B-school chalks out Dept of Posts revamp

B-school chalks out DoP revamp

Department of Posts may get a fresh lease of life if Jamnalal Institute of Management Studies (JBIMS), Mumbai, has its way. A team of students from the business school has chalked out innovative strategies to revamp the business of India Post, which is the most-widely distributed post office system in the world with more than 155,000 post offices
The strategies provided to make postal services commercially viable include tying up with fast moving consumer goods (FMCG) companies, gift shops, cellular service companies, banks and other financial institutions to deliver their products, mobile bills and debit/credit card statements.
The paper is part of ‘Strategym 2009’, the annual business convention of JBIMS, to be hosted on October 27 and 28. In the past, the business school’s papers have been adopted by renowned corporations like LIC and UTV, to name a few.
“We are in talks with some FMCG companies and postal officials to explore opportunities of setting up a website, where companies can post details of their products and consumers can order them and pay by cash on delivery or by credit card. The postman can collect the goods from the FMCG companies and deliver them to the consumer. Apart from getting the deepest possible penetration for the companies, this model will also get regular business of high volumes to the postal department, whereas the end consumers will get home delivery of all the FMCG products on time, thus providing a win-win situation to all. The revenue-generating strategy will first be implemented only in major metros,” says Bhushan Dhade, a team member.
The students also propose to make post offices work in two shifts between 8 am to 8 pm, instead of the current norm of closing at 5 pm, thus optimally utilising its manpower and other infrastructure, and making itself more approachable to the general people who work between 9 am and 7 pm. The students believe that, instead of a voluntary retirement system to cut down on manpower, increasing the working time with two shifts will be in the best interest of the postal department’s over 500,000 employees.
As part of the study conducted to revive one of the oldest sectors of the country, the students visited remote areas of Uttarakhand, Himachal Pradesh, Karnataka, Rajasthan and other states in India, where they found that most farmers and villagers still borrow money at exorbitant interest rates from local money lenders.
The students suggest that if the postal department’s huge deposits of its postal savings scheme can be given as loans to poor farmers and villagers against a collateral security of land or precious jewellery, it will provide poor people in rural India an exploitation-free source of money at much lesser interest rates. On the other hand, the money in savings scheme will be utilised in a better way.
Other strategies include delivering mobile bills and debit/credit card statements, assuming that the department can charge Rs 10 for a mail being delivered with a guarantee of delivery within 48 hours. The team also suggests tying up with gift companies from where the gifts can be directly mailed to the consumer by the postman.
The six-member team, which aims to make the department self-financing, worked on the rationale that post is a primary means of communication for a large part of the Indian population but very little attention has been given to it. Situation is such that perhaps India — along with its neighbours, namely Pakistan and Bangladesh — are the only countries wherein the postal department has been so bereft of reforms.
The study states that, on an average, a post office serves an area of 21.26 sq km and a population of 6,602. Postal services encompass three broad areas of activity — retailing postal products and services, transmission of postal articles and delivery of postal articles.
Owing to the far-flung reach and its presence in remote areas, India Post is also involved in other services such as small savings banking and financial services and is also utilised by other departments of the Central government and state governments to perform several functions on their behalf. But, due to slow induction of technology and old staff norms, manpower costs increased exponentially.
Corresponding adjustment of product and service pricing lagged behind expenditure in a soft state, which perceived postal services as the common man’s means of communication and, therefore, needed to be under-priced with the state picking up the subsidy tag. The postal deficit met from the general budget increased 1632.8 per cent from 1998-99 to 2008-2009 to reach Rs 5,395 crore, competing for top place with food and fertiliser subsidies