Operation Management

Optimizing Operation Efficiency Vijay R.I Mohan Analysis and Recommendations for a Country’s Postal System

Ruritania Postal Department

9/1/2008

RURITANIA MAIL SERVICE As a management consultant, I’d first bring to light all the issues faced by the Ruritanian Mail service. Firstly, and probably the most important issue is getting the mail out of the sorting offices on time, as stated by the logistics manager. This issue as a result determines the core of the discussion, i.e., getting the mail delivered on time. Other issues include the predetermined standard sizes of the letters which cause a runtime delay. The size and the weight of the letters also cause problems at the sorting sections. Hence the machinery and the manpower need to be properly sorted, thereby making the HR and the operations the most influential part of the discussion.

ISSUES FACED The placement of all the sorting offices have not been given in the case study, but it is stated that Vile is the head office and dispatch section. The cost of transport to and from Vile needs to be addressed. The profitability of the postal department is mainly dependent on the first class letters of all sizes. In a short term plan, in order to increase the profitability of the department, we must focus on sorting out the lags occurring amongst these letters. As given in the case, around 11% of the letters are greater than 150g, and hence come under the general packet section. The average weight of packets overall is stated to be 2.4kg, hence a major part of the profit is gained through this section as well. The machinery as such is causing the bulk of the problem. Since the department is finding hard to completely automate the sorting process, other techniques may be introduced. As stated in the case the letter

machines can only check the stamps and the addresses on the letters but are not used to check the weight (they have the capability of doing so but service is not used to avoid delays). There is also a delay faced when the bigger small letters are processed through the large letter machine. There is a chance for the letters to turn around and cause a jam. This is a major time consumer. Even the small letter machine cannot handle letters more than 6mm thick, as they can cause a jam. These letters are rather rare to come by and hence cause lesser problems. The final problem is the availability of the machinery. They need to be imported and they do not serve the indigenous practice. The slow running of the general packet machine is also a problem.

POSSIBLE SOLUTIONS To get the letters out of the sorting offices on time we must first improve the facilities. Increasing manpower as necessary could also be an option but the case states that the department is already running on a 14-hour shift. The different sorting offices throughout the state need to be taken into consideration while discussing the centre of gravity technique. This is to address “the need to dispatch close to the customer due to time-based competition and transport costs and the need to locate near the appropriate labour pool to take advantage of low-wage costs and/or high technical skills.” These are long-term decisions and are hence difficult to reverse. As the case suggests, the posts are in a few fixed standard sizes hence there is a need for the sorting machines to be specifically designed. This

incompatibility leads to confusion and unreliability if packages arrive out of proportion. We could hence increase the variety of sizes by still prioritizing the first-class posts. As given, the small letters are up to 75g in weight and the large ones up to 150g and anything bigger are considered to be general packets. usually most of the postcards and envelopes are less than 60g. Let the small letters and postcards be processed in the machine with heavier capacity but smaller weight in take. Let 60g to 100g be the next weight category and 130g in above assume the general packet (GP) category. As given, the GP takes 11% of the total post. This category can be assumed to be majorly used not by the general public but by larger associations. For every 50g above 130g for the first-class GPs, we can charge up to 15 cents: this implies that for an average weight (2.4kg) we would be making around 5.54 ruros. For the standard class GPs if charged at 7 cents for every 50g over the standard weight, the returns would be around 2.59 ruros. These assumptions on the basis of a more varied scale of weights, would probably be more compatible with the presently applied system. The operations with the machinery need to be revised as well. The letter machines are not used to weigh the letters due to the perspective delay it might cost, we could alternatively follow manual sorting techniques. If the posts have the wrong postage stamps on them (over-valued or undervalued) the letters should still reach the recipient and the recipient pays the excess postage amount. This can be done only for personal mails but not for commercial mails. This would probably save time of sorting out

wrongly stamped letters and further issues can be taken care of by the local post offices. The sorting offices would hence be cleared as soon as possible. To deal with the issue of the heavier small letters, the best possible solution would be manual sorting. This would definitely reduce the confusion of stoppages and that of transport time. Since there are not many of this class of letters, an increase in manpower would probably not be necessary. There is a runtime delay every morning of 25 minutes as given in the case to get the machines ready for sorting. To counter this we could start the manual sorting ahead of the machine-dependant ones. Recruiting a few more personnel at sorting houses far from the centre of gravity might also help getting cheaper labour force.

Conclusion As a short-term plan, we could readily enforce the above stated ideas and depending on the fiscal and public response make long-term assessments. The department already runs on a 14-hour shift hence the only way of reducing or nullifying the lag would be to recruit more personnel. As the details of turnovers of the previous years have not been put to light, it is not possible for me to give an estimate for profitability. Thereby assuming that the department went into profit last year, we could reinvest in getting manpower and improving the facilities. If the profit continues, new machinery can be purchased according to demand. Recommendations

There is an urgent need to develop indigenous machinery which would cater to the local demand or else the whole system needs to be changed into a globally acceptable format. Proper distribution centers well-spaced between the local post offices must be developed. Increasing manpower would obviously reflect on the rate of postal delivery. Prioritizing on the first-class letters for the first six months we should clearly be able to achieve the primary target. To get the standard letters more closer to the optimal value we must follow continuously improving short-term practices. Reference: OPERATONS MANAGEMENT by Nigel Slack