SAPO – SA Post Office Keeping Up With The Times

In a time of upheaval at one of South Africa’s most recognised institutions, the SA Post Office (Sapo) is developing a stabilisation strategy which will allow it to restructure and streamline before it advances with a growth scheme that will see it become a first-class government organisation that proudly serves the nation.

Threatened by legacy efficiency issues, public trust problems, stiff competition, capacity restrictions and now the coronavirus outbreak, Sapo is facing an uphill battle to reposition itself as the industry leader. But the business is resilient and is facing challenges head on, offering up innovation, collaboration, and cultural improvements to help overcome even the largest obstacles.

“In a fast-changing world, being well-established could easily mean being inefficient and outdated – especially if the organisation in question is a State-Owned Entity, constrained by much stricter and complicated legislation and regulations,” says Group Executive: Operations, Zukiswa Ntsikeni.

“Before the Post Office’s future plans can fly, it needs to be stabilised. We have progressed immensely along the road of stabilising operations. The future plans include launching an online e-commerce platform. It will be different from others in the sense that it focuses on small and medium enterprises in rural areas.”

But, while longer-term plans are starting to be rolled out, the issue at the forefront of most people’s minds is coronavirus. With the nation subject to movement restrictions and advice to stay at home where possible, delivery of essential mail has become more important than ever before. Communication surrounding the best way to beat the virus has been largely digital, but physical mail will also play a part. However, there is a nervousness – both locally and globally – around all forms of human contact, even around a postman delivering mail.

Sapo is clear that all precautions are being taken and that the organisation will do everything to ensure a level of normality.

“The coronavirus has a very short life on surfaces and international mail operators have methods to eliminate possible contamination of items. Still, our employees are concerned, and they have been issued with gloves and masks to wear when handling mail. This is available at our international sorting centres in Johannesburg, Cape Town and Durban. We also give workers at other, smaller sorting facilities masks and gloves,” details Ntsikeni.

Pre lockdown, Acting CEO Ivumile Nongogo was crystal clear that Sapo would do everything to ensure South African Social Security Agency (SASSA) social grants are paid.

“We are designated to provide this important national service and we are cognisant of the importance of social grants for a sizeable part of our population constituting mostly vulnerable people.

“In order to minimise transmission risks, Sapo’s retail employees will be restricted to operating beyond one meter of each other.

“Measures have also been put in place to control the distance between queueing customers, as well as providing requisite queue marshalling services during peak times in the busy branches. Hygiene improving provisions such as sanitisers, gloves and masks are being made available to retail employees.”

All SAPO branches remained open during lockdown and 882 were designated as vital in the delivery of social grant payments. Delivery of medical supplies and other essential items through the post office system would continue but mail services, parcel deliveries and other support operations were suspended alongside the Post Office customer services contact centre which was not available. All mail collections were also completely suspended during the 21-day lockdown.

COURIER AND TRANSPORT

Investments into fleet, processes and culture have seen Sapo come a long way in just two years. In 2018, Sapo had a very hard time delivering its two million items per day with only 586 vehicles – that’s more than 3400 items per vehicle.

To remedy the situation, Sapo signed contracts with Avis and FleetAfrica in 2019, bringing its fleet up to 1200.

“This has drastically changed the service levels,” confirms Ntsikeni. “In 2018, our courier volumes had dropped to just over 100,000 items per month, performing at 40% of conformance to standard. Today, we are performing at 90% conformance in the courier division.”

Fleet investments played a big part in this improvement but culture change and communication among employees has also contributed. Continuous efforts to involve staff at all levels and ensuring the realisation of the importance of Sapo work is an ongoing effort.

“We have appointed our senior managers in Operations and are finalising our area manager recruitments. When they start in their new positions, we will see a drastic improvement in service levels.

“We have reduced the control span which was previously excessive. Where area managers used to look after 40 or 50 branches, we now reduced it to no more than 30 allowing the manager to touch each branch at least one a month.

“At first it will be necessary to visit a branch more than once a month, later it can be reduced. Similar to the area manager positions, we recruited tellers and branch managers internally. The benefit of that is that our employees see a career opening up for themselves, and we will train and upskill those that find themselves out in the cold,” explains Ntsikeni.

PROCESS IMPROVEMENT

In terms of processes, Sapo has and continues to overhaul its entire system. From local and international delivery to expedited mail to courier and transport services, all processes are being reviewed to drive improvements. The new Board, appointed in October 2019 to revive Sapo after a decade of losing money, has put profitability at the heart of everything it does.

“We have plans to implement a route optimisation system where drivers will be directed through the most cost-effective routes,” details Ntsikeni. “This is a fleet management system that assigns a driver to a vehicle through a biometric system; it is allocated to a zone. When you leave the zone, or drive recklessly, the control room is notified.

“Mobile phones with the optimisation system will implement a system for electronic proof of delivery,” she adds. Currently, Sapo uses a manual system and details have to be captured after the event. The new electronic system will scan everything immediately and details will be uploaded right away via the mobile network. This information is vital for businesses to confirm that the recipient has signed for their goods. “It will allow us to start billing quicker – great for our cash flow,” states Ntsikeni.

The system will also reduce cash in transit by allowing customers to transact in a contactless manner. Some international parcels require the collection of cash by drivers, but Sapo is keen to eliminate this risk. In 2018, industry bodies declared the ongoing threat from criminals targeting cash in transit a national disaster. Sapo’s new system is centred around safety.

“The money will go into our bank account much quicker. It is a tap-and-pin system so the card never leaves the customer’s hand, but the purchase is safeguarded through the PIN verification. This is much safer and eliminates the risk, cost of cash and the inconvenience to the customer,” confirms Ntsikeni.

GLOBAL MAIL

Another point of frustration, this time for those looking to ensure their parcels get to their destination from abroad, was the lacking tracking information available when parcels move from international transporter into South Africa.

“‘Once the item is in your system, I cannot see it,’ said the customers,” admits Ntsikeni. “Those days are over. The SA Post Office has switched to an international system – Universal Postal Union’s IPS tracking system. Items no longer get a new tracking label or new tracking number when they come into South Africa.

“The item can now be tracked seamlessly and we are able to use our employees far more productively.”

Integration internally has also improved capacity, and is allowing for parcels that arrive from international markets to be delivered more effectively.

“The Post Office used to work in separate units that shared very little,” admits Ntsikeni. “Logistics trucks would leave a mail centre with space to spare – and then there would be incoming international mail that was left waiting for its own, dedicated transport. Now, with the integration of international and logistics departments, we make sure that transport is available universally. Where necessary, international mail drivers are also available for logistics.”

When it comes to sending items out of South Africa, yet again, there had been serious hold ups in the past. Collaborating and partnering with South Africa’s Civil Aviation Authority has helped to ease the strain and Sapo is now a trusted service provider with the ability to clear outbound mail.

“We can detect the presence of items in parcels that are not allowed on aircraft and return that parcel to sender. We are now a regulated and licenced clearance agent. Our mail now leaves the country much quicker and we are saving money. In fact, we can now clear mail on behalf of other service providers and charge them for it,” explains Ntsikeni.

Perhaps one of the biggest success stories has been Sapo’s ability to turn inefficient infrastructure into revenue generating capacity at the same time as helping rural South African communities. For some time, Sapo long-haul vehicles would run various legs of journey at less than 50% capacity. “Empty space is wasted potential income,” states Ntsikeni.

Today, the sales force has managed to engage with other players in the transport and logistics markets to fill this space. “This improves service standards on all sides and improves the bottom line.

“In remote rural areas our competitors have very little presence – the Post Office does,” reiterates Ntsikeni. “In line with the modern trend of partnerships, we have engaged our competitors here. The Post Office can collect and deliver their parcels in these remote areas for them, saving them exorbitant cost – and again benefiting the Post Office’s income.”

This collaborative approach demonstrates a new willingness to reach out and engage other companies in the country while achieving an end goal for clients. The idea was developed from a similar system which has been operating in China for some time where community stores have been put up to pool all parcels in rural areas.

FASTER, STRONGER

In March, SA Post Office new Chairperson, Colleen Makhubele delivered a damming round up of the business as it stood.

“After our appointment in October 2019, we found an organisation which has been losing money for the past decade; a qualified audit report that was not being adequately addressed; governance lapses; wasteful expenditures; a post office with no executive committee and right management to address the strategy; operational and financial risks and inefficiencies and low staff morale in almost all departments.”

Of course, this environment had resulted in inefficiencies but a strategy to reposition the business was quickly installed. Now, effective performance is measured like never before, innovation and technology adoption is encouraged at every opportunity, staff are involved in all communication, and results are showing, as Ntsikeni explains.

“Our general day-to-day performance for regular mail is consistently improving as a result of better equipment and a focus on employee communication. Best of all, we are also improving when it comes to time sensitive Fastmail items. The volume of Expedited Mail Service items from other countries rose by close to 20% after we introduced new measures to improve the service. In May last year, international volumes were around 500,000 per month. It is now 1.8 to two million items per month. EMS showed the same trend, from 6000 items per month to 10,000 items per month.

“We were very happy to see customer complaints drop drastically, and disappointed toward the end of 2019 when they showed a rising trend. However, this is to be expected as mail volumes rise very much towards the end of the year as our customers order items online with a view to Christmas.”

For most companies, adopting a host of changes would then require time before tangible change is realised. For Sapo, the interventions are already being felt, and fortunately its customers that are seeing the benefit. “The proof is in the pudding, and our customers have understood that our service has improved,” says Ntsikeni.

DELIVERING UPSKILLING

Currently, the Post Office is a large employer – home to thousands of people. Cultural improvements are high on the agenda of management and new programmes to upskill, retrain and restructure are underway.

“We’ve started the upskilling program with maintenance,” details Ntsikeni. “For example, if you are a postman, perhaps advanced in years and no longer comfortable with delivering mail through your walk, you can be trained to become a certified maintenance worker. We intend to form maintenance teams, starting in the major mail centres in the Gauteng province. We are already speaking to Human Resources in this regard and the great thing is that we can use the Unemployment Insurance Fund grant to train these people formally as artisans.”

She is happy that this delivers the correct message both internally and externally: Sapo is restructuring, but it does not want to dismiss people. “We want to be sensible and not spend unnecessarily on contractors when we have capable people to do maintenance in-house.”

PROFITABILITY?

With all of the reforms in place to take the business back to profitability, Chairperson Makhubele underlined exactly what the challenging job of management was targeted around.

“Our job is to strategically position SA Post Office and use its distribution network, warehouses and retail infrastructure as a service platform to be leveraged for profitability, innovation, service delivery and of course to enhance its universal social obligations,” she said.

At the same time, Sapo holds the vision of being the trusted exchange channel of service delivery in South Africa respected for relevance, reliability, reach and resilience.

So how will South African’s benefit from a new digital, efficiency, and people focussed strategy? The launch of the new online ecommerce platform is one great example.

“Maybe you manufacture and sell curios to tourists in a remote village,” proposes Ntsikeni. “For the first time, you can now advertise your goods online, receive your orders through our system, and send them off for delivery from your local post office.”

Perhaps you require delivery of essential medication? “We deliver for the Department of Health to selected post offices. We plan to extend this service further, and we are planning to offer some exciting, and essential, services at our post office branches on behalf of Home Affairs.”

For South African drivers, Sapo has become an important tool. “The Post Office also sees itself as front office for government,” says Ntsikeni. “South Africans can already pay their car licence at selected post offices in seven out of the nine provinces. We will expand this success story even further – each financial year, more than three million motorists renew their car licences at a post office.”

Of course, efficient payment of SASSA will remain a priority. “Every month, more than 11 million South Africans receive grant payments on time. Since the Post Office took over payment of SASSA grants, there was no month that beneficiaries were not paid. We wish to assure all South Africans that this social obligation will never change,” said Makhubele in March.

This new strategy, new structure, new focus and new optimism is propped up by two outstanding characteristics: more than 1500 branches all over South Africa, and an established reputation as part of society.

“As our network covers all of South Africa, there is sure to be a post office near you – an advantage we plan to use to the full,” says Ntsikeni.

Despite the issues that are sure to arise from the growing coronavirus pandemic, Sapo is there to serve the needs of South Africa and will continue to do so in a faster, better and more sustainable manner.