US Postal Service 2006 Annual Report Download - page 8

6 | 2006 Annual Report United States Postal Service
To the President, Members of Congress, postal customers, postal
employees, and the American People:
It has been a challenging year for the Postal Service, but also one of great
achievement and promise.
This was our fourth consecutive year of positive net income. Total revenue
of $72.8 billion exceeded our plan by $470 million. We accomplished
this by working hard to communicate the value of mail and increase the
convenience of core products. We are committed to growing the mail.
We are not merely defending our products against diversion; we are
reshaping them for emerging markets and new customer needs.
Technological and market developments bring risk but also open doors.
Enthusiastic customer use of services such as Click-N-Ship and free
Online Carrier Pickup demonstrate that the Internet and postal delivery
network can be complements. Growing Vote-by-Mail programs show
that creative new applications for mail need not always come from new
technology.
Our financial challenges came into sharp focus in 2006. We implemented
new rates to fund a $3 billion escrow account mandated by law. This
was the first increase since 2002. Costs for fuel and inflation-triggered
employee benefits increased, while our network continued to expand,
adding 1.8 million delivery points. We responded by attacking all costs
under our control. We limited spending to essentials and expanded strict
process control across operations. The result was a seventh straight
annual increase in total factor productivity.
On-time performance for First-Class Mail with an overnight commit-
ment remained at 95 percent in spite of residual impact of Hurricanes
Katrina and Rita. We achieved scores of 91 percent and a 90 percent,
respectively, for First-Class Mail with 2- and 3-day service commitments.
Customer satisfaction continues to be high as well; 92 percent of
households reported a positive view of the Postal Service.
Our managers are armed with versatile new tools for reducing costs
and improving service. Real-time information from intelligent barcodes
is flagging trouble spots and clearing backlogs. Surface visibility scans
are tracking mail within plants and along transportation networks. Mail
flow data are integrated across functions, improving end-to-end service
performance. Managers are documenting best practices, highlighting
results, and continually ratcheting up targets.
We are proud of these achievements but we are even more enthusiastic
about improvements in store. Aided by powerful new technologies, disci-
plined field management, and unprecedented information flows between
customers and postal operations, we are poised for new breakthroughs in
service improvements and cost reductions.
2006 was a pivotal year because it saw the first steps in several ambitious
steps that will help ensure the future of mail:
n Launch of the new 4-state barcode and a revolutionary new visibility
strategy will give our managers, customers, and partners a continu-
ous view of the flow of mail, from production to delivery.
n Multiple enhancements to streamline commercial mail acceptance
to cut paperwork, simplify payment, and create a host of diagnostic
tools to improve mail quality.
n New price and mail classifications will help remedy long-standing
cost-coverage disparities and better align mail preparation with
processing and delivery operations.
n Deployment of advanced technology in automation, including
successful tests of the Flats Sequencing System, promises to reduce
flats processing and delivery costs substantially starting in 2008.
Enactment of the Postal Accountability and Enhancement Act will not alter
our focus. We will continue to grow the mail, drive down costs, enhance
service, and engage our employees and partners in achieving success.
By combining strict fiscal control, strong operational focus, and dynamic
service development, we are even better prepared to help ensure a
prosperous future for mail.
John E. Potter
Postmaster General, Chief Executive Officer
James C. Miller III
Chairman, Board of Governors
A Letter from the Postmaster General/CEO and the
Chairman of the Board of Governors