Pacific Area Customer Focus

1. San Francisco Sacramento Bay Valley Sierra Coastal San Diego Los Angeles Santa Ana Honolulu Pacific Area Customer Focus Dean J. Granholm Area Vice President

2. Strategic Focus • Operating Plan • 24-Hour Clock • MAP (MAQ/PAQ) • - Arrival • - Volume • - Quality • F4 Op Plan • F2 Op Plan • Mail Condition • Threshold • Holiday Plan • Required Hours • Budget vs. • Affordable • Earned and • Opportunity • Complement • Affordable • ORNA • Overtime • Smart Control • Only when Earned SERVICE Cost Operations Managers Collaborative Leadership Team • Compliance • - PAFS / CSI • - Intervals • Workload Value • - DPS % • - Manual Reductions • Efficiency • - Equipment Performance • - % to Std & SEI Collaborative Leadership Team Operations Managers

3. San Francisco Sacramento Bay Valley Sierra Coastal San Diego Los Angeles Santa Ana Honolulu Pacific Area “Providing Premier Customer Service” Honolulu

4. Reliable Service – End to End Measurement • Product Visibility from Scanning • Acceptance to Delivery • Enroute Originating / Destinating (OEN/ DEN) • Arrival at Unit (AAU) • Delivery Confirmation • Work in Process – Measuring Mail Flow • On-Hand Mail Inventory • First In – First Out (FIFO) Measures • Mail Transport Equipment Container Tracking

5. Reliable Service – End to End Measurement – Cont • Customer Service / Delivery • Customer Point of View • Sunday Delivery • Dynamic Routings • Expanding Retail Reach • VPO’s • Drop Off Points • Alternate Access • Virtual Operating Plan (VOP) • Voice of the Process • Plant Clearance by Operations • Inventory • Continuous Improvement

6. Delivering Scanning Excellence Visibility touches every part of our business Customer value • Essential to compete • Offers transparency and predictability • Foundation for shipping • Track all volume • More data to support customer service Business value • Provide information about reliability • Manage networks and logistics • Correct problems • Identify pinch points

7. Delivery Unit Efficiency Technology Solution

8. Technology Solution • Future-State Interactive Delivery Platform that will transform USPS delivery operations. Designed for Supervisors, the platform will provide real-time access to business systems, increase communication with carriers, enhance street management and drive productivity. • Features: • Performance dashboard • Street mapping • Carrier performance/alerts • Mail volume scanning • Voice activated routes • Route analysis • Delivery monitoring • Delivery analysis platform • Mobile business system access • Overtime management • Contacts • Help

9. Dynamic Routing

10. Dynamic Routing • Total Dynamic Routing Lends Itself To Hub Delivery • More Territory (crossing ZIPS) • Less Volume Density (Sunday Express Mail) • Sunday Delivery of Manifest Packages • Static Route Concept Lends Itself to: • Consistent Volume • Condensed Territory • Saturday Package Delivery in 5 Day Environment • Scheduling Restrictions • Schedules Needing to be Posted Ahead of Time

11. Sequencing Carriers used smart phone technology to sequence packages in delivery order. Barcode on each package was scanned using Smart phone. The carrier immediately received a verbal announcement of the sequence number for the package; and a visual reference as shown to the left. “This was package # 86 in the sequence (green with black border around the 86) Package 111 (also green) was the package scanned and sequenced prior to #86.”

12. Pacific Area Tools • Virtual Operating Plan (VOP) • Run Plan Generator (RPG) • Mail Arrival Quality (MAQ) - Plant Arrival Quality (PAQ) Collection Visibility System (CVS) • Confidence Model

13. San Francisco Sacramento Bay Valley Sierra Coastal San Diego Los Angeles Santa Ana Honolulu Lean Mail Processing Work Floor Standardization

14. Through Continuous Improvement we fix the cause, not the symptoms How Do We Get There? • By identifying root causes of problems we can improve it at the source instead of treating ongoing issues that result from those causes. Tools for continuous improvement are: • Lean reduces the non-value add (searching, • waiting… ) steps in a process (detect areas • of opportunity and identify remedy options) • Six Sigma drives the quality of the process by •     using statistical tools to identify the variations in •     our processes (detect areas of opportunity) • Lean Six Sigma drives quality, speed and •    cost simultaneously in the process • These tools and techniques will transform mail processing operations in order to provide premier Service to our Customers.

15. LMP Project Roadmap • A Current State Value Stream Map was created for a comprehensive view of end-to-end processes within mail processing • The project will leverage lessons learned from other P&DCs and identify other improvement opportunities within our plant Current State Value Stream Map LMP Implementation (Umbrella Project) THS VAP Calculations MSWYB Set Up Reduction Mail Flow, Staging, and Inventory Management Signage and Visual Management Machine Utilization and Material Handling Manual Operations Working toward the “Blue Standard”

16. Standardization Focus

17. Certification Compliance 38 Certification line items to complete

18. San Francisco Sacramento Bay Valley Sierra Coastal San Diego Los Angeles Santa Ana Honolulu Pacific Area Certification Status Completed Mail Processing Sites & District • Phase 1 – Pilot • San Bernardino P&DC (San Diego) • Phase II – Senior Plants • Margret L. Sellers P&DC ( San Diego) • Santa Ana P&DC (Santa Ana) • Santa Clarita ( Sierra Coastal) • Sacramento (Sacramento) • San Francisco (San Francisco) • Honolulu P&DC (Honolulu) • Oakland P&DC (Bay Valley) • Phase III – Subordinate Plants • San Jose (Bay Valley)

19. QUESTIONS