The NAUMD’s Postal Committee traveled to Washington last month to meet with Supply Chain Management, the purchasing arm of the USPS. The Committee presented a new approach for administering the program designed to significantly reduce administrative expenses and provide the USPS with transparency to every transaction – a change that would include the adoption of cloud-based software by licensed postal vendors.
While the agreement to meet was considered positive – it was the first between the two parties since the USPS suspended communications due to their interpretation of the Sarbanes Oxley Act, the outcome of the meeting was less than certain. Because of this, the committee is working on many options it could pursue going forward to retain and improve the current distribution system.
In an interview with NAUMD Industry News, the committee’s chairman, Roger Heldman, labeled the meeting constructive, noting that representatives from Supply Chain Management (SCM) were “engaged” and “interested in ideas for reducing costs.” The committee has identified $5 million in transactional costs that could be eliminated from the current program if the new approach is adopted by USPS.
Since the inception of a cash allowance in 1955, the NAUMD has enjoyed a healthy working relationship with USPS and its unions, collaborating with its customers on uniform redesigns that have enhanced and strengthened the image of the nation’s letter carriers and window clerks.
But the lack of communication in recent years has helped fuel rumors that the current program would be awarded to a sole or limited number of suppliers.
Another driver surrounds a prequalification solicitation recently sent to prospective suppliers. When questioned whether this would ultimately lead to the issuance of an RFP, Supply Chain Management was somewhat vague. “Essentially, they’re uncertain if an RFP will be issued,” says Heldman. “It depends on their review of the responses to the prequalification solicitation and the feedback they receive from other stakeholders.”
The cash-strapped postal service is eager to reduce costs. Its financial woes are well documented: Mail volume has plunged in recent years by 25 percent, and postal revenues have gone down at the same time. In a hearing on Capitol Hill last month, Postmaster General Patrick Donahoe told lawmakers that the postal service is “at the brink of default” and could run out of cash as early as next summer and may no longer be able to make good on its contracts.
With the agency expected to post a $9 billion deficit this year, Donahoe said he would like to cut more than 100,000 postal jobs that are covered by no-layoff clauses in union contracts, as well as eliminate the agency’s mandatory annual payment into employee health benefits.
“Our proposal offers the postal service real savings while preserving the integrity of a program that has well served postal employees for years,” notes Heldman.
Equally important to a struggling economy, the proposal saves jobs. The dissolution of the multi-vendor system could cause the elimination of countless domestic manufacturing jobs and harm small businesses, further exacerbating the effects of the recession.
What’s Next?
In light of the uncertainty that still looms, the postal committee is considering its next steps to persuade the USPS that continuing the current program with the improvements outlined at the September meeting best serve their needs.
Currently, it is in the process of reaching out to the various stakeholders in the program. “A more proactive approach that includes the vigorous participation of the entire licensed vendor community may also be required,” says Heldman. “Everything’s on the table.”
NAUMD Industry News will continue to track this story, and report on developments as warranted.
