MTE Forecasting and Tracking Workgroup #108

1. MTE Forecasting and TrackingWorkgroup #108 Ability to effectively forecast and fulfill Mail Transport Equipment needs for customers and plants.

2. Update (Since 8/2/06) • 3 Meetings: • August 3, 2006 • MTESC Presentation • Key Industry Concerns • USPS Challenges • Output: • Need to bridge the gap between forecasting information the Postal Service needs (3 – 6 mos) and availability of accurate information mailers can provide (8 – 14 days) • Laundry list of issues and suggestions

3. 2nd Meeting • September 21, 2006 • Addressed/discussed each of the suggestions raised at August 3 meeting • Agreed on key areas of focus and developed four subgroups: • Contingency Plan • Education/Communication • Forecasting Pilot • Standardization • ( Note: Rate/Automation Impact tabled for January)

4. 3rd Meeting • November 1, 2006 • 2005 IBM Forecasting Model (New Buys) • Methodology for determining next year’s buys • Physical Inventory Levels • Daily Demand • Required Days of Inventory • Current Year’s New Buys • Key Assumptions • Networks, operations & behaviors remain the same • Demand remains constant • Leakage, condemnation and equipment misuse are all inherently factored into the analysis • Days of the week weighted equally when calculating average daily volumes (7-day operation)

5. IBM Forecasting Model • Forecasting Outputs for 2006 • Recommended Purchase vs. Actual Purchases Pallets 1,244,273 vs. 1,700,010 EMM Trays 0 vs. 6,440,448 MM Trays 6,693,470 vs. 0 1257 Tray 4,351,115 vs. 7,000,552 • Pallets remain the only concern for FY’06 • The data suggests a leakage cost for pallets in the amount of $39,650,201.50(purchases vs. inventory) • How do we stop this leakage?????

6. The Downfall of the IBM Forecasting Model • Why didn’t the model work? • Based purely on historical • Did not consider customers future needs • Did not consider industry/marketing changes • Did not consider mail preparation changes • Inventory tracked does not include that in the Postal Service and mailers plants. • How can it be improved • Ongoing dialogue/input re customer needs • Ongoing discussion re industry/marketing changes • Ongoing analysis which includes rate changes/make-up changes/industry trends. • Inventory knowledge in USPS/mailers plants

7. Workgroup Focus Subgroup Reports • MTE Forecasting Pilot • FY06 Fall/Holiday Mail Planning BSN Service Improvement Team working in collaboration with Network Operations (weekly meetings) • Created Beta Forecast Process (14 days out) • Identified 14 Customers for Participation • Analyzing Forecast Data vs. Actual Orders

8. Workgroup Focus MTE Forecasting Pilot Subgroup Reports • Preliminary Findings • Template Revision • Some mailers asked if they could use their own (some very rudimentary – some very sophisticated) • Forecast Responsiveness • Some mailers were more responsive than others. As mailers started to see a return on investment, they were more responsive. • Data Findings • There were large variances in the forecast vs. actual orders placed • ?? Lack of ability to forecast? (mail pieces vs. equipment needs) • ?? Inventory was already in the mailers plant?

9. Workgroup Focus EIRS Revived • EIRS – Equipment Inventory Reporting System • Weekly Equipment Inventory • USPS Plants • Customer Plants • MTESS provides inventory levels available at 23 MTESC sites and 3 commercial warehouses. There is no data available on the amount of equipment available at either postal plants or mailer plants. This leaves a knowledge gap in understanding all inventory in the system. • Exploring SOP and means to automate reporting

10. Workgroup Focus Subgroup Reports • Standardization: • Mission: Develop a standardized national process for ordering MTE with a focus on technology/ease of use/tracking. Any “system” solution should fit in with overall USPS technology strategy. • Telecon scheduled within the next two weeks.

11. Workgroup Focus Subgroup Reports • Contingency Plan • Mission: Explore and create a contingency plan for industry/USPS when there is an equipment shortage for submission of mail to USPS. • Identified Two Major Tasks:       • Communications plan to ensure that mailings with alternative MTE will be accepted by BMA and processed without delay. • Creation of a list of acceptable alternative MTE items to be used when insufficient equipment is available.

12. Workgroup Focus Subgroup Reports • Education Communication • Key Areas for Communication • Industry Best Practices • MTE Newsletter/Bulletin • It’s A CRIME! Campaign • Improvement of system-generated communication (MTESS) • Whatever else may come out of other subgroups (Contingency Plan, Standardization, etc.)

13. Workgroup Focus Subgroup Reports • Education/Communication • Communication Resources • USPS.com/RIBBS • E-Mail Alerts • Articles in trade magazines, company newsletters, association newsletters and/or websites • USPS publications, both internal and external • BSN • BMAU • Area MTE Coordinators • USPS Sales Force • PCC’s, etc.

14. Workgroup Focus NEW SUBGROUP • Industry Best Practices • Find customers who have developed successful MTE forecasting and inventory processes • Gather input from other stakeholders • Create a standard SOP/Guidebook based on their best practices

15. MTE WorkgroupNEXT STEPS • Discussion/Possible Presentation from distribution trade organization (already contacted). • Discussion/Possible Presentation with FAST/Postal One regarding data values/communication link • Subgroup Meetings and output • Next Workgroup Meetings: • Mid-December (proposed) • February 21, 2007