More than 12,000 radio frequency identification tags are being used in letters every month to track the delivery of mail by Australia Post.
The government business enterprise has replaced manual monitoring of mail delivery with RFID tags.
In its annual report released Wednesday, Australia Post said RFID monitoring of mail came into effect in July after being run in parallel with manual monitoring for six months.
"We installed radio frequency identification technology that will enhance our ability to monitor our service performance and provide a better analysis of potential problems within our delivery network," the report said.
Under the system, monitoring company Research International inserts RFID tags into "test letters" that can be tracked throughout the course of their journey.
"Whereas the previous system measured our overall postal performance, RFID technology will also provide intermediate measurement points throughout the journey of test mail items.
"This detailed information will enable us to better identify and solve any problems that arise within the mail network," the report said.
Many tags were recovered and reused, according to Australia Post.
Australia Post has installed new hardware, software and monitoring equipment in its nine metropolitan letter processing facilities, as well as in 21 country mail centers, 23 delivery centers and in 16 mobile units.
Audit firm Deloitte Touche Tohmatsu is providing quarterly and annual certification of Australia Post's performance.
Under the Australian Postal Corporation Act 1989, Australia Post is required to meet a standard of 94 percent on-time delivery of items. Post delivered 95.6 percent of domestic mail on time or early in the past financial year.
Steven Deare of ZDNET Australia reported from Sydney.