Richard Thompson is managing director of Pitney Bowes Management Services