Simulation -a Key Tool to Accelerate and Add Confidence to Postal Network Configuration

Postal operators are increasingly facing new challenges to maintain competitiveness – most have already played the “card” of facility consolidation and introduction of automation to reduce processing costs. How exactly, should a given infrastructure/network and transportation strategy be changed to meet the upcoming challenges? Should mail streams be consolidated to enable further automation? Should the product portfolio be revised to accommodate for new competitive marked drivers?. Obviously, the postal industry has a strong need for advanced decision support tools that can address its dynamics and complexity. This paper will explain how postal organisations have benefited from discrete event simulation to accelerate and add confidence to decision making. The simulation model described in this paper is designed for “End-to-end” analysis of the logistic value chain. In that way it can establish a nation wide (or area wide) general view of the cause-effect relationships in a complex postal system. 1 THE MANAGEMENT CHALLENGE The marketplace for postal services is being deregulated and opened for competition and mail volumes drops. Many issues have to be raised, considered and answered to develop the most appropriate solution for a future postal network strategy. Throughout the world, postal administrations face the requirement to continuously analyse, improve and reengineer their services, as well as to improve the performance of how the products are processed from collection through to delivery. It is a huge challenge to develop and implement an integrated business solution that has a balanced response to a range of different change drivers including technology change-push, changes in demand (e-mails potentially reducing amount of letters) and de-regulations. Business changes that follow from these drivers include strategic network reconfigurations, new product developments, service quality improvements, cost control, etc. Generally, a postal network is comprised of a number of facilities having some processing equipment which fit into the logistic strategy chosen by management. Hence the postal network represents a very complex production system where millions of dynamic delivery points have to be serviced every day within a short timeframe. There are many questions to be asked before formulating a successful logistic strategy and change process. First of all, did you ask all the right questions, and did you get all the numbers right. There is an imminent risk that several complex relationships and interactions were not considered adequately. To build this knowledge, pilot implementations can be made. However, experimenting on a real system can be costly or impractical. Logistic simulation models is the most appropriate analytical tool for a true representation of a postal logistic system. It can be a realistic no-risk environment for analysis of alternative solutions while they still are on “the drawing board” – simulation accelerate the decision process and establish valuable insights that builds confidence to the solution. It is our experience from using simulation for more than a decade in the postal environment, that postal management recognise the benefit of simulation. Leading postal organisations USPS, Canada Postal Corporation, Deutsch Post, Norway Post, Belgium Post (La Poste), Swedish Post and Post Denmark has successfully used simulation to accelerate and support decision making to develop and validate: