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USPS: Small Package Sorting System ||Small Parcel Sorting System

USPS OIG: Small Package Sorting System

USPS Advisory Report on one of the SPSS machines in West Valley P &DC located in Phoenix, Arizona

posted Monday September 14, 2015

Small Package Sorting System Performance and Functionality at the West Valley Processing and Distribution Center

August 24, 2015 – The Small Package Sorting System (SPSS) machine sorts packages that weigh 20 pounds or less and are processed at U.S. Postal Service facilities. The Postal Service saves labor costs as packages move from manual operations to the SPSS machine. The SPSS program is one of the major activities supporting Delivering Results, Innovation, Value, and Efficiency (DRIVE) Initiative 43 – Building a World-Class Package Platform. In March 2014, the Postal Service approved the purchase of five SPSS machines for about $(redacted) million for evaluation in Arizona, California, Florida, New York, and Texas. In January 2015, the Postal Service approved $(redacted) million to purchase and deploy an additional 26 SPSS machines. This occurred before the Postal Service fully deployed the first five machines. At the time of this audit, the SPSS machine at the West Valley Processing and Distribution Center (P&DC) was the only system operating.

Our objective was to evaluate whether the performance and functionality of the SPSS machine at the West Valley P&DC met stated expectations. We plan to conduct future audit work on overall SPSS deployment, performance, and functionality

What The OIG Found
The SPSS machine at the West Valley P&DC is not achieving the projected performance and economic goals in support of DRIVE Initiative 43. It is exceeding the (redacted)percent acceptance rate (how well the machine reads the packages) goal by (redacted) percent because an upgraded optical character reader was installed on it. However, the SPSS machine did not meet the projected performance metrics for daily machine runtime (amount of time the machine is in use each day) and package processing volume (number of packages fed through the machine). The average daily machine runtime is (redacted)percent less than projected and the average package processing volume is (redacted)percent less than projected. We found the site has enough packages to support running the machine for more time each day.

The shorter machine runtime and lower volume impact projected and actual labor savings from automation. Between February 3 and April 30, 2015, labor savings were $(redacted) less than the projected (30 percent less) because the SPSS machine did not meet the projected runtime of hours. Management stated this issue is occurring because the site is not receiving packages early enough to run the machine on additional tours. Also, West Valley P&DC management is not ensuring that employee time clock rings are accurate. As a result, there is no way to determine if the West Valley P&DC is achieving projected labor savings of hours per year. This issue is occurring because the operational supervisors are not ensuring staff is clocking into the correct job function.

Correcting these issues at the West Valley P&DC and preventing them at future sites will help achieve the labor savings goal and support DRIVE Initiative 43.

On August 3, 2015, USPS reported the five (5) New Small Parcel Sorting System (SPSS) exceeds expectations

What The OIG Recommended
We recommended management establish optimum runtimes and processed package volumes for each deployed SPSS
machine and establish a process for all non-deployed SPSS sites to maximize machine use and reduce manual parcel sorting. We also recommended management establish a process to ensure that SPSS employee clock rings are properly completed so labor costs can be accurately attributed and measured.

More info

In January 2015, the Postal Service approved $(redacted)million to purchase and deploy an additional 26 SPSS machines. This occurred before the Postal Service fully deployed the first five test and evaluation machines. At the time of this audit, the SPSS machine at the West Valley Processing and Distribution Center (P&DC) was the only machine operating. Between February and April 2015, the Postal Service deployed four additional SPSS machines; however, this audit did not evaluate those machines because there was limited operational data to evaluate throughput and workhours.

The DAR projected that the SPSS machine would cost less than purchasing new Automated Package Processing System (APPS) machines, which the Postal Service has used for almost 10 years. The new sorters will save labor costs as packages move from manual operations to automation. The Postal Service projected deployment of the five SPSS machines would provide $(redacted)million in gross labor savings through fiscal year (FY) 2025 with $(redacted)million in net operational savings and a percent return on investment (ROI).

Conclusion
The SPSS machine at the West Valley P&DC is not achieving the projected performance and economic impacts in support of DRIVE Initiative 43. The SPSS machine is exceeding the acceptance rate3 goal of percent by (redacted) percent and the Postal Service estimates the acceptance rate should increase percent once the machine is connected to the remote encoding center.4

However, the SPSS machine did not meet the projected performance metrics for daily machine runtime and volume. The average daily machine runtime5 is (redacted) percent less than projected and the average volume is (redacted) percent less than projected. The site has enough packages to support running the machine for more time each day. As a result, the SPSS machine saved $(redacted) less than the projected savings of (30 percent less) from February 3 to April 30, 2015.

Further, management is not monitoring SPSS package operation employee time clock rings to track labor distribution code (LDC)6 14, which is the data needed to determine whether the system is saving a projected workhours per year.

These issues occurred because the site was not receiving the packages early enough to run the machine on additional tours and West Valley P&DC management was not monitoring the employee clock rings to ensure proper labor attribution.

Correcting these issues at the West Valley P&DC and preventing them at future sites will help the Postal Service support DRIVE Initiative 43 and achieve its labor savings goal.

Meeting Performance Metric Goals
The SPSS machine is exceeding the acceptance rate goal of (redacted) percent by percent because an upgraded optical character reader was installed on the machine. The manager of Package Technology estimates the acceptance rate should increase an additional to (redacted)percent once the SPSS machine is connected to the remote encoding center. The successful and improving acceptance rate can help increase throughput rates.

The SPSS machine did not meet the projected performance metrics for daily machine runtime and volume at the West Valley P&DC. Specifically, the average daily machine runtime is (redacted)percent less than projected and the average daily volume is (redacted) percent less than projected. There are enough packages available at the site to benefit from increasing the machine’s runtime (see Table 1 for volume details).

West Valley P&DC management stated that they are not receiving the packages early enough to run the machine during additional tours. Currently, the SPSS machine is only running during the evening tour; however, management stated that they have a plan to change the arrival profiles to receive packages earlier and increase machine runtime.

Managing Labor Savings
The manager of Technical Planning and Analysis, Engineering Systems, stated that the site has the primary responsibility to monitor clock rings. However, the SPSS package operation time clock rings are not being monitored to ensure data is captured to support the projected LDC 14 labor savings of workhours per year. An operational productivity performance metric exists for the SPSS machine, but West Valley P&DC personnel are not clocking into the correct job function.

As a result, the Postal Service will not have accurate data to determine the extent to which the SPSS machine is helping to reduce LDC 14 workhours in the West Valley P&DC and whether projected labor savings are achieved. The Postal Service needs to understand the LDC 14 savings as they relate to the SPSS machine to measure success and understand why LDC 14 manual package sorting workhours increased percent compared to the same period last year (SPLY). This increase in manual workhours caused a $(redacted) increase in labor costs while volume only increased (redacted) percent for the same period (see Table 3 for labor cost details)

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