Improving the Drop Shipment Process MTAC Workgroup 87 Update

1. Improving the Drop Shipment ProcessMTAC Workgroup 87Update Washington, D.C. August 2, 2007

2. Agenda • Mailer Rating Pilot • National Deployment • Next Steps

3. Mailer Rating Pilot Status • Executing the Mailer Rating Pilot (June 22 – August 17) at the following facilities: • CEDAR RAPIDS Plant in Cedar Rapids, IA • DES MOINES BMC in Des Moines, IA • INDUSTRY Plant in Industry, CA • QUEENS Plant in Flushing, NY • NEW YORK Plant in New York, NY • Weekly teleconferences are being held with the mailers, FAST coordinators, and Surface Visibility coordinators at pilot facilities

4. Top Four Areas of Improvement • No Show Appointments in FAST • At the pilot facilities from 6/16 to 7/13, 12.6% of all appointments resulted in a no show • The mailer with the highest number of No Show appointments at a given pilot facility had 11 out of the 89 total No Show appointments for that facility. • Nationally from 6/16 to 7/13, 22.1% of all appointments resulted in a no show • Unscheduled Arrivals with valid Scheduler IDs in FAST • At the pilot facilities from 6/16 to 7/13, 6.1% of all arrivals were unscheduled • The mailer with the highest number of Unscheduled Arrivals at a given pilot facility had 12 out of the 112 total Unscheduled Arrivals for that facility. • Nationally from 6/16 to 7/13, 2.9% of all arrivals were unscheduled • Cancelled Appointments in FAST • At the pilot facilities from 6/16 to 7/13, 4.7% of all appointments were cancelled • The mailer with the highest number of Canceled appointments at a given pilot facility had 16 out of the 61 total Canceled appointments for that facility. • Nationally from 6/16 to 7/13, 4.6% of all appointments were cancelled • Recurring Appointments in FAST • At the pilot facilities from 6/16 to 7/13, 6.2% of all recurring appointments were No Shows • The mailer with the highest number of late arrivals for recurring appointments at a given pilot facility had 23 out of the 48 total late arrivals for recurring appointments for that facility. • Nationally from 6/16 to 7/13 recurring appointments represented 22.1% of all No Shows

5. Mailer Rating Pilot - Mailer Questions/Issues Questions/Issues raised by mailers have included: • Early arrivals and impact on rating • Multi-stop appointments and impact on rating when USPS delays occur • USPS requirement for appointment IDs on PS Form 8125. Drivers will need to contact dispatch/scheduler to obtain an Appointment ID. If an Appointment ID is unobtainable, then the Scheduler ID must be provided • Manual entry of appointment number on PS Form 8125 is not considered as altering the PS Form 8125 • Acquiring return receipt of signed PS Form 8125. If mailers provide 2 copies of PS Form 8125, USPS will return a signed copy to the driver • Discrepancy between FAST Closeout Data vs. the signed PS Form 8125 • Please contact facility to address the issue within 120 hours of appointment date/time. If no response is returned from the facility within 1 business day, please contact Prat Shah from Operations

6. Surface Visibility Scan Utilization Average Pilot Facility SV Drop Shipment Utilization

7. Tier Percentage and Slot Allocation – Current Functionality • Current Functionality • Four or less slots will be allocated to tiers automatically • 1 slot per hour (Tier 4) • 2 slots per hour (Tiers 4, 3) • 3 slots per hour (Tiers 4, 3, 2) • 4 slots per hour (Tier 4, 3, 2, 1) • Five or more slots will be distributed based on tier percentage • Partial Slots are not allocated. Tier 4 receives all slots that are not allocated to a specific tier

8. Tier Percentage and Slot Allocation - Proposed Functionality • Proposed Functionality • Slot allocation will always award the first slot to tier 4 • Remaining slots distributed based on tier percentage and the “trickle down” effect starting with Tier 1 • Additionally, if the distribution equals 0.6 of a full slot or greater, a full slot will be allocated to tiers 1, 2 and 3 • The remaining slots will be assigned to tier 4 if not utilized in other tiers • Partial Slots will carry over to the next available tier: • If distribution < 0.6 • If a fractional slots remain after allocation (e.g. 0.2 slots will be carried to tier 2 if 1.2 slots are allocated to a tier 1 based on tier percentage)

9. ANY FACILITY (ABC) Example - Slot Allocation Conversion • Current functionality with 4 Pallet Appointments at 8 PM • Four or less tiers are distributed without regard to tier percentages • Tier 1: 1 slot allocated • Tier 2: 1 slot allocated • Tier 3: 1 slot allocated • Tier 4: 1 slot allocated • Proposed functionality with 4 Pallet Appointments at 8 PM • First Slot awarded to Tier 4 with 3 Slots Calculated by Tier Percentage • Tier 1: 3 X .30 = .90 (1 slot rounded up) • Tier 2: 3 X .15 = .45 (0 slot rounded down) • Tier 3: (3 X .15)+.45 = .90 (1 slot rounded up) • Tier 4: (3 X .40) = 1.20 (1 slot awarded + 1 slot remaining = 2 slots)

10. ANY FACILITY (ABC) Example - Slot Allocation Conversion • Current functionality with 6 Pallet Appointments at 8 PM • Tier 1: 6 X .30 = 1.8 (1 slot rounded down) • Tier 2: 6 X .15 = 0.9 (0 slot rounded down) • Tier 3: 6 X .15 = 0.9 (0 slot rounded down) • Tier 4: 6 X .40 = 2.4 (5 slots remaining) • Proposed functionality with 6 Pallet Appointments at 8 PM • First Slot awarded to Tier 4 with 5 Slots Calculated by Tier Percentage • Tier 1: 5 X .30 = 1.5 (1 slot rounded down) • Tier 2: (5 X .15)+.50 = 1.25 (1 slot rounded down) • Tier 3: (5 X .15)+.25 = 1.00 (1 slot rounded down) • Tier 4: (5 X .40) = 2.00 (1 slot awarded + 2 slots remaining = 3 slots)

11. National Deployment • Mailer Rating National Deployment will be based on a phased approach by area • Deployment will include FAST SV enabled sites with 80% SV drop ship compliance or better • Deployment Approach based on mailer/facility performance by area • Deployment will span 3 months beginning August 18 (immediately following pilot) • Mailer Rating National Deployment will continue communicating to mailers and facilities • Deployment team will continue teleconferences with mailers and facilities to help familiarize rating rules and review weekly metrics • Mailers should look at FAST rating reports to determine if operational changes need to be made to improve their rating score for each drop shipment facility • Mailer Rating National Deployment Plan • Phase I: 1 Area; Western • Phase II: 3 Areas; Great Lakes, Southwest, Eastern • Phase III: 5 Areas; NY Metro, Capital Metro, Pacific, Northeast, Southeast

12. National Deployment- Fall Mailing Season • Mailers expressed concern about national deployment during fall mailing season • Mailers agreed based on: • Review of pilot data for accuracy • SV sites at 80% compliance or higher only • Willingness to closely monitor facilities • Ability to "turn-off" a facility if problematic • Agreement to "take action" if impacting the fall mailing season

13. 10/20/2007 08/18/2007 6/22/2007 09/15/2007 Mailer Rating Timeline Dec Nov May June July Aug Sept Oct Mailer Rating Pilot Communication Preparation Execution National Deployment* Phase I - Western Phase II - Great Lakes, Southwest, Eastern Phase III - NY Metro, Capital Metro, Pacific, Northeast, Southeast

14. Next Steps • Complete Mailer Rating Pilot • Continue communicating National Deployment schedule to mailers and facilities • Begin National Deployment Phase I • Review National Deployment status at next MTAC 87 meeting