Over the course of the last year the City of Detroit has embarked on a mission to "reduce costs, eliminate redundancies, and streamline processes that are ineffective or inefficient."
If an award were given to the agency that did the most to meet this initiative, the city's Information Technology Services (ITS) department would be a prime contender.
When the department assumed control of the city's mailing operations about 18 months ago, there were 40 mailing machines—all under lease agreements—in myriad locations throughout the city. After being given the reins of the city's postage account, ITS helped reduce that number to eight, saving an impressive $100,000 in machine rentals. What's more, this consolidation has resulted in a massive $400,000 savings in postage. And the city is just beginning to realize additional benefits in terms of mailing efficiencies, increased productivity and shorter mail delivery times.
"The reality is, very few machines are needed to handle the city's mailing needs," explained Sreeny Cherukuri, deputy director of ITS. "The problem was that departments bought machines based on their peak mailing load, but many only have a peak load once or twice a year. So virtually every department had a mailing machine that far exceeded its daily needs."
The excess number and capacity of the city's mailing machines were just two of the factors that catalyzed the consolidation process.
"Right around the time the mailing functions were handed over to us, the postage machines were expiring," said Cherukuri. "A changeover mandate by the United States Postal Service to digital machines meant machine replacement anyway. This mandate created an opportunity for ITS to re-engineer the entire mailing process.
"There was a tremendous amount of redundancy," he added. "Practically every office in every building had a postage machine. That, combined with various billing issues and lack of support from our current vendor, convinced us to look elsewhere for a solution."
Ultimately, the project was put out to bid. Price would be a major factor, of course, but emphasis would also be placed on the ability to network the machines together to get consolidated reports on postage usage by department and location. The most attractive bid was provided by Neopost Inc., a worldwide provider of mailing and shipping solutions.
"We were pleasantly surprised to see this bid come in, and they won quite handily," said Cherukuri.
Machine Reduction of 80%
After reviewing the city's mailing requirements, Neopost was able to reduce the number of machines by 80%, providing ITS with eight Model IJ mailing machines – all for medium- to high-volume mailing requirements. Dynamic scales to meet the new shape-based postal regulations were also provided, as well as scanner roll tape dispensers and conveyors.
The machines are located in several places. Three of the larger machines were positioned in City Hall for use by both ITS' centralized mailing and printing area, and the Treasury Department. Due to different departments' mailing needs, the remaining machines were placed in three outlying locations that are within convenient distance from the departments without machines.
The machines are networked together with Neopost Online Services, allowing users to keep track of all mailroom activities via a personalized, web-based account. This also means that personnel from any department can code in to any machine. Thanks to this system, ITS is planning to start providing quarterly reports for each department that provide detailed information of postage use.
Mattie Pritchett, an operation supervisor for ITS, immediately noticed the upsurge in efficiency.
"Previously, our biggest challenge was trying to keep track of everything, especially when we it came to downloading money onto all of the postage accounts. We had to go out to reload 40 machines, in multiple locations," she said. "Plus, there was password protection on every machine, and only Jim Davenport, [manager of Data Center Services] and I had passwords. There was far too much wasted time. The new system just makes life easier for everyone."
An Upsurge in Printing
Cherukuri also highlighted the ancillary benefits of the consolidation process.
"We have been driving more work into our centralized print facilities, because now people are thinking, 'Why print it somewhere else then carry it here?' Consequently, we can also advise people on how to produce their materials in a fashion that will enable them to reduce postage. Given the new shape-based postal regulations, this is a huge advantage.
"We also expect that the increased efficiency will lead to a reduction in the use of overnight mailing services, since we're actually optimizing the mail to the times of the postal pick-ups." he added. "In addition, people no longer have to figure out how to put money into a postage account. They now have an internal resource to do that."
Davenport has a particular affinity for the cost savings, as well as the decrease in "waste" postage.
"We no longer have to make maintenance or lease payments," he said. "Overall, we have better postage accounting. Plus, we're cutting out waste postage, since it's now virtually impossible to sneak in non-city official mail."
In the end, said Cherukuri, this whole undertaking offers a classic example of the Kilpatrick administration's "in-sourcing of shared services", a trend that more and more organizations will begin to consider – especially if they want to identify bottlenecks in their system the way Detroit did.
"It's easy for everyone to tell you to out-source your mailing," he observed. "But through this project we have been able to empower our employees to drive change and identify opportunities. We would have never discovered half the problems or reaped half the benefits through a simple outsourcing. "For example, now that we've centralized, we're seeing that we have serious problems with address quality, and massive amounts of returns. Now we're going to start working with Neopost on things like address quality. Before, nobody internally had the knowledge base to take advantage of that."
Tony Hall, government account specialist for Neopost who worked on the Detroit project, elaborated on the future services Neopost will provide.
"We are in the process of presenting our PrintMachine software to the City of Detroit," he said. "The software simplifies mailings of every size and allows users of Neopost folder/inserters to electronically create documents like invoices, statements and other customer mailings. This could save the city over a hundred thousand dollars per year. The possibilities for future savings and efficiencies are almost endless."
Machines Are Good; Service Is Better
Hall was quick to emphasize the role of strong customer service in this endeavor.
"A machine is a machine - what customers want is service," he said. "Being able to look at a customer's immediate needs is not enough; anticipating their ongoing needs is mandatory."
According to Cherukuri, assessing these ongoing needs is, in itself, an ongoing process.
We're still not using more sophisticated mailing tools like self-sealing mailers," he said. "But now that we're looking at mailing from an enterprise rather than an individual perspective, we're able to continually reexamine how we do everything.
"Our Neopost solution has allowed us to meet the postal transformation head on, while solving our own unique mailing needs. And ultimately, we're extracting value for the citizens of Detroit. That's the most important bottom line."