A Federal Agency is Winning the Race on Supply Chain Sustainability
The USPS is paving the way for sustainable practices in its supply chain to ensure continuous operations to its customers despite risks of climate change.
Climate Change at the USPS
The United States Postal Service (USPS) has 227,000 vehicles and over 500,000 employees who deliver 160 billion pieces of mail to over 156 million delivery points across the U.S. annually.[1] The Postal Act of 1970 mandates that the USPS “provides prompt, reliable, and efficient services to patrons in all areas”. [2] Given the frequency and breadth of operations, USPS should identify threats to its core business and take steps to mitigate any impact. In a report to the Government Accountability Organization, the USPS identified hurricanes as the biggest immediate negative impact on its supply chain due to the large impact area.[3] The USPS also identifies gradual changes from increased greenhouse gas (GHG) emissions as a risk needing mitigation, including wildfires, prolonged periods of extreme temperatures, and severe rainstorms.[4] Power losses, flooding, and damage to infrastructure make it challenging to accept, sort, transport, and deliver mail to areas impacted by an extreme weather system. In the long-term, the changes in weather patterns will make operations costlier, driving the need for synergies within business practices to continue reliable and timely service to its customers.
Steps Taken to Address Concerns
The USPS developed a Climate Change Adaptation Plan in 2014 (updated in 2016) in response to a directive for all federal agencies to prepare the U.S. for climate change impacts.[5]
Greenhouse Gas Emissions
The reduction of GHG emissions is one of USPS’s main goals with a target to reduce GHG emissions by 25% by 2025 from 2008 baseline levels.[6] A short-term goal is to develop more efficient routes for parcel deliveries to decrease the total miles driven by its fleet. A long-term goal is to replace vehicles as they wear out with alternative-fuel vehicles.[7]
A long-term goal for its 32,000 facilities is to increase energy efficiency by conducting energy audits with a target energy reduction of 2.5% annually through 2025.[8] In the short-term, the USPS is installing a solar generation system for its Los Angeles Processing and Distribution Center as a pilot-program.[9]
Sustainability in the Supply Chain
The USPS updated its procurement guide to promote sustainability throughout its supply chain. Over the next three years, the USPS will increase its purchases of environmentally preferable products (EPPs) by 3% annually and increase the number of EPPs listed in its internal purchasing catalog by 10% by 2018.[10] The agency plans to continue its practice of oversight of its supply chain by mandating reports from any company rewarded a contract over $500,000 outlining its biopreferred and biobased purchases.[11] Additionally, the USPS issues dynamic routing for its highway contract route services to reduce the number of miles driven.[12] Through BlueEarth®, the USPS gives its business customers insight to their GHG emissions statistics associated with their shipping activities, enabling them to analyze and implement changes to their supply chain practices.[13]
How to Push Further
The USPS received the Environmental Protection Agency’s Climate Leadership Award for supply chain in 2017.[14] However, there are still additional ways the USPS can bolster its efforts to adapt to climate change.
Short-Term
Instead of simply monitoring sustainability practices of its suppliers, the USPS should include a sustainability standard in all its contracts (e.g. suppliers must reduce GHG emissions by 2% annually or must use 30% or recycled material in products). Currently, there is no forcing function for suppliers to increase their sustainability practices, which does not align the suppliers’ incentives with USPS.
Mid-Term
The USPS should take a more active role in protecting its facilities and fleet from the impacts of severe weather to ensure their core business remains viable. For example, facilities should be structurally resistant to risks of the region and able to continue operations in the event of a power disruption with alternative energy generation or energy storage. The next generation of USPS vehicles are currently in prototyping. In addition to fuel efficiency and alternative fuel sources, it is imperative to also consider the ruggedness of the vehicles. After natural disasters, it is often not safe for normal vehicles to travel on the roads due to flooding or debris. Since the USPS serves the most rural areas in the U.S., there should be vehicles outfitted appropriately to continue to supply uninterrupted service to its customers.
Overcoming the hurdle of constraints in the government
The USPS does not rely on money from the Federal Government for its operations. Its revenue comes solely from its operations. However, it does have a federally mandated cap on its debt limit, which prevents the agency from taking on innovative projects. This leaves me with the following question:
What are some creative ways to initiate sustainable projects with a limited budget and restrictions on debt limits?
[1] USPS, “Size and Scope,” https://about.usps.com/who-we-are/postal-facts/size-scope.htm, accessed November 2017.
[2] “Postal Policy,” Title 39, U.S. Code, Sec. 101 (a), 2008 ed., https://www.gpo.gov/fdsys/granule/USCODE-2011-title39/USCODE-2011-title39-partI-chap1-sec101, accessed November 2017.
[3] United States Government Accountability Office, “Federal Supply Chains: Opportunities to Improve the Management of Climate-Related Risks,” Report to the Honorable Matthew Cartwright, House of Representatives, October 2015, http://www.gao.gov/assets/680/673300.pdf, accessed November 2017.
[4]USPS, “USPS Climate Change Adaptation Plan,” p. 5, https://about.usps.com/what-we-are-doing/green/pdf/CCAP_FINAL_2014.pdf, accessed November 2017.
[5] Ibid., p. 5.
[6] USPS, “2016 Strategic Sustainability Performance Plan,” p.18, https://about.usps.com/what-we-are-doing/green/pdf/USPS-2016-Strategic-Sustainability-Performance-Plan.pdf. Accessed November 2017.
[7] Ibid., p.5.
[8] Ibid., p.14
[9] Ibid., p.5
[10] Ibid., p.28.
[11] Ibid., p.29.
[12] Ibid., p.30.
[13] “2017 Climate Leadership Award Winners,” press release, March 2017, on EPA website, https://www.epa.gov/climateleadership/2017-climate-leadership-award-winners#USPS, accessed November 2017.
[14] Ibid.
Thanks for the interesting read! Maybe I’m too much of a millennial, but I wonder if the solution to the USPS problems is the gradual scaling down of the services. With the continued advent of digitization of documents, email, online advertising etc. I bet that most consumers almost never receive mail that is urgent or very important. Perhaps daily deliveries in these cases are a waste of time and resources and consumers could be scaled back to 2 or 3 deliveries a week, unless they opt to pay an extra delivery fee. I always feel guilty when I get mail and its only ads, and that’s at least 70% of the time.
Thank you for illustrating an interesting topic – USPS is certainly relevant to the day-to-day lives of most Americans, so it’s heartening to know that they are pursuing more sustainable operations. When I first read this piece, my mind immediately went to packaging, and the emissions that go into producing packaging as well as the negative environmental consequences of inadequately disposing of boxes, envelopes, and their contents.
Even though you pointed out that USPS is aware of this opportunity alongside their initiatives to reduce GHG emissions and using recycled materials, I wonder if they could do more to innovate around sustainable packaging and push consumers to support their efforts. Many companies have implemented creative solutions to wasteful packaging production: for example, Dell uses wheat straw (which is a byproduct of wheat harvesting) to produce packaging (http://www.inboundlogistics.com/cms/article/getting-packaging-costs-down-to-size/). Other companies have gone a step further by eliminating redundant packaging, which USPS could hypothetically implement with certain types of products. They could also start to consider customers as a part of their supply chain, and leverage them to cut down on packaging production. Perhaps they could incentivize customers to support their sustainability efforts by providing a rebate for re-using a box. No matter the solution, USPS is taking steps in the right direction, and I look forward to hearing more about their sustainability initiatives in the future.
This was a really interesting post – thank you. I had never thought through how climate change might affect something as simple as mail delivery. While I appreciated USPS’s commitment to sustainability through their vehicles and suppliers, I was concerned about how they would continue to meet their customer promise in the face of climate change. I agree it is essential they consider reducing their emissions to minimize contribution to climate change, but they also need to have contingency plans or innovations in place to ensure they are able to deliver mail and packages in a timely manner as disasters occur more frequently. I really liked your mid-term suggestions on “weather-proofing” facilities or vehicles, but if I were USPS, I would be consider more innovative options. I’m reminded of this article I recently read where Rakuten delivered fried chicken to areas hit by disasters [1]. Although a bit light-hearted and quite a while post-disaster, I think the use of this kind of technology could be extremely helpful for USPS in the face of climate change and more generally in modernizing their operating model. However, I appreciate your final point on the difficulty of securing funding for innovative projects; I’d definitely want to look further into if they have the capital to make this kind of investment.
[1] https://www.cnbc.com/2017/11/01/drone-delivery-fukushima-japan.html