Circulation Management: Reconsolidation Pilot Test Set for Fall

FindArticles > Circulation Management > July 1, 2002 > Article > Print friendly

Reconsolidation Pilot Test Set for Fall

In what could be the start of a significant opportunity for publishers and the Postal Service to reduce magazine distribution costs, a cooperative Magazine Publishers of America/American Business Media pilot test of magazine reconsolidation has been scheduled for this fall.

The test will be conducted in Northern Illinois. If it succeeds, the concept is likely to be expanded into a reconsolidation network of similar facilities in all U.S. metropolitan areas.

Reconsolidation before postal entry eliminates postal bundle sorting, mail preparation for sorting and flat sorting. As postage discounts for mailer worksharing have increased over the past 15 years, the cost advantages of reconsolidation have increased correspondingly. At this point, elimination of sorting operations through use of a third-party logistics supplier could save over 35 percent of all postal publication distribution costs, according Frederick Seymour, manager of the pilot program.

The pilot test initially will process magazine flats only, but the production and cost experience gained could pave the way for reconsolidation programs for most flat mail, including catalogs. Flats processing costs have become a growing concern for the USPS, as well as mailers. Speaking at a recent Mailers Technical Advisory Committee meeting, Postmaster General Jack Potter said: "I have a couple of passions, and one of them is doing something about flats. The USPS has significant flats cost issues. We need any help we can get." MPA and ABM agreed to co-sponsor the pilot operation last November.

The pilot will include magazines of all circulation sizes, providing effectively equal distribution cost and delivery efficiency through a third-party logistics supplier. Smaller-circulation magazines that have been unable to achieve discount and transportation economies will, naturally, see the largest savings, notes Seymour. However, large-circulation magazines are also expected to see incremental benefits. Those that provide major volumes of carrier route-sorted mail today should realize additional postage reduction through reconsolidation of 20 percent or more of their volumes in what is called "tail-of-the-mail" or non-carrier route-sorted volumes, he reports.

Right now, very few large-circulation publications drop-ship at Destination Delivery Units (DDU's). Most drop-ship at Sectional Center Facilities (SCF's). By using a third-party reconsolidator, all publications will be co-mailed, presorted to carrier route and destination-entered.

In addition to cost savings, reconsolidation is expected to maintain home delivery times and possibly help reduce overall printing and distribution schedules.

At present, flat-mail processing results in four mail streams, converging as trays or packages of periodicals on a carrier's sorting shelf destined for that carrier's route, Seymour explains. The pilot process would reduce this to just two processing streams. One stream will result from reconsolidation, with all magazines co-mailed, sorted to carrier route and entered at the DDU on pallets. The other stream is unsorted residue.

The third party will coordinate reconsolidation efforts from multiple printers, thereby achieving maximum destination volumes, according to Seymour. DDU entry pallets are rarely possible through postal processing channels because of multiple incoming mail streams and the need for specialized co-mailing equipment. Third-party reconsolidation enables just one intermediate processing step, one intermediate dock transfer and handling, and only two "legs" of truck transportation prior to entry, as mail at the destination post office from which the carrier delivers.

"With reconsolidation, the publisher creates a magazine and pays for its manufacture and distribution into the postal carrier's hands," says Seymour. "From that point, of course, the Postal Service is the only national resource capable of delivering to every American home six days each week."

Publisher costs for trucking magazines from the printer to the reconsolidator and having them presorted and trucked to DDU's should be lower than the costs for the same services through the USPS.

Large publishers are on board with this pilot project, but getting smaller publishers involved has proved more difficult because of lower awareness of the initiative.

"Often, smaller publishers are not members of associations, and it can be difficult for us to locate the right contact person within these companies," says Seymour. He encourages smaller-circulation magazines to visit a Web site that has been created to explain the project (www.recouncil.org/bindery2002) or call 847-446-0438.