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Profits & Savings
There will never be an incentive for any vendor to save you as
much money as you can save for yourself. Everyone is out to
maximize their profit, including the United States Postal
Service. This area is another of
management's least understood areas of operation. As General
Services Manager, I supervised the printing, inserting and
delivery to the United States Postal Service of more than one
million pieces of First-class mail. With the implementation
of a few judicious guidelines, you should be able to achieve
substantial cost reductions. For those people who are poor
planners - these are the ones who are always late on their
assignments, late for work, etc. - their poor planning
oftentimes costs the firm in either disappointed customers or
in payment of higher communications costs. Yes, I am talking
about overnight mail expense. It seems that no self-respecting
manager can live without the fastest and most expensive
service available. I would recommend that you do the
following:
1. Replace the Standard Overnight envelopes at $10.75 each
with 2Day envelopes at $7.25, each for a 32.56% cost
reduction. With facsimile machines for immediate transmittal
of information, it seems reasonable that a two-day delivery
standard be adopted.
2. Create a policy where the President
or other authority figure must review and approve each
Overnight parcel before it is sent. 3. Consolidate the
number of courier and/or parcel delivery, service vendors to
one or two. This reduces your management cost as supplies are
more easily monitored, ordered and stored. And, your
transaction costs, within the Accounts Payable Department, is
less. With some courier firms, a discount for volume is
available. Ask. The next thorny issue is that of First-Class
priority mail versus Standard Mail (A) bulk mail. A savings of
almost 57% can be realized when utilizing Standard Mail (A).
Some managers think their customers will feel cheated or a
loss of image will result from not using First-Class mail. In
the lean and mean 90s, customer reaction has proven to be just
the opposite. Depositors of the savings & loan where I
served, were often quite vocal about the perceived
extravagance of our literature, furniture, etc. Parcels with a
Macy label have been replaced with sacks from Wal-Mart.
Savings is "in." Your customers will respect your desire to
lower overhead and save them money. Now then, the rules of
determining what can be sent at Bulk Mail rates is as follows:
1. Printed letters or circulars must contain information that
is not unique to each recipient. For example, you cannot
utilize Standard Mail (A) to send checking balance
information, as each bit of information is unique to the
customer. You can mail a promotional flyer or letter. It's the
contents that matters. 2. Printed matter must weigh less
than 16 ounces, and all pieces must weigh the same. 3. You
must have a mailing of at least 150 pieces, or that weighs at
least 50 pounds. 4. The items must be presorted into zip
code sequence.
Of course, you can obtain discounts when utilizing First-
Class mail. After all, many mailings will not meet the Bulk
Mail requirements with regard to the weight, number of pieces,
etc. The keys to savings, while utilizing First-Class, is to
expand the typical five digit zip code field to ZIP +4 and to
get your Data Processing Department to print statements or
labels in zip code order for easy handling. If you have less
than 2,000 customers, the United States Postal Service will
give you the extra zip code data onto your floppy or magnetic
tape at no charge. For larger firms, there are service bureaus
who provide the upgrade at a minimal charge.
Now then, if you have 500 pieces or more, of items with the
same weight, your discount would be:
TYPE OF MAILING EFFORT RESULT
First Class Presort 7.81% savings
This price is yours if you will go through the trouble of
getting 500 pieces together in a presorted status. If you
cannot always get 500 pieces together, mailing houses will
share the savings with you AND pick up your mail, just for
giving them the business.
First Class ZIP+4 Presort 18% savings
As above, just include the sort with the zip + four digits.
First Class Carrier Route Presort 22% savings
This is a finer sort, utilizing another field of data. Most
computer address files could accomplish this task with a
little bit of planning.
First Class Zip+4 Barcoded 20% savings
At this stage of the game, the USPS has not given mailers
enough incentive to consider this option. The cost of barcoded
mail is prohibitive for all but the major players.
First Class ZIP+4 Non-Presort 3.6% savings
The explanation is in the description. If you are to make any
effort at all at cost cutting, it is not worth considering
this option. It's kind of like getting a kiss through a screen
door.
To get a handle on the specific procedures, to gain further
discounts, going from a 32-cent premium rate to as low as 15
cents per piece, I suggest you contact the Postal Customer
Council in your area, or talk directly to your Postal Service
Representative. If you decide to share the savings, changing
your method of sending letters, by using a pre-sort firm be
sure to ask the following questions: 1. Does the firm have
Reconstruction Insurance? Will they pay for you to rewrite the
damaged or lost letters that are a result of either machine or
courier error? 2. Does the firm have third-party bonding, to
prevent the loss of your confidential mailing list? Your
customer addresses and names are valuable. Efforts should be
in place by the vendor to prevent loss to competitors.
RESULT: You should be able to reduce your postage costs by as
much as 50%.
What's the hurry?
In most priority cases, documents could be faxed or emailed.
There is no faster method of delivery. Original documents,
should there be a legal need or if the fax is not as clear to
read as one desires, could then be sent by way of regular
mail. There is no practical need to send documents twice with
no regard to price. And. speaking of fax, the cost of
computer fax modems have become very affordable. Working with
your fax modem & software (I recommend Norton’s WinFax Pro),
you can fax a document without a cover sheet (the software has
a TO, FROM. DATE header built-in), and not have to mess with (i)
the cost of printing out onto paper, (ii) handling the
document at a fax machine, and (iii) with having to file the
document away in a filing cabinet. Regarding courier
services, if you must use this service at all, then you should
reduce the number of vendors utilized to no more than two.
When negotiating with Federal Express and others, you will
often find that there are advantages to giving all of your
business to one vendor. ASK THEM. From a soft dollar
perspective, (i) you have fewer supplies to inventory and
order, so your cost of management is down, (ii) accounts
payable will suffer fewer transactions, and thereby reduce
that expense, and (iii) the tracking of late parcels will be
easier, as you have a single source. Some express services
offer you a means of tracking the package yourself, using your
own personal computer. ASK THEM.
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