Av Mikael Wällstedt | Article | May 14, 2018

The road to successful Postal Transformation

The main part of our distance communication is today done via phone, text messages or social media. However, that’s just how it has been in recent years. For the last couple of hundred years, letters were instead our main distance communication media. Postal organizations had a significant role in society’s communication. During the last decades, the decline of letter volume has required many postal organizations to investigate and explore new business models. What is happening, why and how?

Earlier this year, I bought myself a new stove to my kitchen. As many others, I ordered a modern induction cooktop from one of popular e-commerce vendors. Since a stove is quite heavy and require the correct mounting, I ordered the extra services: installation as well as dismantling and scrapping of the old stove. The service engineers that came to my home to install my new stove had “Bring” written on their jackets. This is one example of how delivery organizations extend their delivery services.

Many postal organizations have during the last years invested allot in new business models. In 2014, the French La Post announced their ambitions to extend their current logistics core business to also include home services. Among others this included to assist elderly, isolated or vulnerable people. We have also seen similar Postal Transformations in other countries. Yamato in Japan, Canada Post, New Zealand Post or the Finnish Posti are examples of organizations that have taken big steps to provide extended delivery services.

Why transform?

The background reason and driver to undertake transformation are the changing market conditions. For hundreds of years, the government-owned postal organizations have delivered, mainly letters, to the recipients’ home. They have done this quite good. The old say: “as letter by the post”, meaning that you can trust it will happen, demonstrate the big trust the postal industry have earned. The postman delivering the daily newspaper and letters was something you just expected to happen every day.

During the last decades the letter volume has declined because of the emerge and rise of electronic communication. In some countries, like Estonia, the letters volume has reached a very low figure, while in other countries, like UK, letter (in form of direct advertisement) is still significant business. Regardless, the fact is that the letter business is substantially declining, while the parcel need is rapidly growing.

So, what could be good to do in a changing market, when some of your key assets are a large workforce, buildings, high market trust and establish business processes for home delivery. Well, besides parcel business, moving to also do other kind of home services, could probably fit your capabilities quite well.

How to make it happen?

Even though most postal organizations are, from a structural and organizational point of view, well equipped to deliver advanced home services, new methods are needed to also do it efficiently. The requirements of these new value-added services are significantly more advanced than plain letter delivery. Regardless if the service is about doing a check on elderly people, performing an installation, unpacking or bring back wrapping, it will require new tools giving instructions and fulfillment control.

The good news is that new technology can effectively enable many of the needed functions. Guided workflows in the postman’s device can for example guide him specific tasks. Advanced software tools can, on the display, show him his next step in a specific process. Through smart proof of delivery, GPS coordinates and other data capture, analytics tools can help to better optimize. The postal transformation has only started. I am convinced that we will see an acceleration in new postal business models during the next couple of years, thanks to what new technology can bring.