The development of the Post Office Network as a strategic asset of Poste Italiane
Alberto Buttaroni, Operation and Customer Service Department Manager, Chief Network and Sale Office Division, PosteItaliane
World Mail Review May 2008
The Transformation of Post Italiane
Poste Italiane Group, internationally acknowledged by several important economic and financial institutions,has this year for the second time been ranked at tenth in the list of the most important postal operators in Fortune’s “World’s Most Admired Companies” rankings. In 1998 PI Group registered a loss of €1,377m, in 2002 it achieved breakeven, and in 2006 it recorded net profit of €676m. 2007 is estimated to be even better. EBIT has shown a compound annual growth rate of 57% between 2002 and 2006.
These results are due to the successful transition from a first phase change related to balancing costs and revenues, and the following phase of Company development, which actually has been a challenging new step for PI. A key role in the change programme has been played by the post office network which has become an essential competitive factor in boosting PI growth. Yet the key statistics for post offices are not totally different from in the past, in terms of both number of retail outlets (about 14,000) and employees (about 62,000 ut of the total 150,000 working in Poste Italiane).
Product Development
In the postal area, new products have been developed to fulfil customers’ expectations in areas such as electronic despatches (in addition to physical ones), delivery standards, and end to end tracking.
In parcels, the existing offering has been consolidated and new products have been introduced in order to meet customers’ needs, for example price related to delivery date and special flexibility for international delivery. In regard to the financial offering, Bancoposta’s new current account was the main driver in boosting Company growth. Success in financial services can be seen in such figures as 5.2m current accounts, 3.5m prepaid credit cards, and 6m debit cards. Several important added value products have been developed in savings and investments areas, including the insurance sector. Postevita SpA, within PI Group, has become in just eight years a leading company in life insurance, gaining second position in the national rankings in 2006, and achieving a significant market share.
In November 2007 PI extended its offering by becoming a virtual mobile operator. Postemobile provides an innovative way to obtain financial and commercial mobile services. Combined with the website and the contact centre it enhances the company’s multi-channel offering.
Structural innovation in the post office network
In the year 2000, computerised workstations were installed in all 14,000 post offices in just one year. As a result, all the information about counters’ productivity levels and their opening times are now available on a real time basis for senior management reports. Improvements in IT reliability since 2000 mean the IT network is now able to support 15m financial transactions on a daily basis. It can be considered as a model for both national and international network systems.
The points of sale have been involved in renewal plans, resulting in a reorganisation of the entire office, creating different job spaces, enhancing automated transaction capabilities to save time and resources, and introducing a different way to welcome customers with different needs–consumers and business.
This change process has also involved historical post offices, located in the centre of cities. These buildings have non standard layouts and the traditional models cannot be immediately applied. So our designers have had to find the best way to make cohabitation possible between counters and stained glass windows, or mail and historical paintings!
A new post office model, based mostly on new automated solutions, has been recently implemented. The first new self service post office is located inside the university campus in Rome and it represents for Poste Italiane a break through into advanced high tech. The new concept sets up standard solutions based on experimental plants already in use, enhances customers’ presence at the post office, and integrates and facilitates access to the self service area and business relation points. All the network operational processes have been carefully analysed, using Business Process Reengineering techniques. This has led to an overall improvement in resource optimisation between 2003 and 2007. It has been possible to accomplish about 15% more activities with the same number of counters. Back office activities have been reduced by up to 50%.
Last but not least, a unified logistics platform and e-procurement system have been created to facilitate better stock management As an example, over the last three years the cost of forms has shown an average decrease of 30% .
Network development management
PI has introduced a classification system based on geography and revenues, market potential and local competition. This has resulted in the identification of six groups of post offices. It is updated every year. The added value of this classification is that it allows PI to understand the market perspectives that influence customer choices, and also to find the right local selling approach.
Attention has also been given to post office structures. As a result, more than 4,000 consulting areas have been introduced in post offices, creating dedicated areas for retail customers to discuss investments and other offerings such as mortgages and loans. 1,500 counters dedicated to business affairs have been implemented to provide added value offerings for SOHO customers. Further specialisation has resulted in 5,700 counters providing facilities for public administration where people can get special solutions to simplify their relationships with government; 800 counters providing specific services for foreigners; 2,800 logistic counters dedicated to reverse logistics (B2B2C); and 250 shop in shops furnished with different products (books, CDs etc). A network of 15 Specialised Team Services deals with post office back office procedures related to financial activities.
PI also plans to satisfy customer needs with mobile units. The fleet will comprise 60 fully operational mobile units by the end of 2008, providing a full range of services. It can be used during special events, both on a temporary and permanent basis, in order to strengthen the PI presence at fairs, exhibitions or any other special occasions.
A new approach has been developed for rural areas. This involves the creation of service areas. These consist of a group of post offices offering local commercial and specific items with the advantage of closeness to the customer and a more flexible operational management. Since 2007, 566 service areas have been created to run 3,500 post offices. The positive results achieved through the rural service area management approach have encouraged its extension to other parts of the network, in particular to metropolitan areas.
Metrics
The organisation’s processes are designed to manage every single growth component concerning commercial, operational and human resource factors. The Company systems run reports related to commercial results in terms of selling, as well as quality of service. National surveys have been used by Poste Italiane since 1999 to evaluate quality in post offices. Results from the 2007 survey indicate significant increases in the total customer satisfaction index that measures all service aspects. Moreover, a Key Performance Indicators system provides a complete and integrated scoring system to measure post offices’ performances. The system comprises 42 indicators, in four levels: post offices, service areas, branches and country areas. In total, 15,000 organisational structured points are constantly monitored.
In summary, the post office network is maintaining and enforcing the company’s strategic role in PI, defining new ways to increase quality of service and results through physical contacts, a multi-channel approach and cost reduction.
