DRIVING

STRATEGIC COST
REDUCTION
Accenture Post and Parcel
Industry Research 2019
THE REVENUE MIX IS SHIFTING
AND MARGINS ARE DECLINING
Shifting Revenue Mix
Posts Mail to parcels has declined(2)

Posts and Integrators

68% 2014 2018

67%
of players saw a decline
(0.5%) – (5.7%)
Absolute EBIT margins
decline range
28:1
Increasing Cost Pressure
15:1
in EBIT(1) margins
between the last two Integrators Employee Costs
reported financial years
60% Transportation Costs

Rental Costs
(0.5%) – (2.2%)
Absolute EBIT margins
decline range

Copyright © 2019 Accenture. All rights reserved. (1) EBIT = Earnings Before Interest and Tax; (2) For 10 players considered as part of the analysis 2
COST DRIVERS ARE AFFECTING
MARGINS

100%
Companies* saw increased
59%
Companies* saw increased
71%
Companies* saw increased
transportation expenses rental(3) expenses average employee wage

Austrian Post bpost Posti bpost Posten Norge PostNord

+0.1% +5.6% -25% +42% -6% +17%
Change as a percentage of revenue(2) % Growth in rental expenses(2) % Growth in average employee wage(2)

(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
Copyright © 2019 Accenture. All rights reserved. expenses separately i.e. 11 for transportation expenses, 17 for rental expenses and 24 for employee wage rate 3
INTEGRATORS NEARLY 3X MORE
PROFITABLE

Postal players bear the brunt of the decline Integrators have made parcels
despite having mail delivery synergies(1) three times more profitable

10.7% 3.7%
Median margin for mail(2) Median margin for parcel(3)
9.7%
Median margin for parcels(4)

(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,
Copyright © 2019 Accenture. All rights reserved. Canada Post, Posten Norge, Swiss Post; (4) Integrators includes UPS, FedEx, DPDHL and Aramex. 4
INTEGRATORS HAVE HIGHER
CONTRIBUTION PER UNIT
Parcel EBIT Parcel Revenue Parcel Cost
per unit per unit per unit
[FY 2018] [FY 2018] [FY 2018]

Fedex 1.2 15.1 13.8

Median parcel Posts
UPS 1.2 EBIT margin 11.1 9.9
Integrators
DPDHL 1.2
8.2%
14.9 13.7

Swiss Post 1.1 12.3 11.2

PostNL 0.5 7.0 6.5 B2B B2C

Median parcel
Austria Post 0.4 5.8 5.4 Cost per stop $5.00(1) $5.50(1)
EBIT margin
5.6% Parcels per stop ~3(2) ~1.05(2)
Canada Post 0.3 7.7 7.4
Cost per parcel $1.67 $5.23
La Poste 0.2 6.3 6.1 First time
delivery rate 97% 85%
Royal Mail 0.1 4.3 4.1

(1) Cost per stop based on industry averages for parcel delivery (excludes mail) for integrators and postal players with organized
Copyright © 2019 Accenture. All rights reserved. labor; (2) Parcels per stop based on industry average for parcel delivery (excludes mail) for integrators and postal players. 5
 WHAT CAN POST AND
PARCEL PLAYERS DO TO
REDUCE
COSTS?
Copyright © 2019 Accenture. All rights reserved. 6
UNDERSTANDING THE OPPORTUNITY
TO IDENTIFY POTENTIAL COST SAVINGS, ACCENTURE HAS:

Analyzed 24 post and parcel organizations Identified 29 Digital & Non-Digital initiatives
across post and parcel value chain

Developed a representative organization from Quantified FTE and Non-FTE financial

existing financial statements impact across post and parcel value chain

Pinpointed examples of successful cost take

Created a customizable Strategic Cost
out from other industries that apply to post
Reduction Model
and parcel organizations

Applied findings to representative

Found $500 million cost takeout opportunity
organization
Copyright © 2019 Accenture. All rights reserved. 7
LABOR SAVINGS (FTE) VS.
OTHER SAVINGS (NON-FTE)
% Contribution to Total Cost Reduction ($500 million total)*(1)

~$350 million in FTE cost reduction ~$150 million in non-FTE cost reduction

9% 6% Transportation Non-FTE
Transportation FTE 10%
13% Warehousing & Support Functions Non-FTE
Sortation FTE Warehousing &
13% 31% 54%
65% Support Functions FTE Sortation Non-FTE
Post Offices & Other FTE Post Offices Non-FTE

Copyright © 2019 Accenture. All rights reserved. (1) In a base case scenario. *Full time employee 8
VALUE CHAIN
PERSPECTIVE
POST AND PARCEL ORGANIZATIONS CAN MAKE
SAVINGS IN:

Core Workforce Customer Support

Operations Organization Touchpoints Functions

Copyright © 2019 Accenture. All rights reserved. 9

VALUE CHAIN PERSPECTIVE:
CORE OPERATIONS
Distribution & Logistics Network Rationalization 78

Routing Algorithms 47

Alternate Delivery Day 33

[~$210-394 million]
Robotics & AGV in Warehouse & Sortation 31
[$million impact]
Connected Vehicles with loT and Telematics 28
Consumer Control & Seamless Parcel
Delivery Experience* 22 Conservative Scenario
Sorting Automation & Efficiency Improvement 21 Base Scenario
Self-Service Kiosks or Smart Collection
16
Optimistic Scenario
Boxes on Retail Points

Electric Vehicles for Last Mile Delivery 14

Robotic or drone delivery 11
Predictive Analytics for Maintenance in
Warehouse& Sortation 2

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
Copyright © 2019 Accenture. All rights reserved. impact, cost reduction contribution will be zero. 10
VALUE CHAIN PERSPECTIVE:
WORKFORCE ORGANIZATION

[~$35-121 million]
Outsourced & Contracted Delivery* 40
[$million impact]
Right FTE Mix or Flexible Workforce 23
Workforce Augmentation Through Conservative Scenario
Wearables & Handhelds
11
Base Scenario
Workforce Analytics 1
Optimistic Scenario

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
Copyright © 2019 Accenture. All rights reserved. impact, cost reduction contribution will be zero. 11
VALUE CHAIN PERSPECTIVE:
CUSTOMER TOUCHPOINTS

[~$32-55 million]
23
Parcel Specific Pick & Drop Parcel Lockers* 35 [$million impact]
11
AI Powered Care/Chatbot* 9
Conservative Scenario
1
Base Scenario
Optimistic Scenario

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
Copyright © 2019 Accenture. All rights reserved. impact, cost reduction contribution will be zero. 12
VALUE CHAIN PERSPECTIVE:
SUPPORT FUNCTIONS

Zero Based Budgeting - ZBS 28

RPA in Support Functions 18 [~$39-100 million]

Sales Force Enablement or Effectiveness 11 [$million impact]

Digitized HR Employee Self Service 5 Conservative Scenario

Marketing Performance Analytics 5 Base Scenario
Optimistic Scenario
HVAC Analytics 1

Finance Analytics 1

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
Copyright © 2019 Accenture. All rights reserved. impact, cost reduction contribution will be zero. 13
 WHERE TO
NEXT
Copyright © 2019 Accenture. All rights reserved. 14
FIVE ACTIONS FOR THE FUTURE

01 DEVELOP
COST VISIBILITY 02 LEARN
FROM OTHERS
Create cost visibility that Successful implementations
accurately captures granular and strategies employed both
cost data to incorporate into within and outside the industry
cost take out initiatives can provide a roadmap to
unlock value
BECOME
VALUE FOCUSED

03 TAKE ADVANTAGE
OF NEW, PROVEN
TECHNOLOGIES
04 IMPLEMENT A
RIGOROUS COST
TAKE OUT PROGRAM
Technologies such as artificial Successful cost take out
intelligence, robotics and programs include the right
cloud make it possible to focus, the right structure and
unlock an entirely new set of governance and the right data
cost savings and reporting

Copyright © 2019 Accenture. All rights reserved. 15

FOR MORE INFORMATION ABOUT ACCENTURE
BRODY BUHLER Accenture is a leading global professional
Global Managing Director, services company, providing a broad range of
Accenture Post & Parcel Industry services and solutions in strategy, consulting,
digital, technology and operations. Combining
[email protected] unmatched experience and specialized skills
/in/brodybuhler across more than 40 industries and all
business functions—underpinned by the
@brodybuhler
world’s largest delivery network—Accenture
works at the intersection of business and
technology to help clients improve their
ANDRE PHARAND performance and create sustainable value
Global Management Consulting Lead for their stakeholders. With 482,000 people
Accenture Post & Parcel Industry serving clients in more than 120 countries,
Accenture drives innovation to improve the
[email protected]
way the world works and lives. Visit us
/in/andre-pharand at www.accenture.com.
@andre_pharand

Copyright © 2019 Accenture. All rights reserved.

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