Mail Network Optimization Project

1. Mail Network Optimization Project A study

2. India Post’s revenues Percent Mail Revenue Rough estimates in percent Mail Network Optimisation project focuses on postal (mail) business, which account above 50% of the department’s revenues 100% = INR 5,862 crore International mail Ordinary and registered mail Speed post Postal receipts SB & Financialservices

3. There are 3 main reasons why improvement inMail Business is required India Post's total mail volume,million items p.a.1 * India Post is losing volume and market share significantly * * 2004/05 2008/09 Customer survey results2 Customers rate India Post low, especially in reliability EBIT3 margin of postal operators > 30% > 25% India Post's financial performance is poor compared with that of other players > 20% 4 4 4 1 Based on annual report and book of information 2 Based on 50 extensive and structured interviews with 20 loyal and 30 former Speed Post customers 3 EBIT = Earnings before Interest and Tax 4 Mail division only

4. Scope of the project "Get the core right" • Optimise India Post’s mailnetwork from collection to delivery • Standardise processes with focus on quality improvement and reduction in complexity • Establishaneffective performance manage-ment structure using KPIs and regular reviews SCOPE "Modernise the look and feel" • Improve India Post's appearance to make it more trustworthy and reliable for customers • Broad approach to upgrade processing facilities and improve working conditions for employees • Make staff and customers proud of being associated with India Post

5. Project Roadmap All India 2012 Roll-out 2011 Geographical reach Prioritycities "Wave 1" "Wave 2" "Wave 3" Scenario-based design Scenario-based design and pilots Speed Post & International mail First class Second class Product range Approach particularly reflects strong need for immediate tangible impact

6. City 3 Mail Office City 1 PO 1 Mail Office 2 PO 2 PO 3 Mail Office 1 TMO City 2 TMO Mail Office PO 3 PO 2 PO 1 1 What is the right network? What is the right network schedule? 2 3 What are the right processes? How to measure India Post's performance? 4

7. MNOP and Speed Post operations

8. Objective • Reach a new level of excellence in speed post handling • Educate each user in the system the overall perspective and the importance of his/her role in achieving excellence and meeting the commitments to customers • Adopt standard practices in operations across all handling units • Bring in transparency by generating viable and transaction specific MIS to improve the monitoring process

9. What excellence is aimed at? • Maximize next day delivery of articles within and across cities • Bring in reliability to the service • Provide efficient after sales service through increased visibility for the articles passing through the system • Enhancing the look and feel

10. What are the changes? • Optimising the processing centres – introduction of sorting hubs • Standardising the equipments • Realigning the layout in processing centres to improve handling processes • Stringent commitment to cut off times in bag closing processes

11. Introduction of sorting hubs • Existing system of closing bags by each SPC to others dispensed with • Bag handling process rationalised through introduction of sorting hubs to • reduce the number of bags handled • bring in cost effectiveness • achieve scalability • 89 SPCs identified as sorting hubs on the national network that can close bags to each other; These are specialised processing centres • Intra circle hubs introduced to handle mail pieces within the circle • Booking interfaces not reduced • POs are mapped to hubs • Overall expedited processing, transit and delivery time, reduced sorting complexity (back-routing to a small fraction of mail notwithstanding)

12. Rationalising booking and delivery • Booking and delivery processes are through POs • POs to segregate articles as TD or NTD only and close two bags to parent sorting hub or IC hub(if available) • 89 SPCs which are now sorting hubs are optimised as exclusive processing centres • BNPL centres handle articles from bulk customers with large volumes • MBCs, RMS units and OSAs(collection agents) also book articles • Post offices also accept BNPL articles and maintain accounts of customers subject to certain restrictions in payment processing

13. Revising layouts Sample of new layout Introduction of assembly line functioning in hub

14. Standardising equipments Sorting Cages Roller containers Bag cutter and stool Tray trolleys

15. 1 Non-TD sorting Commitment to cutoff times to improve D+1 Cut-off to ensureflight connectivity Receipt of itemsfrom other cities Cut-offfor POs Receiptfrom PO TD sorting (from own POs) TD sorting (from Rest of India) 2 3 Rationale Sort rest of India volumes before outgoing flight Sort TD from own POs while “waiting” for flight receipts Sort TD from rest of India after receipt from incoming flight

16. Performance monitoring through KPI analysis KPI What does it do? Transit analysis within city Measures speed and reliability of processing of Speed Post articles from booking to delivery 1a Transit analysis across city 1 1b D+X reports Time per leg of transit within city 1c Time per leg of transit across city 1d Scans compliance in the entire network Measures for each processing step whether articles got scanned as prescribed 2a Scan com-pliance reports 2 Scan analysis per leg of transit within city 2b Scan analysis per leg of transit across city 2c Measures for international inbound article the efficiency of movement at every step before merger with Speed Post Percent of F-scans in SpeedNet vs. F-scans in IPS1 3a Inter-national reports 3 Percent of F-scans in IPS vs. D-scans in IPS 3b Share of SpeedNet Delivery scans vs. IPS F-scans (TBD) 3c Articles processed per hour per FTE Supports achieving better D+x and scan performance 4a Staff absenteeism 4b 4c Share of bags without bag labels 4 4d Share of articles not processed in SpeedNet Support-ing KPIs 4e Share of articles closed after cut-off time 4f Share of missorted articles 4g Share of articles with missing pin codes 4h Share of articles not dispatched same set

17. MNOP and first class Mail

18. Revised network • Existing mail offices classified into L1 and L2 offices to handle first class unregistered and registered mail • 89 L1 offices and 244 L2 offices identified • Post offices mapped to L2 office or L1 office

19. Mail flow process for I class mail Post Office Post Office Post Office Post Office Level-1 mail office Level-1 mail office Level-2 mail office Level-2 mail office Level-2 mail office Level-2 mail office Post Office Post Office Post Office Post Office Post Office Post Office Post Office Post Office • Level-1 mail offices exchange mail with each other and with selected L-2 in the Circle • Level-2 mail offices exchange mail with the level-1 mail office to which they are mapped and the level-2 mail offices mapped to the same level-1 mail office, and with selected L-1 offices • Post Offices exchange mail only with the mail office (level-1 or level-2) to which they are mapped

20. Sorting pattern • Post offices prepare two kinds of bags • A TD bag containing unregistered mail • A NTD bag containing unregistered mail • A TD bag containing registered mail • A NTD bag containing registered mail • POs to retain station articles • L2 offices close bags to parent L1 office and mapped delivery Post offices • L1 offices close bags to each other • The bags handled are treated as due bags

21. Network redesign for Second class mail

22. The new network • Existing mail offices handling second class mails reclassified as L1 and L2 offices • 86 L1 and 241 L2 offices identified • Post offices to close one bag containing both TD and NTD articles to mapped L1 or L2 offices • POs to place the following bags in M bag • first class TD and NTD bags for both unregistered and registered mail • Second class bag