US Postal Service 2007 Annual Report Download - page 28

28 | 2007 Annual Report United States Postal Service
Financial Section Part II
Other Expenses
Other operating expenses of $9,333 million for 2007 were 1 million less
than last year’s comparable amount, as shown in the table that follows.
Other Operating Expenses 2007 2006 2005
(Dollars in millions)
Supplies and Services $ 2,594 $ 2,643 $ 2,557
Depreciation and Amortization 2,152 2,149 2,089
Rent and Utilities 1,700 1,721 1,590
Vehicle Maintenance Service 760 709 586
Information Technology and
Communications 630 649 652
Rural Carrier Equipment Maint.
Allowance 495 485 449
Other 1,002 978 977
Total Other Operating Expenses $ 9,333 $ 9,334 $ 8,900
In 2006, other expenses increased $434 million or 4.9%. The increase
was driven by higher fuels costs, which increased both utilities and vehicles
maintenance services. The latter category includes the fuels used by our
carriers to deliver mail in the community.
Productivity
We use a single indicator to measure productivity, which is called total
factor productivity (TFP). TFP measures the change in the relationship
between outputs (workload processed) and inputs (resource usage).
Workload consists of weighted mail volume, and our expanding delivery
network. Resources consist of labor, materials (including transportation),
and deployed capital assets. Workload minus resources used equals total
factor productivity.
During 2007, TFP improved 1.7%, which is equivalent to $1.2 billion in
expense savings. This marks the eighth consecutive year of TFP growth, a
cumulative growth of 12.3%, and an overall expense reduction equivalent
to $8.2 billion during this time. Productivity gains are a result of effective
workforce management, efficient use of material (supplies and services to
include transportation), and maximizing the return-on-capital investments
(mainly automation). During 2006, TFP grew 0.4%.
The aggregate workload for FY 2007 declined 0.2%. This was mainly due
to a sharp decline in weighted mail volume, driven by the 4.7% decline
in First-Class single-piece mail volume. Despite the workload decrease,
resources were managed effectively, resulting in a 2.5% decline compared
to last year.
The following graph shows the TFP cumulative trend from 1971 through
2 0 07.
0
5
10
15
20
20072000199019801972
Average Annual Growth 0.3% 1972 –1999
Average Annual Growth 1.5% 2000 – 2007
Total Factor Productivity Cumulative Percent Change
Service and Performance
Management monitors several key statistics to determine performance
against our service standards. The major indicators we monitor are the
External First-Class (EXFC) on-time mail delivery scores and the Customer
Satisfaction Measurement (CSM) scores.
EXFC is an independently-administered system that provides an external
measure of delivery performance from collection box to mailbox. Although
not a system-wide measurement of all First-Class Mail performance, EXFC
continuously tests a panel of 463 3-digit ZIP Code areas selected on the
basis of geographic area and volume density, thereby providing a measure
of service performance from the customer’s point of view. In the fourth
quarter, we achieved record service scores for all categories. Results of
these measures for the last four quarters are listed below.
EXFC Service
Performance Scores Quarter 1 Quarter 2 Quarter 3 Quarter 4
(Percentage delivered on time)
Overnight Delivery 95 95 96 96
2-Day Delivery 91 91 93 94
3-Day Delivery 86 88 91 93
CSM is an independently administered survey of customer opinions about
key areas of service to residential customers. Customer satisfaction
levels remained constant across the last four quarters, which included
the implementation of a rate increase in May of 2007. The following table
displays the residential satisfaction results for the last four quarters.