Why should CEP operators choose an O&M solution over an in-house team?

In certain CEP environments, opting for an external operations and maintenance (O&M) solution over using in-house O&M staff can make more business sense. We explore why an O&M solution may be preferable to an internal solution for CEP operators.

By Franco Migliorati and Bert van Willigen

What is an O&M solution?

Modern automated sortation systems can be complex and can take a certain level of expertise before CEP operators can achieve the optimal system performance with the greatest availability.

For traditional CEP companies such as postal public postal houses, it was commonplace to develop their own operations and maintenance departments in parallel with the development of their sortation equipment. As state postal organisations became increasingly mechanised, they had to ensure they could be robust and independent, with their own engineers on site.

As the CEP industry became more competitive, some CEP companies started to question whether it would be more cost-effective to outsource their O&M work. Perhaps by relying on external O&M support, they would gain increased flexibility and the right knowledge and skill sets to optimise their system performance.

The promise of an O&M solution

An external O&M solution (or a residential service) is how a CEP company can completely unburden itself of its O&M requirements.

A residential service makes sure the system or the technology used by the operator delivers the required functionality for a defined period against a defined cost. The ultimate promise of residential services is that the supplier of the services ensures the CEP operator can keep its commitments to its end customers against a reasonable cost. Every day of the year. Year after year.

O&M solutions become increasingly remote but always available

While residential services have traditionally been deployed on site, we are seeing the development of more remote services. With data-driven preventative and predictive maintenance, system breakdowns are becoming less frequent. It is even possible to run processes well without having an engineer onsite or with a limited ‘partial residential service’ setup, particularly after the residential services team has trained the customer staff.

Why choose an O&M solution?

In engaging residential services, CEP operators can gain significant advantages which may explain why many operators are increasingly looking externally for their O&M solutions. We look at the advantages in turn.


Firstly, externally-operated residential services are often more cost-effective O&M solutions than “own” O&M departments within the CEP business.

The needs of each CEP business are not always the same. One business may not always need 100 percent system performance; it may be that for 80 percent of the year, it can manage its operations with less. External residential services are able to provide just the right amount of service the operator needs and not over-service it. In some cases, it can also scale up and down in accordance with the operator’s requirements over the year.

Greater flexibility and a larger pool of support

Residential service teams can also offer greater flexibility and availability. If one of its team members falls ill, it’s easier to secure contingency with residential service teams than with your own staff.

Conversely, contingency planning can be difficult for CEP businesses with in-house teams, as the teams are limited in resources, in the variety of services they deliver and around-the-clock availability.

Industry knowledge and expertise

A significant advantage of engaging residential services is the industry-wide knowledge they bring. O&M providers have many O&M contracts all over the world, so have easy access to in-depth knowledge from a skilled global workforce – from first, second and third-line experts. Access to these experienced professionals also exposes the CEP operator to potential opportunities and innovations in the industry.

With this extensive experience and know-how, residential service providers have the insight to know what worked for one CEP customer may well not be an effective solution for another customer. Residential services teams are founded on a culture of continuous improvement and best practices, so come with the most up-to-date knowledge and innovations.

An in-house team O&M, however, may not have access to the technical expertise that the residential services team has, or know the preventive or corrective actions that need to be performed. Nor will it have direct access to the global support structure that is available to the external O&M residential services teams.

Mentorship, training and development

Residential services can also train the CEP operator’s staff to drive the optimal performance of their sortation systems. The more training, coaching and guidance the operational staff receive – floor teams as well as floor management – the greater the possibility of achieving a flawless operation, higher system output and fewer breakdowns.

Residential services teams often end up as mentors or subject matter experts that CEP staff can rely on to develop and improve their skills and performance.

For CEP businesses with their own O&M teams, training can be a substantial and ongoing responsibility. The retention of organisation and operational knowledge then becomes problematic for the business as any new staff must be trained over again. As more and more CEP operators seek higher levels of staff education, there is a further danger that these highly-skilled O&M staff become disinterested as fewer breakdowns occur.

Working partnership based on trust

The best form of residential services solution a CEP operator can expect from its residential services provider is a partnership based on trust and transparency. Working in full cooperation with a dedicated team that knows the ins and outs of its business can help the CEP operator succeed in fulfilling its customer promise of timely and complete deliveries.

An effective O&M solution with true partnership goes beyond the performance of the O&M contract by the letter and fulfilling the KPIs. It is about taking ownership and being clear to the CEP operator on a daily basis that the O&M team is delivering the best service possible to ensure it can meet its commitments to its end customer. Reporting and transparency should include clear information when the provider has missed something and where there is room for improvement.

Long-term success vs short-term gain

Importantly, a residential services team is interested in the long-term success of the CEP business over a short-term gain. The O&M service provider’s mission is to lead with a long-term perspective, with the ability to set strategic directions that deliver value and quality performance over the long haul.

Residential teams work with data analytics

In today’s pressured parcel environments, being able to leverage data analytics is one of the tools a CEP operator must master.

Data analytics, however, is not a simple tool. It is one thing to have a traffic-lights type dashboard but it is another to use these advanced tools to really understand how the sortation machines are working in the daily process. Data engineers can look at an operation and literally distil how it functioned today to improve tomorrow’s operations.

By having access to the data experts of a residential services team, CEP operators gain expertise on how to use data at a higher level. Data professionals are able to interpret data, bring to light what’s hidden in the data and reveal deeper insights. As in-house teams don’t generally have access to this level of expertise, residential services can skillfully fill a knowledge gap.


Without viable O&M support, many CEP operators will not be able to operate at optimal performance. Deciding to outsource residential services is a very cost-effective solution for the CEP business that is lacking certain skill sets or that is not wanting to overextend its operations or has no contingency plans for when its O&M resources are limited. Furthermore, CEP operators gain industry-wide knowledge from expert professionals who are exposed to the most up-to-date knowledge and innovations.

Subscribe to our newsletter