® Flats Sequencing System Update Managers of Delivery Programs Support March 5, 2008

®

Flats Sequencing SystemUpdate

Managers of Delivery Programs SupportMarch 5, 2008

AgendaAgenda

Flat Volume

Phase 1 Deployment Update

Dulles Pre-production Operation

Mailing Industry Changes / Update

Field Implementation

Annual Flats Volume Annual Flats Volume

Periodicals17%

First-Class Mail8% Standard Mail

75%Standard Mail

75%

FY 2007

52 Billion FlatsFY 2007



54 Billion Flats

Percent Change

-3.3%

Class Breakdown Unchanged

Flat Volume – Class Breakdown FY 2008 Flat Volume – Class Breakdown FY 2008

7%

17%

53%

22%

1%

F irs t-C lass Mail

P eriodicals

S tandard Mail w/o S at

S aturation

Other

Periodicals

Standard w/o Saturation

Saturation

First-Class

Other

Post Rate Case Flat Volume ComparisonPost Rate Case Flat Volume Comparison

May June July Aug Sept Oct Nov Dec Jan

SPLY 4,452,181 4,120,631 3,850,627 4,655,927 4,696,848 5,831,920 5,188,039 3,941,061 4,423,839

2007/08 4,173,155 3,650,039 3,743,145 4,264,392 4,038,751 4,985,502 4,727,329 3,521,277 3,950,168

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Pie

ces (0

00)

Total Flat VolumePost Rate Case - SPLY Comparison

-6.3

-11.4 -2.8

-8.4-14.0

-14.5

-8.9

-10.7

-10.7



SPLY 369,516 346,908 329,316 363,757 340,617 379,740 368,600 324,958 376,242

2007/08 343,128 305,531 300,131 312,596 289,177 330,067 314,603 276,765 308,812

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Pie

ces (0

00)

First Class Flat VolumePost Rate Case - SPLY Comparison

-7.1

-11.9-8.9

-14.1-15.1

-13.1-14.6

-14.8

-17.9



SPLY 747,635 778,010 628,246 756,208 741,440 752,113 713,028 679,234 750,075

2007/08 734,039 711,025 641,347 728,284 701,403 787,593 700,359 683,598 741,601

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Pie

ces (0

00)

Periodical Flat VolumePost Rate Case - SPLY Comparison

-1.8-8.6

2.1

-3.7-5.4

4.7

-1.8 .6

-1.1



SPLY 3,290,042 2,950,056 2,836,093 3,469,809 3,565,234 4,647,268 4,056,020 2,883,294 3,243,473

2007/08 3,052,420 2,590,146 2,751,701 3,157,044 3,000,497 3,818,013 3,659,999 2,511,388 2,853,394

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

Pie

ces (0

00)

Standard Flat VolumePost Rate Case - SPLY Comparison

-7.2

-12.2-3.0

-9.0-15.8

-17.8

-9.8

-12.9

-12.0

YTD - FY 2008 SPLY Comparison YTD - FY 2008 SPLY Comparison

First-Class Periodicals Standard Total Flats

FY 2007 1,218,398 2,908,756 12,917,249 17,241,789

FY 2008 1,449,540 2,894,450 14,830,056 19,384,859

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Vo

lum

e (

Pie

ces 000)

Flat Volume by Class & Total Volume SPLY Comparison

FY 2008 YTD vs. SPLY Flat Volume Comparison Oct - Jan

FY 2007

FY 2008

-15.9

-11.1

0.5

-12.9

Cased Flats FY 08 vs. SPLY Comparison Cased Flats FY 08 vs. SPLY Comparison

Oct Nov Dec Jan Feb

SPLY 3,322,648,181 3,534,217,610 2,526,864,861 2,849,986,414 2,544,027,675

FY 2008 3,163,957,132 3,237,171,104 2,457,106,049 2,683,634,574 2,466,927,104

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

Vo

lum

e (P

iece

s)

FY 2008 vs. SPLY Case Flats (City Delivery)

SPLY

FY 2008

-4.8% -8.4%

-2.8%-5.8%

-3.0%

Flats by Product Class: RPW (Qtr 1 2006 - Qtr 4 2007)Flats by Product Class: RPW (Qtr 1 2006 - Qtr 4 2007)

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

1

2

3

4

Qu

arte

r

First-Class Periodicals Standard

Seasonal variation from yearly average

Flats by Product Class: RPW (Qtr 1 2006 - Qtr 4 2007)Flats by Product Class: RPW (Qtr 1 2006 - Qtr 4 2007)

Normalized to single FSS machine

68%188.7Standard

21%59.0Periodicals

11%29.9First-Class

%Vol (000)

68%188.7Standard

21%59.0Periodicals

11%29.9First-Class

%Vol (000)

69%181.5Standard

21%54.4Periodicals

10%26.0First-Class

%Vol (000)

69%181.5Standard

21%54.4Periodicals

10%26.0First-Class

%Vol (000)

Qtr 4 (Jul – Sep)

Qtr 2 (Jan – Mar)

72%230.3Standard

19%59.0Periodicals

9%29.6First-Class

%Vol (000)

72%230.3Standard

19%59.0Periodicals

9%29.6First-Class

%Vol (000)

66%172.4Standard

23%61.9Periodicals

11%28.2First-Class

%Vol (000)

66%172.4Standard

23%61.9Periodicals

11%28.2First-Class

%Vol (000)

Qtr 3 (Apr – Jun)

Qtr 1 (Oct – Dec)

69%193.2Standard

21%58.9Periodicals

10%28.4First-Class

%Vol (000)

69%193.2Standard

21%58.9Periodicals

10%28.4First-Class

%Vol (000)

Yearly Average

FSS Candidate Volume

Phase 1 Deployment Phase 1 Deployment

29 Districts

33 Processing Facilities (FSS Locations)

● 28 Existing Processing Centers

● 5 New Facility Project (Integrated FSS Space)

2 - 5 Systems per Facility

1,500 Zones, or more

Phase 1 FSS Deployment SitesPhase 1 FSS Deployment Sites

Area Districts#

FSSPlants / Facility

NYM

Northern NJ

Long Island NY

Central NJ

4

3

3

NJ BMC

Mid Island NY P & DC

Trenton NJ P & DC

NE

Boston

Massachusetts

Connecticut

SE New England

3

4

5

3

Northwest Boston P & DC

Middlesex Essex P & DC

Springfield BMC

Providence RI P & DC

EA Columbus 3 Former Columbus P & DC

SESouth FloridaAtlantaCentral Florida

544

New Miami Facility ProjectAtlanta BMCOrlando P & DC

WE

Colorado / Wyoming

Arizona

Mid America

5

5

2

Denver P & DC

New West Valley (Phoenix) Facility Project

Kansas City P & DC

Phase 1 FSS Deployment SitesPhase 1 FSS Deployment Sites

Area Districts#

FSSPlants / Facility

PA

Los Angeles

Sacramento

Bay-Valley/San Francisco

Sierra Coastal

Santa Ana

San Diego

2344232

Herb Peck AnnexSacramento P & DCSan Jose P & DCVan Nuys Main OfficeAnaheim P & DCNew Aliso Viejo Facility ProjectNew Perris DPC Facility Project

CM

Greensboro

Northern VARichmondCapital

22442

Raleigh P & DCGreensboro P & DCDulles P & DCNew Richmond Facility ProjectCurseen-Morris P & DC

GL

Greater Indiana

Northern IL

Central IL

Southeast MI

232222

Indianapolis MPAPalatine P & DCCarol Stream P & DCFox Valley P & DCSouth Suburban P & DCNew Royal Oak Facility Project

Dulles VA P & DCPre-production Operation UpdateDulles VA P & DCPre-production Operation Update

Dulles Pre-production StatusDulles Pre-production Status

Install Complete Oct 2007

● Integration/ Machine Testing Nov 2007

● Live Mail Ramp-up Dec 2007

● Second Zone Added Jan 2008

● Field Pre-Test/Test Feb/Mar 2008

● Full Machine Ramp Up May 2008

18

Dulles FSS Installed & Sequencing FlatsDulles FSS Installed & Sequencing Flats

19

Dulles FSS Installed & Sequencing FlatsDulles FSS Installed & Sequencing Flats

Dulles Live Mail Ramp-upDulles Live Mail Ramp-up

21

Dulles Stand Alone Mail Prep (SAMP)Dulles Stand Alone Mail Prep (SAMP)

22

Dulles AFSM 100 Dolly InductionDulles AFSM 100 Dolly Induction

Dulles Live Mail Ramp-upDulles Live Mail Ramp-up

Reston VA, Zones 20190 and

20194 Started December 4th

● December Low Flat Volumes

● Runs Have Exceeded 40K

● Taking DPS Flats to the Street

Fairfax VA, Zones 22030

Started Jan 22nd

● Runs Have Exceeded 40K

● Taking DPS Flats to the Street

Testing and Ongoing Zone Ramp-up in MarchTesting and Ongoing Zone Ramp-up in March

24

Dulles Pre-production OperationDulles Pre-production Operation

Operational for 1 Year December & January Zones:

● Reston 20194 and 20190

● Fairfax 22030

March and Beyond● Burke 22015

● Culpepper 22701

● McLean 22101

● Alexandria Belleview 22307

● Alexandria Engleside 22309

● Falls Church 22043 and 22046

● Sterling 20164

25

Mailing Industry ConcernsMailing Industry Concerns

1. Address Location / Address Construction

2. Mail Entry

• Entry Points

• Critical Entry Times

3. Mail Prep in FSS Environment

26

Standard Address Construction / PlacementStandard Address Construction / Placement

Federal Register Proposed Rule

● Published 10/10/07

● Comment Period Through 12/10/07

● Final Rule Targeted in the Next 30 to 45 Days

Address Construction / Barcode

• 11-Digit POSTNET or IMB Barcode

• Minimum 8-point Type (approximately 1/10-inch high)

• Address Lines Cannot Touch or Overlap

• No More Than 3 Blank Spaces

27

Standard Address PlacementStandard Address Placement

Orient Address Location for Carrier Street Handling

• Parallel or perpendicular to top edge

• Cannot be upside down in relation to top edge

Joh

n D

oe

123 M

ain

St

An

ywh

ere, US

A 12

345

Joh

n D

oe

123

Ma

in S

tA

nyw

her

e, U

SA

12

345

Can face left or right

John Doe123 Main StAnywhere, USA 12345

Can be left or right justified, or centered.

Basic Standards

Specific Standards

Bound or Folded Pieces

• If parallel to top edge, entire address block within top half

• If perpendicular to top edge, one edge within 2.5 inches of top

Enveloped or Polywrapped

• No “bound edge” applies- top is either shorter edge

• Inserts must be secured

Both

• Address block must be at least 1 inch closer to the top than to the bottom

28

Mail EntryMail Entry

Number of Entry Points?

Critical Entry Times (CET’s)?

● Service Measurement Proposal

National Standardized CET’s

Standard Mail and Package Services

Local CET’s

First-Class Mail and Periodicals

Local Operating Conditions

What About CET’s for FSS?

29

PreparationPreparation

What Prep Changes Will be Needed?

• Current State → Future State

• Transition from CR-RT to FSS Schemes

How and When to Transition to FSS Environment?

What is Being Considered Now?

• MTAC Workgroup 115

• Bulk Flats Processor / Bundle Make-up

• USPS Looking at End-to-End Flats Flow and Data Exchange

• Federal Register Proposed Rule – Address Facing for Presort Bundles on Pallets

Field Integration Strategy / PlanningField Integration Strategy / Planning

FieldImplementationInfrastructure

FieldImplementationInfrastructure

Road MapRoad Map CommunicationCommunication TrainingTrainingReadiness

SupportTracking

ReadinessSupportTracking

Area Leadership

Area FSS Program Manager

Area FSS Team

District Leadership

District FSS Coordinator

District FSS Team

Facility Activation / Construction POAC (where warranted)

Microsoft Project Plans “District Implementation”

Space Readiness: Construction, Equip Migration, Install Plans

Guidelines:

• Policies• Integrated

Logistic Support Plan

• Methods Guide• Vendor

Training• FSS

Certification• Standardization• Lean Principles• Delivery

Readiness

Executive Level Communication & Briefings

Site Level Tactical Communication

• General Business Knowledge

• Change Management

• Functional Impacts

• Technical Impacts

Communication Tools

• Training• Stand-up Talks• Posters• Websites• DVDs / Videos

Area & District Project Manager Training – Grow Project Leaders

Dulles On-site Functional Training

Vendor Developed Training & (administered at local level)

USPS Developed Training (administered at local level)

District Readiness Assessments

• Processing• Delivery• Maintenance• Space

Readiness Reviews (Headquarters, and/or Areas)

Standardization / Certifications

Leave Behind Plant Resource s: Maint. Support

Capture Savings

Communicating Change

Corporate

Line Supervisors

MDOs, Postmasters& Station Managers

In-Plant , OPS & Support Functions

Area &District Leadership

Media, Resources, & TrainingKnowledge / Technical Information

CraftJob Instructions

Operating Policies & Procedures

Comprehensive Operating Knowledge

Strategies, Operating Basics & Policies

Strategies & General Knowledge

Comprehensive Operating Knowledge, Planning, Program Management & Policies

Job Aids & Training

Handbooks, Visuals, Videos, Quick Reference Guides & Training

Tools, Handbooks, Graphics, Videos & Training

FSS Overview & Understanding Materials

Strategic Transformation Plan & Presentations

Tools, Handbooks, Planning Models, Project Plans, Graphics, Videos & Training

Pla

nnin

g &

Rea

dine

ss

Day-to-D

ay

32

Field ImplementationField Implementation

Field Resources / Infrastructure

● Area FSS Program Managers

● District FSS Coordinators

● REATLs – FSS Impacted Districts

Field Resource Training

● Major Program Management / Project Leaders

Delivery/Customer Service Planning & Readiness Sessions

● Competed in January

FSS University – Leverage Dulles Pre-production Operation

● Beginning March 2008

● Cross-functional Classroom, Workroom Floor & Hands-on Experience

33

Field Implementation Planning – In ProgressField Implementation Planning – In Progress

Line Manager & Supervisor Training Strategy

● Comprehensive Operating Knowledge

● Effectively Implement Change

Craft Training Strategy

● Standardization

● Training Within Industry (TWI)

● Toyota Talent

Readiness Assessment Process

● Utilize Cross-Functional Focus Group to Define Process

34 Begin FSS Planning Activities

Documents

® Flats Sequencing System Update Managers of Delivery Programs Support March 5, 2008