Flats Symposium 2008

1. ® NPF Where knowledge and innovation connect. National Postal Forum ® Flats Symposium 2008 Bill Galligan Senior Vice President, Operations USPS National Postal Forum 2008

2. Why FSS?

3. Mail Processing 22% Support 0.9% Other Functions 9% Delivery 43% Customer Service 16% Maintenance 6% Vehicle Services 2.4% USPS Salary & Benefits: $54 Billion Source: 2007 Annual Report

4. Managing Delivery Costs • Incremental Cost Improvements Over the Last 10 Years • Delivery Will Continue to be Largest Cost Center • Continued Delivery Point Growth • Address Infrastructure Burden

5. What is Delivery Point Sequencing? Technology Places Mail Pieces into Exact Order of Delivery

6. 87% DPS Letters Cased Letters Letter Mail Technology (City) – DPS Trend • USPS Has Sequenced Letters Since 1993 • Resulting in Over $5 Billion Annual Savings

7. Replicate Letter Mail Success for Flats

8. Flat Volume Trend

9. First-Class Mail 8% Standard Mail 75% Periodicals 17% Annual Flat Volume 52 Billion Flats FY 2007 (RPW)

10. Flats End-to-End Strategy • Streamline and Simplify Mail Make-up • Reduce Number of Entry Points • Induct the Mail Where Processed • Bypass Sack / Bundle Distribution • Automate Mail Preparation • Automate Sequencing of Flats for Delivery • Leverage the Use of Data

11. Mailer Changes • “The Address” • Mail Entry • Entry Points • Critical Entry Times • Mail Prep in FSS Environment

12. Substitute Technology for Manual Labor Manage Delivery Growth Reduction in Future Delivery Vehicles Reduction in Facility (Delivery Unit) Space Needs Improve Processing Performance and Service End-to-End Visibility Create Lowest-Combined-Cost System FSS Benefits