The document discusses strategies for post and parcel players to reduce costs. It finds that 67% of players saw declining earnings margins due to shifting revenue mixes from mail to parcels and increasing cost pressures. Integrators have made parcels three times more profitable than postal players through higher revenue and lower costs per unit. The document identifies 29 initiatives across the value chain that could reduce costs by $500 million, including automation, analytics, and workforce optimization.

1. DRIVINGSTRATEGICCOST
REDUCTION
Accenture Post and Parcel
Industry Research 2019

2. Copyright © 2019 Accenture. All rights reserved. 2
THE REVENUE MIX IS SHIFTING
AND MARGINS ARE DECLINING
67%of players saw a decline
in EBIT(1) margins
between the last two
reported financial years
Posts and Integrators
60%
Integrators
Absolute EBIT margins
decline range
(0.5%) – (2.2%)
Shifting Revenue Mix
Mail to parcels has declined(2)
28:1
2014
15:1
2018
(1) EBIT = Earnings Before Interest and Tax; (2) For 10 players considered as part of the analysis
Increasing Cost Pressure
Employee Costs
Transportation Costs
Rental Costs
68%
Absolute EBIT margins
decline range
(0.5%) – (5.7%)
Posts

3. Copyright © 2019 Accenture. All rights reserved. 3
COST DRIVERS ARE AFFECTING
MARGINS
(1) Analysis done for the last two reported Financial Years; (2) Range expressed for top to bottom performers; (3) Property,
facilities and maintenance costs; *Considered only those companies as part of the analysis which are reporting respective
expenses separately i.e. 11 for transportation expenses, 17 for rental expenses and 24 for employee wage rate
100%Companies* saw increased
transportation expenses
Change as a percentage of revenue(2)
+0.1%
Austrian Post bpost
+5.6%
59%Companies* saw increased
rental(3) expenses
% Growth in rental expenses(2)
-25%
Posti bpost
+42%
71%Companies* saw increased
average employee wage
% Growth in average employee wage(2)
-6%
Posten Norge PostNord
+17%

4. Copyright © 2019 Accenture. All rights reserved. 4
INTEGRATORS NEARLY 3X MORE
PROFITABLE
9.7%Median margin for parcels(4)
Integrators have made parcels
three times more profitable
Postal players bear the brunt of the decline
despite having mail delivery synergies(1)
Median margin for mail(2) Median margin for parcel(3)
10.7% 3.7%
(1) Analysis done for the last two reported Financial Years; (2) Postal companies for mail includes Austria Post, PostNL, CTT,
Posten Norge, Swiss Post; (3) Postal companies for parcel includes Royal Mail, Austria Post, SingPost, PostNL, CTT, La Poste,
Canada Post, Posten Norge, Swiss Post; (4) Integrators includes UPS, FedEx, DPDHL and Aramex.

5. Copyright © 2019 Accenture. All rights reserved. 5
INTEGRATORS HAVE HIGHER
CONTRIBUTION PER UNIT
13.8
9.9
13.7
11.2
6.5
5.4
7.4
6.1
4.1
1.2
1.2
1.2
1.1
0.5
0.4
0.3
0.2
0.1
15.1
11.1
14.9
12.3
7.0
5.8
7.7
6.3
4.3
La Poste
Fedex
DPDHL
UPS
Swiss Post
PostNL
Austria Post
Canada Post
Royal Mail
Parcel EBIT
per unit
[FY 2018]
Parcel Revenue
per unit
[FY 2018]
Parcel Cost
per unit
[FY 2018]
Posts
Integrators
Median parcel
EBIT margin
8.2%
Median parcel
EBIT margin
5.6%
Cost per stop
Parcels per stop
Cost per parcel
First time
delivery rate
B2B B2C
$5.00(1) $5.50(1)
~3(2) ~1.05(2)
$1.67 $5.23
97% 85%
(1) Cost per stop based on industry averages for parcel delivery (excludes mail) for integrators and postal players with organized
labor; (2) Parcels per stop based on industry average for parcel delivery (excludes mail) for integrators and postal players.

6. Copyright © 2019 Accenture. All rights reserved. 6
WHAT CAN POST AND
PARCEL PLAYERS DO TO
REDUCE
COSTS?

7. Analyzed 24 post and parcel organizations
Copyright © 2019 Accenture. All rights reserved. 7
Developed a representative organization from
existing financial statements
Pinpointed examples of successful cost take
out from other industries that apply to post
and parcel organizations
Applied findings to representative
organization
Identified 29 Digital & Non-Digital initiatives
across post and parcel value chain
Quantified FTE and Non-FTE financial
impact across post and parcel value chain
Created a customizable Strategic Cost
Reduction Model
Found $500 million cost takeout opportunity
UNDERSTANDING THE OPPORTUNITY
TO IDENTIFY POTENTIAL COST SAVINGS, ACCENTURE HAS:

8. Copyright © 2019 Accenture. All rights reserved. 8
LABOR SAVINGS (FTE) VS.
OTHER SAVINGS (NON-FTE)
(1) In a base case scenario. *Full time employee
% Contribution to Total Cost Reduction ($500 million total)*(1)
~$350 million in FTE cost reduction
Transportation FTE
Warehousing &
Sortation FTE
Support Functions FTE
Post Offices & Other FTE
Transportation Non-FTE
Support Functions Non-FTE
Warehousing &
Sortation Non-FTE
Post Offices Non-FTE
65%
13%
13%
9%
54%31%
10%
6%
~$150 million in non-FTE cost reduction

9. Core
Operations
Copyright © 2019 Accenture. All rights reserved. 9
Workforce
Organization
Customer
Touchpoints
Support
Functions
PERSPECTIVE
VALUE CHAIN
POST AND PARCEL ORGANIZATIONS CAN MAKE
SAVINGS IN:

10. Copyright © 2019 Accenture. All rights reserved. 10
VALUE CHAIN PERSPECTIVE:
CORE OPERATIONS
1) In a base case scenario. Does not fully account combinatorial impact across initiatives. Does not include the impact of CRM
Support Solutions and Procurement Optimization; *These initiatives have EBITDA impact due to revenue increase and/or cost
reduction, however, here only cost reduction impact of such initiative has been taken into consideration. In case of only revenue
impact, cost reduction contribution will be zero.
78
47
33
31
16
14
11
28
22
21
2
Self-Service Kiosks or Smart Collection
Boxes on Retail Points
Connected Vehicles with loT and Telematics
Routing Algorithms
Alternate Delivery Day
Robotics & AGV in Warehouse & Sortation
Consumer Control & Seamless Parcel
Delivery Experience*
Sorting Automation & Efficiency Improvement
Electric Vehicles for Last Mile Delivery
Robotic or drone delivery
Predictive Analytics for Maintenance in
Warehouse& Sortation
Distribution & Logistics Network Rationalization
[~$210-394 million]
[$million impact]
Conservative Scenario
Base Scenario
Optimistic Scenario

11. Copyright © 2019 Accenture. All rights reserved. 11
VALUE CHAIN PERSPECTIVE:
WORKFORCE ORGANIZATION
[~$35-121 million]
[$million impact]
1) In a base case scenario. Does not fully account combinatorial impact across initiatives. Does not include the impact of CRM
Support Solutions and Procurement Optimization; *These initiatives have EBITDA impact due to revenue increase and/or cost
reduction, however, here only cost reduction impact of such initiative has been taken into consideration. In case of only revenue
impact, cost reduction contribution will be zero.
Right FTE Mix or Flexible Workforce
Workforce Augmentation Through
Wearables & Handhelds
Workforce Analytics
Outsourced & Contracted Delivery*
Conservative Scenario
Base Scenario
Optimistic Scenario
40
11
23
1

12. Copyright © 2019 Accenture. All rights reserved. 12
VALUE CHAIN PERSPECTIVE:
CUSTOMER TOUCHPOINTS
1) In a base case scenario. Does not fully account combinatorial impact across initiatives. Does not include the impact of CRM
Support Solutions and Procurement Optimization; *These initiatives have EBITDA impact due to revenue increase and/or cost
reduction, however, here only cost reduction impact of such initiative has been taken into consideration. In case of only revenue
impact, cost reduction contribution will be zero.
AI Powered Care/Chatbot*
Parcel Specific Pick & Drop Parcel Lockers*
11
23
1
35
9
[~$32-55 million]
[$million impact]
Conservative Scenario
Base Scenario
Optimistic Scenario

13. Copyright © 2019 Accenture. All rights reserved. 13
VALUE CHAIN PERSPECTIVE:
SUPPORT FUNCTIONS
1) In a base case scenario. Does not fully account combinatorial impact across initiatives. Does not include the impact of CRM
Support Solutions and Procurement Optimization; *These initiatives have EBITDA impact due to revenue increase and/or cost
reduction, however, here only cost reduction impact of such initiative has been taken into consideration. In case of only revenue
impact, cost reduction contribution will be zero.
Marketing Performance Analytics
RPA in Support Functions
Sales Force Enablement or Effectiveness
Digitized HR Employee Self Service
HVAC Analytics
Finance Analytics
Zero Based Budgeting - ZBS
1
11
5
1
28
18
5
[~$39-100 million]
[$million impact]
Conservative Scenario
Base Scenario
Optimistic Scenario

14. Copyright © 2019 Accenture. All rights reserved. 14
WHERE TO
NEXT

15. Copyright © 2019 Accenture. All rights reserved. 15
FIVE ACTIONS FOR THE FUTURE
BECOME
VALUE FOCUSED
02 LEARN
FROM OTHERS
Successful implementations
and strategies employed both
within and outside the industry
can provide a roadmap to
unlock value
01
Create cost visibility that
accurately captures granular
cost data to incorporate into
cost take out initiatives
DEVELOP
COST VISIBILITY
03
Technologies such as artificial
intelligence, robotics and
cloud make it possible to
unlock an entirely new set of
cost savings
TAKE ADVANTAGE
OF NEW, PROVEN
TECHNOLOGIES
04
Successful cost take out
programs include the right
focus, the right structure and
governance and the right data
and reporting
IMPLEMENT A
RIGOROUS COST
TAKE OUT PROGRAM

16. FOR MORE INFORMATION
/in/brodybuhler
BRODY BUHLER
Global Managing Director,
Accenture Post & Parcel Industry
@brodybuhler
robert.b.buhler@accenture.com
www.accenture.com/postal
/in/andre-pharand
ANDRE PHARAND
Global Management Consulting Lead
Accenture Post & Parcel Industry
@andre_pharand
andre.pharand@accenture.com
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