Back when john rapp first donned the blue uniform and slung a mail satchel over his shoulder, it felt like a different America: Jack and Jackie were in the White House, "Breakfast at Tiffany's" was playing at the local movie palace, a first-class stamp cost $0.04. On the radio, The Marvelettes were pleading with Mister Postman to wait a minute—a message that undoubtedly struck a chord with Rapp. In 1961, he was Mr. Postman, and his job was to deliver the letters, not to mention the Sears catalogs and junk mail, to the houses on his neighborhood route—the sooner the better.
Fast forward a few decades—four, to be exact. Though still an employee of the U.S. Postal Service, Rapp's long since traded in the sidewalks for an office at USPS headquarters in Washington, D.C. Once responsible for delivering a satchel's worth of mail, he's now accountable for billions and billions of letters and other assorted items that move via the U.S. postal system each day. To be precise, Rapp, who holds the chief logistics position within the U.S. Postal Service, is ultimately responsible for delivery, customer services, retail operations, network operations management, engineering, and facilities for the wide-reaching national postal system.
A career civil servant who literally worked his way up from letter carrier to top dog within the U.S. Postal Service (his title is senior vice president of operations), Rapp has also made time for formal learning. He holds a bachelor of science degree in business management and administration from the State University of New York. He's completed the executive training curriculum at the Fuqua School of Business at Duke University and at the Darden School of Business, University of Virginia, as well as the Advanced Management Program at the Wharton School of Business, University of Pennsylvania.
Rapp spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald about the daily challenges of managing one of the planet's largest and most far-flung logistics operations.
Q: The first thing that comes to mind when you think about logistics and the U.S. Postal Service is the scale of the operation. How big is it?
A: We are big. Very big. There's no question about it. Just in terms of people, for instance, we're talking about something on the order of three-quarters of a million employees for 2004, and the workforce is down about 85,000 from its peak four years ago. We handle literally billions and billions of pieces of mail every year through an enormous distribution channel. We have 38,000 post offices. We have another 40,000 retail outlets like grocery stores, where we sell stamps on consignment.We have roughly 500 distribution centers.
Q: With the exception, I guess, of holidays, is every one of those facilities you mentioned active every day?
A: Yes. Most of our plants operate seven days a week, twenty-four hours a day.
Q: Tell us about your role in leading this mammoth operation.
A: A lot of my job at this point falls more into the strategic arena.We spend an awful lot of our time looking out to the next year and discussing where we want the company to be five years out. We ask ourselves every day how we can strengthen our strengths and possibly eliminate some of our weaknesses.
Q: It's interesting to hear you refer to the Postal Service as the "company." How do you folks define your operation? Is it a government agency? Is it a stand-alone business?
A: We've been described a lot of different ways. We're most commonly called a quasi-government corporation, but we're really a government agency that, by law, is required to fund our operations out of our postage sales. We aren't funded by the government.We're off the government budget. But we're still required to provide universal service, which is basically delivering mail to everybody everywhere at pretty much a universal rate.You pay 37 cents regardless of where you live or how hard it is to deliver that letter.We do have some freedoms that maybe other government agencies don't have and we have some restrictions that other government agencies don't have. So it's kind of a mixed bag. It has its pros and cons.
Q: Do you look at any private-sector vendors as competitors?
A: Definitely. For example, UPS (United Parcel Service) and FedEx operate in direct competition with us when it comes to package delivery. We constantly stay in touch with what our competition is doing. We have to keep up with what they're doing, or better yet, stay ahead. That also gets back to the reason I referred to us as the company.We operate more like a private company than a government agency because we can and because we have to. The competitive nature of the business means we have to try to keep our prices down so we can stay competitive; yet by law, we must still cover our costs.
Q: When you started with the Postal Service in 1961 you probably didn't envision yourself sitting in an office at USPS headquarters in Washington someday.
A: No, I absolutely didn't.When I started with the Postal Service, I didn't even envision myself staying for very long. Like most young people, I started out working summers and Christmas vacations just to make money to cover my tuition costs. As time wore on and I got offered a fulltime job, I took it
I'm actually the type of person who doesn't like to spend a lot of time in one job. So you might be surprised when I tell you that even though I've been with the Postal Service for over four decades, it never got old. Of course, I've never really been in the same job for more than five or six years. I always tried to move on to something different, even if it was the same job but at a different place or in a different part of the operation, just so I could learn how the company worked. I think what has helped me the most was the time I spent really learning how mail moved from Point A to Point B and what the problems were and what needed improving. I really learned how the company worked, from the ground up.
Q: Now that you find yourself at a more strategic level in the organization, do you rely on your past work experience to help you visualize how all these wheels and gears work together?
A: Yes. It not only gives you a perspective, but it also gives you credibility with the operations people who are out there doing those jobs now. They realize that you've been there and you've done that. As a result, they believe in what you have to say.
Q: It doesn't sound like you were really following any sort of formal career path.
A: People used to talk about a career ladder that you would ascend rung by rung. I've always looked at it as more of a career lattice than a career ladder. I often would go sideways in terms of responsibility to a new position to learn more, so that I could go back and get on the ladder again, and maybe find myself a rung ahead of where I was before. I guess my first big change was around 1970 when I became a first-line supervisor. That's when I first realized that maybe there was a place for me in management.
Q: Do you consider your logistics operations comparable to those of any other large company? Do you see best practices from the private sector that can be migrated over successfully to your operations?
A: Absolutely. We try to study anybody's best practices and we steal any best practices that we can. We also strategize on how we can leap ahead in certain arenas or certain parts of the business. For example, some of our competitors have started to open retail stores.We already have a lot of retail outlets, but we've gone a step further. We recently launched a Web service for packages called "Click-N-Ship." From your home or work computer you can download a shipping label with the correct ZIP code on it and the postage. You pay for it with your credit card and then click for a pickup. The next day, our letter carrier will stop by on his or her normal rounds and pick up your package at no additional cost. We now, almost instantly, have millions of retail outlets. One at literally every address we serve, which is every address in the country.
Q: You obviously move a lot of stuff each day, and I assume that you use mostly trucks to haul freight among the 500 distribution centers in your network. Do you predominantly use a private fleet or do you contract with for-hire carriers?
A: We primarily contract out for over-the-road highway service. For-hire carriers handle most of the freight moving between the DCs as well as freight moving from the DCs to the local post offices. From there, the postal fleet generally takes over and handles the pickup and delivery.
Q: If you were to classify all the mail carrier trucks as light-duty pickup and delivery vehicles, you may very well have the largest private fleet in the country.
A: I think we might. There are a couple hundred thousand vehicles.
Q: Tell us about the challenges you face these days. A lot of logistics professionals right now are looking at ways to exploit logistics technologies, different processes or management practices. Are you on a similar quest?
A: Yes, indeed. Probably our biggest problem is a lack of consistent actionable information. Technology is helping us build that now, but we still have a long way to go. We're in the process of building some information systems that will allow us to home in on exactly how much cube we have on every truck.With that information in hand, we can start to consolidate our operations so we can maximize the "cubilization" of all of our trucks, whether they're contracted or postal. We've had some systems for these types of functions, but we are making them better.
Q: Do you use home-grown IT systems or do you go shopping in the private sector?
A: Generally, we buy our information systems from a commercial vendor, but we're setting up our own procedures for using bar-code technology and passive scans. We started this with our air services, and now we're going to expand that to our surface network. When it's fully operational, we'll be able to track a tray into a container, a container into a truck and then into what we call a handling unit.We'll be able to forecast at each destination how much is inbound, in nearly real time.
Q: Are you looking at using RFID data-capture technology as your next step?
A: Not at this point. Though we're using RF technology in our international operations, we've concluded it's still on the expensive side for our domestic operations. Our typical large DC has 100 to 200 doors with product going through them continuously. Just buying the receivers needed to read those RF tags would be cost-prohibitive. The price has to come down significantly for it to make sense for us.
Q: Not to mention the impracticality of putting a 40-cent RFID tag on a first-class letter with a 37-cent stamp.
A: Right. And we're able to accomplish a lot of what the RFID technology can offer quite well with existing bar codes.
Q: What would you consider to be the single biggest efficiency gain in the USPS's logistics operations in the past couple of years?
A: We started something about four years ago called "Break-through Productivity," which was an enterprise- wide initiative to improve our performance from a cost standpoint. We succeeded in really driving up our motor fleet utilization—and therefore our cube utilization —especially in our fleet of small vans driving around to the various stations in large cities. Probably the biggest part of the challenge was convincing our managers that we could really significantly improve that part of our operation. We were able to do it, and we've made some significant cost reductions. In fact, company-wide we've driven over $5 billion out of our annual operating costs of about $68 billion over the past four years.
Q: If you could do just one thing to change the way the USPS approaches logistics and if cost were not a barrier, what you would do?
A: I would consolidate and reduce the size of our surface network. As I mentioned, we have over 500 nodes. We don't have a formalized surface network. I would consolidate, size down, and put in a standardized surface network that would service the entire country. Right now we have multiple networks.We have networks for Priority Mail. We have networks for First Class Mail. We have networks for Parcel Post and advertising mail. I would create one network nationwide.
Q: What are the barriers to doing that?
A: They are short term, but they're nonetheless significant. They mostly have to do with the disruption that would result from resizing and retooling the nodes.
Q: Your ability and obligation to go to every U.S. address every day represents both a great benefit and a great burden, doesn't it?
A: We try to look at that as an opportunity rather than a burden. We think that's one of our key strengths. We are everywhere every day.
Q: What do you think the USPS logistics operation is going to look like, five years out, 10 years out, 100 years out?
A: I think we will have a much leaner logistics network. It is our plan to go to that one network idea that I mentioned. I think we're going to be a leaner organization and that will help us improve service as well as reduce costs.
Q: Any closing thoughts?
A: Just a comment on how rapidly things have been changing in recent years. The biggest change I see is the velocity of movement of product across the country. It's all a result of better information and technology, and it's driven by rising customer expectations. Consumers are no longer willing to endure a twoweek wait for something that they've ordered.
Q: Consumers' expectations have risen almost to the point where they want the goods on their doorstep as soon as they click on that "place order now" button.
A: Expectations have risen. That a big part of the challenge we face every day, and it's not going away any time soon.
Gartner, Inc.
