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MTAC May 26, 2011 Washington D.C. Kelly Sigmon Vice-President, Engineering

USPS Operations Plan for Flats & Technology Update . MTAC May 26, 2011 Washington D.C. Kelly Sigmon Vice-President, Engineering. Agenda. Overview of Flats Strategy Automate piece & bundle distribution of all flat mail Reduce non-value added work

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MTAC May 26, 2011 Washington D.C. Kelly Sigmon Vice-President, Engineering

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  1. USPS Operations Plan for Flats & Technology Update MTAC May 26, 2011 Washington D.C. Kelly Sigmon Vice-President, Engineering

  2. Agenda • Overview of Flats Strategy • Automate piece & bundle distribution of all flat mail • Reduce non-value added work • Improve existing processes / standardization • Future Flats Technology • AFSM 100 enhancements • Flats sequencing • Flats bundle prep

  3. Automating Piece / Bundle Distribution • Sequence all flats for delivery • Flats sequencing phase 1 • Beyond phase 1 • Move flat mail up-the-ladder • AFSM 100 efficiencies – non FSS zones • Reduce manual processing • Finalize all bundles requiring distribution • APPS, APBS & SPBS

  4. Sequencing Flats • FSS Phase 1 – deploy 100 machines • 37 sites on-line with FSS • 85 operational machines • Ready for sequencing • 96 machines • 43 sites • 100th FSS machine • Installed – April 2011 • Operational – June 2011

  5. Sequencing Operations - Delivery FSS Sequencing Operations • Over 28,000 carriers are receiving sequenced flats • 960 delivery unit on-line with FSS • 1,351 zones on-line

  6. Move Flats Up-the-Ladder • CR-RT all flats for non-FSS zones • AFSM 100 efficiency • Merge classes at destination sorts • Reduce manual flat processing • Originating FCM cancellations • Periodicals processing policy • Eliminate Hot 2C practices • Process mail efficiently on automation

  7. Process Improvements & Standardization • Equipment utilization • Facility optimization & equipment consolidations • Lean Six Sigma projects to streamline operations & increase productivities • Container density and transportation utilization • Sort plan optimization • Flat mail on the right network (surface / air)

  8. Agenda Continuous Improvement of AFSM 100 Sequence More Flats Increase Delivery Point capability of current FSS Deploy new equipment to handle remaining flats volume Automate Flats Bundle Prep Operations

  9. AFSM100 Enhancements Technology advancements Doubles detection Doubles reduction Flats Forwarding Bring Letter PARS capability to Flats

  10. Flat Sequencing Costs Manual Sequencing Automated Sequencing Reduces cost by 70% 10

  11. 2010 Flat Volume Trend Future Flats Expectations AnnualVolume(Billion) Remaining Flats Sequencing Opportunity FY 2005 –10 Flat volume decline 31% 17 billion fewer flats Future Target FSS Phase 1 FSS Deployment 1.2 pcs per delivery point Saturation FSS Design & Program Planning

  12. 2010 Flat Volume Trend Remaining Flats Sequencing Opportunity Future Flats Expectations Future Target FSS Phase 1 ~.8 pcs per delivery point 10B additional sequenced flats are worth $1B annual savings for Function 2 Saturation AnnualVolume(Billion)

  13. FSS Challenges Challenge Flat volume has declined 31% since 2005 Delivery points continue to rise • Technology solution • Feeder that will feed 2X the speed of the current feeder • Doubles delivery points per sort-plan

  14. New Sequencing Technology Desired Attributes / Functionality Significantly Less Floor space Volume Dependent vs. Delivery Point Dependent Lower Cost Demo – August 2011 Location: Lancaster, PA Floor Space Volume Delivery Points Cost

  15. Flat Handling Process Today Bundle Distribution Bundle Prep Piece Distribution Delivery Mailers

  16. Eliminate Non-Value Added Work X X X X Bundle Distribution Bundle Prep Piece Distribution Delivery X X Mailers X

  17. Flats Process Future Automated Bundle Preparation Flats Sequencing Delivery Mailers

  18. Flat Prep Technology Eliminating Flats Prep • Evaluating additional solutions to seamlessly integrate mailer and USPS processes • Continuous; output of printers production equipment—input to USPS processing equipment • Concepts and designs are under development Stay tuned...

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