CASE STUDY No. 9609

KEY WORDS ENVELOPES, INVOICES, SEND-RETURN COMBINATION

Federal Express Corporation
3350 Miac Cove
Memphis, TN 38118

Contact: Henry A. Coats, Senior Quality Assurance Analyst. Tel: 901-360-5069 Fax: 901-360-5307

Summary

FedEx cuts envelope and warehousing costs, reduces paper consumption and waste by using a combination send-and-return envelope for mailing invoices to customers.

Action

Federal Express did not originally include a return envelope with its invoices to customers. But in 1992, in response to customer requests that a payment envelope be included, FedEx studied the overall cost and benefit of doing so. It was anticipated that most users of the return envelope would be smaller customers--those receiving no more than 11 to 12 pages of billing details in a typical invoice, with the entire mailing weighing no more than 2 ounces. For various reasons, it was believed that larger customers would not benefit from the inclusion of a payment envelope--they would probably have invoice processing and check mailing systems that could not readily accommodate the insertion of an envelope from an outside source. In fact, FedEx already was segregating its invoicing along these lines--invoices to larger customers were not mailed but rather delivered by FedEx couriers.

FedEx adopted as its standard billing mailer a No. 10-size, combination send-return envelope designed and manufactured by Tension Envelope Corp. (901-743-3300). FedEx currently prepares about 125,000 invoices a day.

Payback

Fedex did not disclose its envelope costs. However, the envelope manufacturer says an average user saves 15% immediately compared to the cost of purchasing separate send and return envelopes. In very large volumes, the saving would fall in the range of $2.25 to $2.50 per thousand envelopes, according to a spokesman for Tension Envelope Co. Some users of send-return envelopes also report a positive effect on cash flow. Although this is difficult to explain, one theory is that the extra involvement of the recipient in following special instructions for opening a send-return envelope focuses immediate attention on the invoice. The send-return envelope also reduces "white mail"--payments from customers in an envelope other than the return envelope provided with the original invoice. Atlantic Electric Co., for example, had an 8% "white mail" rate when it used two separate envelopes for invoicing. The rate dropped to 4% with introduction of a send-return envelope, the company reported.

Additional Waste Prevented

  1. The send-return envelope requires about 30% less paper to manufacture than two separate envelopes.
  2. Because one envelope replaces two, warehousing and handling costs are cut about in half.
  3. For companies that prepare invoices to customers using automatic inserting equipment, the single, dual-purpose envelope frees an inserter station for other uses.
  4. Since only a small strip of paper is removed to convert the mail-out envelope to the mail back envelope, 90% of the envelope is returned for recycling.

The adoption of send-return envelopes has worked best when based on a "green" issue--an environmental concern--according to Tension Envelope Co. FedEx believes the message it sends to customers about waste prevention is an important justification of using a send-return envelope. Positive feedback from customers confirms this view, company officials say.

 

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