Commoditization of postal products has made the courier and express parcel (CEP) market competition time-sensitive. In this kind of market, a longer lead-time period – the time between ordering/booking and delivery - is fatal for any postal or courier organization, while speed and service excellence are now even more paramount than the product itself or its price. For many Posts in developing countries, these rapid changes call for a profound adaptation of their strategies, operations and business models.Nowadays, the success of a company is to a much lower extent defined by its core product or service, and to a much higher one – by the additional features and services, accounting respectively for 20% and 80% of a successful portfolio. Therefore, any courier or postal entity needs to focus more on this second component to get a commercial advantage. Hence, now, postal or courier companies can differentiate themselves more through service excellence by using responsiveness and reliability to grapple with customers’ volatile demands and increased competition.
Many Posts in developing regions like South and Central Asia have the largest delivery networks in their respective countries. Their primary activities include booking, transmission, delivery and return of mail while their support activities are related to human resources, infrastructure and technology. The cost leadership and their national outreach have been their defensible advantage during the last few decades.
Since commercial success is derived through either cost leadership or value advantage, Posts should maintain either of them to stay competitive in the courier business environment. Unfortunately, during the last couple of years, many Posts have lost cost advantage in both domestic and international mail without ever gaining any value advantage due to poor performance on service excellence. Their extensive booking and delivery networks, which could have been used to create a sustainable advantage have in some cases become a liability due to technology-aversive human resources and the lack of digital transformation of their primary activities, especially in rural and remote areas.
For a technology-driven e-commerce post, it must be outwardly focused. Posts, particularly in South Asia, for a long time, have remained inwardly focused, and hence slow to respond to market changes. It is easy for postal management to become divorced from the reality of the marketplace while being preoccupied with the day-to-day pressures of running the business.
One major reason that Posts may not be responsive enough to the realities of the marketplace, is the absence of a purpose-based research and development (R&D) section in their central office. Consequently, they cannot create a unique value to customers who demand speed, visibility and accuracy for their domestic and international orders. In addition to that, there has been more focus on functions than on processes. Process-based organizations focus on innovation, customer relationships and cost efficiency. The world is an uncomfortable place for those organizations that do not continuously innovate throughout the whole course of their organizational development.
Some Posts in South Asia, Central Asia and Africa could not innovate during any of the three – incubation, transition, and maturity – development stages, and as a result, they could not decrease their reliance on manual operations and make the best of the available technology. Conversely, many Posts in Europe and some in Asia-Pacific have performed well in both procedural and technological innovations. Yet even those Posts should remain open to innovations to keep up with the global CEP market.
The cost of last-mile logistics contributes 50 % of a postal parcel supply chain in Europe and the U.S. In countries like India and Pakistan, where the levels of road infrastructure development and transport efficiency are lower, it can go up to 65%. Postal products like parcels, small packets, EMS, letter mail and Cash on Delivery (COD) generally meet customer demands but the product surrounds like delivery time, the attitude of booking and delivery staff, the convenience of booking and delivery and the security of mail are heavily influenced by logistics pain points which increase the cost of mail operations.
Moreover, Posts in South Asia still rely on memory and experience when determining how to complete a route rather than on route optimization software. The use of mobile apps is ubiquitous in the global CEP market. They help in in-door as well as out-door operations used both by employees and customers. Some Posts in developing countries have shifted towards these apps but they need to further develop this area.
Letter mail volume has deplorably decreased during the last couple of years with the explosive growth of parcel mail amplified by e-commerce and m-commerce. Most Posts in the region still have their last-mile delivery shaped around letter mail, which has led to a serious gap in parcel delivery. For example, postal workers can’t carry bulky parcels and customers are called to pick up their parcels of 10 to 30 kg. Hence, to reduce the gap, these Posts need to look exhaustively into the 21st-century last-mile solutions like pick-up drop-off (PUDO), parcel lockers, at least for capital cities to start with, and cargo bikes with a capacity of 100 kg for both urban and rural deliveries.
To make these Posts an engine of their nation’s economy, they must focus more on service or process excellence than on product excellence as service quality is much more difficult for competitors to copy. Service excellence is possible only through a well-thought-out strategy for the development of an efficient delivery system through a commitment from people from top to bottom, re-engineering of logistics processes and a fully integrated system incorporating the total system concept (TSC).
TSC is a “one plan” mentality for booking, transmission, sorting, delivery and return. Only then the whole system integration can be achieved. TSC would not only help to achieve hard objectives like those related to time, cost and quality but also soft objectives like complaint management, customer engagement, mail security etc. Among them, quality is the most significant and is a key qualifier for customer loyalty.
For any organizational transformation, people are critical to its success. They are the foundation of digital transformation, which cannot be successful without first empowering people with knowledge, skills and training. World-leading CEOs staunchly support the strategy of prioritizing investment in people. Jack Welsh’s people-focused philosophy at General Electrics is an appropriate example of investment in people for the robust growth of an organization.
People-led digital transformation is key to postal success. Establishing postal training centres under a tech-savvy and well-qualified leadership can help in intensive re-skilling and up-skilling of the postal workforce in such technology and software, like ERP, MRP, JIT, data visualization tools like Excel, Tableau, Power BI etc., which will accelerate the shift from traditional to data-driven decision making. This would also help develop in-house digital talent and leadership pools. Coca-Cola’s establishment of a digital academy and the Royal Mail’s Diamond Programme at its training academy at Daventry, Northamptonshire, are some of the best examples to start with.
Muhammad Fiaz Gul
Domestic and international mail operation and accounting expert, Pakistan Post
Postal strategy and business model trainer and writer