OM in the News: Replacing the Postal Service With Digitized Mail

Just because the USPS isn’t making mail a profitable business doesn’t mean it can’t be done, reports CNN Tech (Feb.26, 2013), as it describes the driver of a white Prius with a giant, red plastic flag affixed to its side, undelivering mail from mailboxes. The driver and the car are part of  Outbox, a company that is  picking up where the embattled  Postal Service leaves off — by digitizing physical mail. The driver visits Outbox subscribers’ homes three times a week,  collecting the letters, bills, magazines and advertisements that were deposited there by official postal workers and delivers them to a warehouse. There they are opened and photographed, and the resulting digital files are sent electronically to the recipient.

For $5 a month, this makes physical mail disappear. Using a mobile device or computer, Outbox customers can ask to be unsubscribed from junk mail, have unwanted items destroyed or request that important mail be re-delivered to their home. Not surprisingly, Outbox has met resistance from the USPS, which has refused to collaborate. “The Postal Service is focused on providing an essential service in our mission to serve the American public and does not view Outbox as supporting that mission,” says the USPS.

The USPS has been slow to innovate and adapt to new technology on its own. It also faces serious financial issues, with $15.9 billion in losses last year –and it just announced plans to cease Saturday mail delivery in an attempt to save $2 billion. Technology has steadily eaten away at its core business for years. The volume of mail handled by the USPS dropped from 203 billion pieces a year in 2002 to 160 billion in 2012, as bill payments, statements and marketers migrate online.

After its first two cities, Austin and San Francisco are fully staffed, Outbox plans to bring its service to New York, Boston, Chicago, Los Angeles and Washington. This is a great example of service technology (Chapter 7) that your class will enjoy.

Discussion questions:

1. What can the USPS do to compete in an increasingly digital world?

2. What are some major operations issues Outbox faces in its business?