IDENTITY CRISIS

May 01, 2002 9:30 PM  By

FUEL PRICES AREN’T THE ONLY SHIPPING COSTS going up these days. Even if operations executives devote themselves wholeheartedly to penny pinching, the one major expense they can’t control is postage. The U.S. Postal Service’s rate hikes may amount to just a few dollars a year for the average consumer, but for companies that send mailings by the hundreds of thousands, those pennies can quickly add up to millions of dollars. Long Lake, MN-based Drop Ship Express (DSE) offers innovative services that help companies keep postage fees on the revenue side of the balance sheet.

DSE client Wellmark Blue Cross and Blue Shield of Iowa, a Des Moines-based HMO serving 1.7 million members, had the challenge of mailing identity cards quickly — because of the time-sensitive nature of health care — and cost-effectively. Wellmark had a self-imposed window of 72 hours to get ID cards into the hands of new members, and before DSE stepped in, didn’t meet this standard consistently. It took a considerable amount of time to bundle ID cards with benefit certificates, and because of the personal nature of ID cards, the entire package had to be sent first class. According to Mary Wells, team leader for Wellmark’s mail processing center, DSE was able to save the company over $700,000 in postage by sending ID cards first class and benefit certificates third class. In addition to the cost savings, DSE was able to fulfill ID cards within Wellmark’s 72-hour window.

Originally, matching identity cards and benefit certificates had been done manually, further slowing fulfillment. Wellmark has now been able to remove manual touches from the process. “By separating the ID card from the certificate, we made this a machine process, getting those items out the door much faster,” Wells says. “In essence, we’re saving a day or two. If we have a group of 20,000, we can get these items run on a machine in an hour, which would take a couple of days by hand.”

Bill Harper, Wellmark’s director of corporate services and chief procurement officer, says that not having to match ID cards and certificates using DSE’s automated system further cuts down fulfillment time. Previously, Wellmark had to pay employees overtime and bring in temps to complete fulfillment. Cutting out these extra labor expenses has further helped Wellmark realize significant cost savings.

Harper adds that speedy mail fulfillment is not typically a core competency for many companies, but was essential for his business. “It’s better to look outside and find what you can get to enhance what you’re doing,” he says, although he cautions that other areas in which Wellmark has explored outsourcing have not come close to giving the benefits gained by partnering with DSE. “Outsourcing is a very valuable tool, but to be effective and efficient with it, you first need to understand your own internal processes.”