Mail Network Optimisation Project

Introduction of the project to the Unions July 15, 2010

Agenda for today's meeting

Background of the Mail Network Optimisation Project Explaining the Project details: Strategy, Work plan, Process redesign, expected outcome Suggestions and view points of the staff side on the project and its status Lunch

11:00 - 11:30

11:30 - 12:15

12:15 - 13:00

13:00 14:00

India Post

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India Post: Mail Traffic

Mail volume (unregd. and regd.)

Crores
-5% p.a. 863.53

736.03

670.06

667.71

639.00

654.00 Constant decline in ordinary mail traffic, while Speed Post has witnessed positive growth

2003 - 04

04 - 05

05 - 06

06 - 07

07 - 08

2008 - 09

Speed Post Traffic Crores +20% p.a. 8.27 17.70 21.00

9.59 04 - 05

10.86

12.86

2003 - 04

05 - 06

06 - 07

07 - 08

2008 - 09

SOURCE: India Post

India Post

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Need for Network Review as a basis for significant increase in volumes, revenues, and market share

External Drivers Declining mail volumes

Competition from
Domestic and International players

Impact

Inconsistent
quality of service High operational costs Eroding customer base

Internal Drivers Difficulties of existing mail network vis--vis changed mail profile

Low level of IT induction

in mail processing

Absence of regulation Change in mail profile Customer Demands

(e.g. Track & Trace)

Low productivity Delivery inconsistencies

and visibility

Lack of customer focus

SOURCE: India Post

India Post

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Recent Initiatives in Mail Operations

Plan Projects

Setting up of Automated Mail

processing Systems Induction of freighter aircraft for carriage of mail for NE Setting up of Mail Business Centres National Address database management system Popularization of PIN Codes RFID in Mail Processing GPS tracking in MMS vehicles Mechanization of Delivery

Mail Network Optimization

Part of Plan Scheme for

Setting up of MBCs Seeks to undertake restructuring of the existing mail network McKinsey & Co. appointed as the Project Consultant 36 month long project

SOURCE: India Post

India Post

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Why do we need a Consultant on board?

Why a consultant

Give focused attention to Mail Operations with

a fully dedicated team in project mode

Have external and objective perspective Learn from best practices in postal services worldwide

SOURCE: India Post

India Post

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Deliverables & Time lines contained in the RFP

Sl. No. 1 2 Description of deliverables Completion of the analysis of current network structure, products and performance, review of customer requirements Finalization of the optimal scenario, optimization objectives, evaluation and prioritization of design options and definition of the target network, implementation planning Identification of appropriate technology, costing exercise for the preferred technology options, assistance in selection of technology service provider, migration planning Finalization of process specification and blue print, definition of Key Performance Indicators (KPIs) and measurement systems, description of roles and responsibilities along the mail business managerial set up, development of training modules, sequencing of implementation of defined processes, systems and structures Roll out / implementation, pilots Completion target month no. 0-3 0-6

3-9

0 - 12

5 6

12 - 18

Full implementation

18 - 36
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SOURCE: RfP issued by India Post

India Post

Objectives of the Project: getting the core right and improving look and feel of mail offices

End-to-end network optimisation: Optimise India

Post's mail network from collection to delivery

Significant quality improvement: Standardise and

"Get the core right"
improve processes and reduce network complexity

Rigorous performance management: Establish an

effective performance management structure using KPIs and regular reviews

Customers: Improve India Post's appearance to make

"Modernise Employees: Improve working conditions to make the look staff proud of being associated with India Post and feel"
it more trustworthy and reliable for customers

Management: Significantly improve the

management's ability to steer a huge organisation

SOURCE: Mail Network Optimisation Project India Post

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Getting everybody on board

Customers

India Post as trustworthy organisation with high-quality reliable service Value for money
Improved working conditions as key benefit Pride in being part of an efficient and widely respected organization Improved working conditions leading to greater employee confidence Constructive role in decision making Improved ability to steer a huge organisation and pride in being a part of a successful organization Usage of state-of the art management principles and tools (e.g., Key Performance Indicators)

Employees

Unions

Management

SOURCE: Mail Network Optimisation Project

India Post

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Project Strategy

PROJECT APPROACH

Start with a few products for big cities

Add more products for the same cities

Early and
broad involvement of Circles and Staff side

Constant
Expand to all products across India Monitoring by the Directorate

SOURCE: Mail Network Optimisation Project

India Post

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The Project Roadmap for mail operations revamp

All India

2012 Roll-out 2011

Geographical reach

Priority cities "Wave 1" 2010 Scenariobased design IInd class Scenario-based design and pilots Speed Post and International mail Ist class Product range

Approach particularly reflects strong need for immediate tangible impact

SOURCE: Mail Network Optimisation Project India Post

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Why begin with Speed Post and International Mail ?

Attractive market Speed Post grows 20% every year Quality is very important for SpeedPost customers
Important for India Post revenue and volume ~10% of total volume ~20% of postal revenue Easiest product for monitoring success SpeedNet has very helpful data for the project Track & trace is the much needed customer demand International Mail is India Post's face to the world Very important to meet international service standards Payments increasingly linked to service standards

SOURCE: Mail Network Optimisation Project

India Post

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The approach to "get the core right"

End-to-end network optimisation: Optimise India

Post's mail network from collection to delivery

Significant quality improvement: Standardise and

"Get the core right"
improve processes and reduce network complexity

Rigorous performance management: Establish an

effective performance management structure using KPIs and regular reviews

Focus now

Customers: Improve India Post's appearance to make

"Modernise Employees: Improve working conditions to make the look staff proud of being associated with India Post and feel" Management: Significantly improve the
management's ability to steer a huge organisation
SOURCE: Mail Network Optimisation Project India Post

it more trustworthy and reliable for customers

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Work Plan for Revamp of Speed Post operations (collection to delivery): Wave 1
City 3
SPC PO 1

Proof of concept

What is the right network design? How should the optimal network of sorting
hubs look like to ensure maximum D+1 quality?

City 1
SPC 2

PO 2 PO 3 SPC 1

TMO

What are the right processes within the facility? How to ensure standardisation? How to maximise throughput and quality? What is the right network schedule? Which
cut-off times and processing windows per processing step across the value chain allow the best possible next-day delivery?

TMO SPC

City 2

How to measure India Post's performance? What is the share of next day delivery (D+1)? Track & trace: Are 100% scans ensured
across the network? Which are supporting KPIs to ensure people do not seek workarounds/shortcuts? Optimisation of delivery in wave 2 (1st class mail) as SpeedPost only accounts for ~10% of delivery volume
India Post

PO 3 PO 1

PO 2

SOURCE: Mail Network Optimisation Project

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The Project assigns high importance to the "look and feel" aspect as well

End-to-end network optimisation: Optimise India

Post's mail network from collection to delivery

"Get the core right"

Significant quality improvement: Standardise and improve processes and reduce network complexity

Rigorous performance management: Establish an

effective performance management structure using KPIs and regular reviews

Customers: Improve India Post's appearance to make

"Modernise Employees: Improve working conditions to make Focus the look staff proud of being associated with India Post now and feel" Management: Significantly improve the management's
ability to steer a huge organisation
SOURCE: Mail Network Optimisation Project India Post

it more trustworthy & reliable for customers

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The "look and feel" Component

Look and feel Recognition and training

Develop scheme for recognising star circles/performers Ensure 100% trained staff on field

Branding
Ensure uniform branding as well as consistency across locations

Infrastructure
Develop standardised and consistent interiors and exteriors of buildings and give clean and supportive infrastructure to the line team

Technology
Identify new tools and technologies and also upgrade exiting ones to ensure faster, better services

SOURCE: Mail Network Optimisation Project

India Post

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Impact of the Project Pilot

We have worked together in the 6 metros (mainly SPCs) over the last months
`

SOURCE: Mail Network Optimisation Project

India Post

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The project has brought some significant improvements over the last months
Days (average delivery time)

Before project - December Kolkata Airport . . . to New Delhi

During project June 7 - 12 Kolkata Airport . . . to Hyderabad New Delhi Bangalore

Mumbai

From . . . Mumbai New Delhi Chennai

Chennai

From . . . Mumbai New Delhi Chennai Kolkata Airport Bangalore Hyderabad

2.9 3.7 3.5

3.4 2.8 3.5

3.5 3.1 2.9

3.5 4.1 4.1 2.6 3.6 4.2

4.3 3.8 3.2 3.6 2.3 3.0

3.9 4.6 5.0

2.7 4.1 2.5 2.9 2.5 2.5

2.6 2.2 2.6 2.4 2.8 2.4

2.0 3.1 2.2 2.0 2.5 1.9

2.4 4.1 2.7 2.1 3.2 2.2

2.3 3.8 1.7 2.1 2.1 2.2

2.2 3.5 2.4 2.0 2.5 1.9

Kolkata Airport 5.0 Bangalore Hyderabad 3.1 3.0

4.1
3.4 3.1

3.1
2.2 2.1

4.9
3.5 2.8

SOURCE: Postal Tech Centre NSPC SpeedNet data, Mail Network Optimization Project

India Post

Hyderabad
|

Bangalore

Mumbai

Chennai

Bangalore SPC example: Throughput doubled by standardization

Items handled by shift Items per manhour

Set 1 (Day)

Set 3 (Night)

Average (Day & Night)

150

100

50

0
26-Apr-2010 10-May-2010 24-May-2010 07-Jun-2010 21-Jun-2010 Date
SOURCE: Bangalore SPC, Mail Network Optimization Project India Post

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The project team seeks involvement of all levels in the Circle

Very high focus and involvement of leadership Visits by leadership as well as regular interaction with staff side Chennai example

Secretary, CGM visit to Kolkata SPC Member (O) visit to Bangalore SPC Regular visits by Director (Mail &SP) & CPMGs to SPCs Regular meetings to understand & resolve ground team concerns (staff and unions) Joint work and discussion of changes on ground (staff and unions)

Attendance of ~50 group C & D staff across shifts 1, 2, 3A, 3B

Circle director and SPC manager answered questions and clarified doubts Layout map handed to all; new role cards discussed and distributed

Consultative approach

SOURCE: Mail Network Optimisation Project

India Post

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Agenda for today's meeting

Background of the Mail Network Optimisation Project Explaining the Project details: Strategy, Work plan, Process redesign, expected outcome Suggestions and view points of the staff side on the project and its status Lunch

11:00 - 11:30

11:30 - 12:15

12:15 - 13:00

13:00 14:00

India Post

| 20

Initial Impact of the Project in terms of Operational Improvement

Easier sorting Ensure minimum multiple handling Less workload reduce no. of bags & missorts between different locations Better equipment Ease of working for staff at SPCs with new equipments Higher throughput Ensure higher processing with improved process design Streamlined workflow by having optimised inflow of mails in the processing centers Prioritized processing Ensure processing prioritisation based on the time of the day for maximum connectivity

Keep everyone informed Regular interaction and display of SPC's daily performance, suggestions and feedback encouraged Training & Incentives Incentivise high performers and help all staff with newly developed trainings
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SOURCE: Mail Network Optimisation Project

India Post

Reduce sorter distress by ensuring minimum multiple handling

to From Large multiple handling before final sorting Minimum multiple handling

Example Hyderabad Number of handlings per item 2.00 1.16

Pre-sorting for all items Ensure maximum

sorting with only one handling

All sorting done with the TD/NTD mails to come

same priority separately to enable prioritised sorting
From to

SOURCE: Mail Network Optimisation Project

India Post

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Reduce number of bags and missorts between different locations within 1 city
to streamlined operations From sorting complexity

We are trying to reduce sorting complexity in the city through streamlining of operations subject to other constraints like distance, connectivity etc.

Mumbai GPO, Speed Post section in Feb 2010

Feb 04, 20101 Overall articles GPO Around GPO Other areas

3,605 (100%) 283 (10%)

This should lead to less confusion, less missorts and less bag closing
Volume throughput and productivity at Mumbai SPC increased after merging of GPO volumes into SPC

250 (12%)
3,072 (78%)

Volumes now get processed at SPC

1 Analysis down for several days with same results SOURCE: Mail Network Optimisation Project India Post

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Ease staff work by giving better equipments

Economic sorting cages and chairs allow for productive and yet relaxed working

Economic sorting cages and chairs allow for productive and yet relaxed working

Bag cutters instead of razor knifes prevent from injuries

Roller trays ease movement of heavy trays and allow for back-friendly work
India Post

SOURCE: Mail Network Optimisation Project

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Ensure faster and higher processing in improved process design

to
Assembly line like processes where one task is given to a person Sorting Open bag Receipt scan Scanning desk 1st level 2nd level Dispatch scan Scanning desk Ensure improved sorting productivity by Optimizing sorting cages Reducing multi-level sorting Revising sorting logic (where necessary) Close bag

From All people doing all tasks together

Ensure 100%
Key features Lack of role clarity can lead to lack of ownership and can cause confusion

Ensure 100%
scan compliance, both for receipt and delivery No article can enter or leave sorting area unless scanned

scan compliance, both for receipt and delivery No article can enter or leave sorting area unless scanned

Clearly defined job description helps in faster and higher processing

SOURCE: Mail Network Optimisation Project

India Post

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Some pictures of Bangalore SPC where this process has been put in place successfully
Mumbai Delhi Chennai Hyderabad Bangalore Kolkata

Category

What is the right network topology?

Layout

Activities Completed Implementation of assembly line layout in the SPC hall

Training of staff in every shift on the revised processes

What are the right processes within the facility?

What is the right network schedule?

How to measure India Post's performance?

SPC hall before

SPC hall now

India Post

SOURCE: Mail network optimisation project

Reduce work pressure by having optimised inflow of mails in processing centers

to to From

All mail coming to the SPC late evening Sudden mail volume to be processed in very short time window resulting in bag transfer despite maximum efforts

Remaining volume collected at 7 p.m. Good share of daily volume collected at 2 p.m.

Uniform volume inflow leads to Less pressure for staff on ground Better connectivity and therefore better quality
SOURCE: Mail Network Optimisation Project India Post

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Ensure processing prioritisation based on the time of the day for maximum connectivity
to Demarcated shift (set) planning to optimize D+X quality Receipt from P.O.s From TD, NTD all being processed at the same time Rationale Cut-off to ensure flight connectivity Receipt of items from other cities Cut-off for P.O.s

Non-TD1 sorting Sort rest of India volumes before outgoing flight

TD sorting (from own P.O.s) Sort TD from own P.O.s while "waiting" for flight receipts

TD sorting (from rest of India) Sort TD from rest of India after receipt from incoming flight

Same amount of effort will lead to better quality and speed for next day delivery

SOURCE: Mail Network Optimisation Project

India Post

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Providing information to each employee at SPC on how their center is performing

to

Web based performance mapping both for speed and quality D+X KPI for Speed
From

Mis-Sort KPI for quality

No visibility of individual, set, SPC performance

SOURCE: Mail Network Optimisation Project

Opportunity to identify 'STARS' Opportunity for knowledge sharing across sets/SPCs

India Post

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Overall, we have developed a set of 18 KPIs to create transparency

KPI
1a Transit analysis within city

What does it do?

Measures speed and reliability of processing of Speed Post articles from booking to delivery

D+X reports

1b Transit analysis across city 1c Time per leg of transit within city 1d Time per leg of transit across city

Scan compliance reports International reports

2a Scans compliance in the entire network

2b Scan analysis per leg of transit within city 2c Scan analysis per leg of transit across city 3a Percent of F-scans in SpeedNet vs. F-scans in IPS1

Measures for each processing step whether articles got scanned as prescribed

Measures for international inbound article the efficiency of 3b Percent of F-scans in IPS vs. D-scans in IPS movement at every step before 3c Share of SpeedNet Delivery scans vs. IPS F-scans (TBD) merger with Speed Post 4a Articles processed per hour per FTE 4b Staff absenteeism 4c Share of bags without bag labels 4d Share of articles not processed in SpeedNet 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 Supports achieving better D+x and scan performance

Supporting KPIs

SOURCE: Mail Network Optimisation Team

India Post

Proposed Incentive for good performers and motivate less performing staff through training
to Recognition

From
No clear and fully objective performance monitoring

Recognition of star performers

Opportunity for them to teach/motivate others

and training Find out need for training

Train people to help them to also become star performers

SOURCE: Mail Network Optimisation Project

India Post

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Overview of some trainings currently being developed by Training division

Training
1 Introductory training for new recruits

Content
Ensure that everybody understands India Post and its procedures not just one's own job

General

2 Train the Trainer Training 3 Basic procedures and operations explanation 4 KPI and quality Training 5 "Basic" Computer Training

IT

6 Enhanced" Computer Training 7 Speednet Training 8 System administration Training

Support staff in computer-related tasks

Role

9 Supervisor Training 10 Customer Service Training

Help people to become even more successful in their roles including awareness of role and soft skills
India Post

SOURCE: Mail Network Optimisation Project

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How does the project proceed?

2010
Activities Jun 15 Jul 15 Aug 15 Sep 15

Speed Top 6 cities Post

Next 15 cities1 led by 8 directors (Mail & SpeedPost)

Monitoring

First class mail

Project team to start working on 1st class mail

Team has already worked on ground in the 6 metros Now we are developing a SpeedPost manual for further rollout 8 directors will then lead implementation in the next 15 cities
1 Next cities in scope are Noida, Gurgaon, Chandigarh, Pune, Goa, Mysore, Ahmedabad, Howrah, Patna, Nagpur, Bhopal, Trivandrum, Kochi, Lucknow, Vashi (preliminary selection subject to change) SOURCE: Mail Network Optimisation Project India Post

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Agenda for today's meeting

Background of the Mail Network Optimisation Project Explaining the Project details: Strategy, Work plan, Process redesign, expected outcome Suggestions and view points of the staff side on the project and its status Lunch

11:00 - 11:30

11:30 - 12:15

12:15 - 13:00

13:00 14:00

India Post

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Any questions, comments or suggestions from your side?

India Post

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Agenda for today's meeting

Background of the Mail Network Optimisation Project Explaining the Project details: Strategy, Work plan, Process redesign, expected outcome Suggestions and view points of the staff side on the project and its status Lunch

11:00 - 11:30

11:30 - 12:15

12:15 - 13:00

13:00 14:00

India Post

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THANK YOU

India Post

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