solution

Problem / Challenge:

US Postal Service (USPS) is in a financial crisis due to:

• loss of revenue from first-class mail due to competition – one area where it is less competitive than FedEx and UPS are fast delivery.
• a mandate to prepay retirement benefits 75 years into the future

Potential Solution Options:

The following solutions have been considered to alleviate the financial crisis.

• Increasing the revenue with the higher postage rate (price)
• Increasing the revenue by expanding service mix (such as delivering alcohol and reinstituting postal banking service)
• Reducing cost with slow first-class mail

Questions: Your recommendations?

1) Which ONE of the above options would you recommend? Why?

2) Assume USPS chose the option (ii) mentioned above – i.e., Increasing the revenue by expanding service mix.

a) What should the “operations” be good at? (Cost? Speed? Flexibility?)

b) How should USPS go about building appropriate capability? – Specify one resource decision and one process decision.