In an upcoming issue of Mailing Systems Technology, theres an article by Jessica Lowrance on the matter of postal costing. It that piece, she advocates that the Postal Service adopt a more modern method of activity-based costing that more precisely captures the costs associated with any particular postal product or service. The activity-based costing model is predicated on the ability of the Postal Service to capture data costs as the mail piece actually undergoes handling on automated mail processing machinery. The use of an activity-based approach to costing in lieu of the present-day measurement scheme based on in-office mail handling samples promises to enhance the accuracy of mail costing estimates and to open up a number of exciting possibilities for postal customers as well as the Postal Service.

A more exacting measurement of postal costs will give the Postal Service precisely the kind of data it needs to establish a rational method of postal pricing for changing times and marketplace realities. Once you know the full measure of the costs associated with the processing and distributing any particular mail product, you then know the latitude that will be available to price that product or service profitably.

Having a precise method of determining postal costs and where in the processing and distribution flow those costs are created provide essential tools for monitoring mail system performance. If you can pinpoint where costs are created, you have a chance of determining what can be done to reduce any unnecessary costs. This will enhance the Postal Services ability to diagnose its own internal operations or to spot changes that may be necessary in how mailers prepare mail for processing and distribution.

To make this new system of costing work requires the use of the kind of data and information that can be derived from an intelligent mail-based system. The one facet of the intelligent mail program with which most mailers are familiar is the Intelligent Mail barcode (IMb). Some within the mailing industry have begun to use it, but some are still holding back and are sticking with the more conventional form of Postnet barcoding. While Postnet may have been innovative in its day, it simply cannot accomplish all thats needed from a full-blown intelligent mail system.

Delaying adoption and full service use of IMb any further would prove to be a big mistake. Without the data full-service IMb can provide, moving to an activity-based costing model will prove difficult. IMb allows the Postal Service to gather relevant postal costing data passively, that is, it does not require any human intervention or interaction during the measurement process. Moving to IMb will enable the Postal Service to gather data in a much more cost-efficient manner, something that will lower overall postal operating costs, as well as provide a useful vehicle for the creation of new and more innovative postal products and services. Its vital that everyone within the mailing industry do whatever needs to be done to facilitate their fullest possible involvement in the intelligent mail program. 

Gene Del Polito, President
Association for Postal Commerce
Alexandria, VA 22314-2806
Ph.: +1 703 524 0096