Digitization of the postal industry: Toward a smarter mailing system

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  Quantumrun Foresight
• January 29, 2024

Insight highlights

Digital transformation in the postal industry involves developing IT capabilities in information platforms, customer experience, data analytics, IoT, and ecosystem platforms. The automation of postal services can improve efficiency and reduce costs but also raises concerns about privacy, cybersecurity, and potential job losses. Wider implications include reduced operational costs, addressing the digital divide for older populations, increased demand for new technologies, and the need for changes in laws and regulations. 

Digitization of the postal industry context

Digital transformation requires Posts to develop their IT capabilities in several areas, as outlined by tech research firm Gartner's "digital business technology platform." The platform consists of five major capabilities: 

1) information platform systems for back office and operations, such as Enterprise Resource Planning (ERP) and core systems; 
2) a customer experience platform with elements like customer portals, multichannel commerce, and mobile apps for delivery management; 
3) data and analytics platforms to enhance decision-making through big data repositories, data management programs, and analytical applications like machine learning; 
4) an Internet of Things (IoT) platform connecting physical assets for monitoring, optimization, or control, involving sensor data, location intelligence, analytics, and integration with operational systems; and 
5) ecosystem platforms facilitating connections to external marketplaces, communities, or supply chain partners, enabling seamless data exchange between Posts and partners via APIs.

Digital advancements enable the gathering, distributing, and preserving of vast amounts of operational and customer information. For instance, increased automation in letter and parcel processing produces billions of tracking data points, with more than 3 billion data points measured annually through the Universal Postal Union (UPU) systems. To address the risks associated with managing this data, postal operators are reinforcing data governance frameworks, which are internal organizational guidelines that regulate data management, usability, integrity, and security within a business.

To fully leverage emerging digital technologies, Posts need to adapt their workforce's skillsets accordingly. This effort may require highly specialized roles, such as data scientists, who develop data analytics models and ultimately contribute to well-informed strategic and operational decision-making.

Disruptive impact

The automation of postal services can lead to improved efficiency and cost reduction. For instance, digital tracking systems can streamline package sorting and delivery, providing more accurate tracking information to customers. Moreover, digitization can foster the growth of e-commerce, enabling businesses to ship and receive goods more quickly and easily. Additionally, going paperless for billing, notifications, and marketing materials contributes to environmental sustainability by reducing paper waste and conserving resources.

However, digitization also raises concerns about privacy and cybersecurity. As personal information and communication increasingly become digital, the risk of data breaches and identity theft grows. For example, if a cyberattack were to compromise the postal service's systems, sensitive information such as addresses, tracking data, and billing information could be exposed. To mitigate these risks, the postal service will need to prioritize robust security measures and continually update them to stay ahead of evolving threats.

Lastly, the digitization of postal services could have significant implications for employment. As automation reduces the need for manual labor, job losses may occur among postal workers, particularly those involved in sorting, processing, and delivering mail. While some of these workers may be able to transition to new roles within the postal service or find employment in other industries, others may struggle to adapt. To address this issue, investing in retraining and reskilling initiatives is crucial to equip workers with the necessary skills to succeed in a digitized and automated workforce.

Implications of the digitization of the postal industry

Wider implications of digitization of the postal industry may include: 

• Reduced operational costs for postal services due to automation and streamlined processes, resulting in lower prices for consumers and increased profitability for the industry.
• The digitization of the postal industry disproportionately affecting older populations, who may not be as familiar with digital technology. Efforts to bridge the digital divide and ensure access to these services for all age groups will be important.
• Increased demand for developing and implementing new technologies, such as artificial intelligence, robotics, and data analytics.
• Job losses for postal workers, as manual tasks become automated. However, it may also create new job opportunities in technology, customer service, and logistics management.
• Reduced carbon footprint through decreased reliance on transportation for physical mail delivery, leading to lower emissions.
• As postal services become increasingly digital, ensuring equal access for those with disabilities can become crucial. This accessibility may include user-friendly interfaces, accessible websites, and accommodations for individuals with visual, auditory, or cognitive impairments.
• The digitization of the postal industry requiring changes in laws and regulations governing privacy, data protection, and mail delivery standards. Governments and regulatory bodies will need to adapt to these changes and provide clear guidance to both businesses and consumers.

Questions to consider

• If you work in the postal industry, how is your company digitizing its processes?
• What are the potential challenges of digitizing the postal industry?