Postal Automation: Initiatives, Transitions & Best Practices

1. FSS Postal Automation: Initiatives, Transitions & Best Practices Part II

2. Postal Automation: Initiatives, Transitions & Best Practices Panel Members Jack Widener Director, Finishing and Distribution Newsweek Rosa Fulton Executive Director, Flats Sequencing System United States Postal Service Joe Schick Director, Postal Affairs Quad Graphics Marc McCrery Manager, Operational Requirements & Integration United States Postal Service

3. Agenda • Flats Background • Flat Volume • Current Flat Operations • Delivery Vision • Flats Strategy • Flats Sequencing System (FSS) • Machine deployment and Schedule

4. First-Class 8% Standard 75% Periodicals 17% Flat Volume 53.2 Billion Flats FY 2006 (RPW) FY 06 Revenue From Flats: $16.7 Billion

5. 42% 58% NeedsProcessing Presorted toCarrier Route 2006 Flats Processing / Handling 53.2 Billion Flats FY 2006 (RPW)

6. Today’s Flats Processing • APPS • Flat Bundle Sorting • AFSM 100 • Automated Tray Handling Systems (ATHS) • Automatic Induction (AI) • UFSM 1000 • Auto Flats Feeder • Manual Keying

7. Saturation 20% 80% Needs Casing By Carrier 2006 Flat Volume Delivery Unit Handling

8. Current Flat Operations • Up-the-Distribution Ladder • Carrier Route Processing • Customer Participation / Work-sharing • Increased Productivity • Centralize Distribution Operations • Standardization / Certification • Reduce Flat Mail Preparation / Handling • Substitute Technology for Labor

9. Mail Processing 22% Support 0.9% Other Functions 9% Delivery 43% Customer Service 16% Maintenance 6% Vehicle Services 2.4% USPS Total Operating Costs: $71.9 Billion Compensation 79% of Total Operating Expense

10. Delivery Strategy • Letters and Flats Sorted Separately • DPS Letter Sorting Continues • Flats Sequencing in Delivery Point Order • Saturation Mail Continues • Reengineer Our Processes for Handling “Residue Volumes”

11. Delivery Vision • Minimize Carrier In-office Time • Substitute Technology for Manual Carrier Casing • Sequence Letters and Flats • Benefit from Street Opportunities • Carriers Start Street Delivery Earlier • Consistent Delivery Times • Manage Growth • Optimize Routes • Other Benefits • Delivery Day Visibility • Capture Real Estate Opportunities • Manage Vehicle Fleet

12. Tray Staging Carousel-styleSorter Dolly Induction Subsystem Integrated Tray Converters Mail Prep Subsystem Automatic High Speed Feeders Flats Sequencing System (FSS)

13. Let's Take a Look

14. 5-digit <1% No Barcode 7% 9-digit 33% 11-digit 60% Increase Customer Applied Delivery Point Barcodes • Transition from 9-Digit to 11-Digit • Move From 11-Digit to Intelligent Mail Barcode • Intelligent Mail Barcode Available for Flats in Spring 2007 2007 Flat Barcode Analysis Barcode sampling results - January 2007

15. Improve Address and Barcode Readability • Standard Destination Address Block • Address Construction Improvements • Font Size, Horizontal and Vertical Character Spacing, and Extraneous Information • Barcode Location • Reduce OCR Return Address Reading Conflicts • CASS Certification™ • DPV™

16. John Doe 123 Main St Anywhere, USA 12345 • This could represent the front cover or back cover of the mail piece. • Customer address and optional delivery endorsement can appear anywhere in the address zone (top third above the dotted line) when the bound edge is aligned to the right. • Customer number, source code and messaging can appear anywhere on catalogs. John Doe 123 Main St Anywhere, USA 12345 John Doe 123 Main St Anywhere, USA 12345 Can be left or right justified, or centered. Can face left or right John Doe 123 Main St Anywhere, USA 12345 Address orientation restrictions will be determined by the USPS (e.g., cannot read upside down when at the top) based on the needs of delivery. Bound edge on right Standard Address Placement • Orient Address Location for Carrier Street Handling Implement MTAC Workgroup 101 Results

17. Maximizing Machine Efficiency • Match Mail Preparation Requirements to Processing Needs • Packaging, package and container make-up • Structure Rates to Support Sortation / Handling

18. Multi-phase Development / Deployment • Prototype – Indianapolis IN April 2006 • BOG Approval of 100 FSS Machines Dec 2006 • Pre-production Install – Dulles P & DC April 2007 • Pre-production – Live Operations Sept 2007 • Production First Article June 2008 • Phase 1 Deployment Begin Sept 2008 • Phase 1 Deployment End Sept 2010

19. Phase 1 Deployment • 100 FSS Systems • 29 Districts • 32 FSS Processing Facilities • 26 Existing Processing Centers • 7 New Facilities / Locations • 1403 Zones • 2 - 6 Systems per Facility

20. Phase 1 Deployment

21. Phase 1 Deployment

22. Questions?