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									                          Corporate
                        Flats Strategy




MTAC November 7, 2002
Presentation Overview
   Background
   Near Term Actions (FY 2003 and 2004)
   Longer Term Planning (FY 2005 and
    beyond)

    – Delivery Vision

   Summary



                                           Slide 2
Importance of Flats

FY 01 Revenue From Flats: $16.1 Billion

Periodicals: Mailbox Anchor That
Generates Other Revenue Streams

Standard Mail Revenue is
Second Only to First-Class Mail

Flats Rates Rising Faster Than Inflation

                                    Slide 3
      Corporate Flats Strategy

Introduced at the September 2000 Postal Forum

                     USPS Committed to Flats
                     Grow Customer’s Business
                     Increase Capital
                     Investment
                     Maintain Affordability
                     Improve Processes


                                         Slide 4
Corporate Flats Strategy

                Distributed in July 2001

                Introduced the Delivery
                Vision

                Focused on
                Improvements in the
                Near Term

                Overviewed the Longer
                Term Plans

                                           Slide 5
Corporate Flats Strategy

   Drive Down Costs Through
    Automation
   Improve Processing Performance
    and Service
   Create a Win-Win for Customers and
    the Postal Service


                                     Slide 6
Last Year’s Progress
   Completed AFSM 100 Deployment
   Started FSM 1000 Modifications
   Explored Mail Preparation Alternatives
    – Logs
    – Flats Feeder Assist Device
    – Fiberboard Trays
    – Pallet Movers

                                      Slide 7
Near Term Actions

   Manage the Base
   Substitute Capital for Labor
   Increase Customer Involvement




                                    Slide 8
Manage the Base

   Improve Operational Performance
    – Up-the-Distribution-Ladder
    – Increase Productivity

   Reduce Mail Preparation Costs
    – Standardize Opening Units

   Standardize Flats Distribution
   Capture Savings
                                     Slide 9
Summary


 QTR 1    QTR 4
FY 2001   FY 2002




              Slide 10
                              piece handlings per workhour




               Qtrs. 1 to 4                  Qtrs. 1 to 4
end of year
 FY 2000      FY 2001                    FY 2002             Slide 11
 Substitute Capital for Labor
 Take Advantage of Latest Technology
    – Automatic Tray Handling System
    – Flats Feeder Assist Device
    – The AFSM 100 Feeder Modification
    – Pallet Movers
    – UFSM 1000
    – ID Code Sort
   Move More Mail to Our Processing
    Centers to Achieve Greater Depth of
    Sort (i.e., from the 5-digit level to carrier route)
                                                  Slide 12
Increase Customer Involvement

   Structure Rate Incentives to
    Support Operations Objectives
   Match Make-up to Processing
    Requirements
   Increase Barcoded Flat Volumes
   Improve Address & Barcode
    Readability



                                     Slide 13
Where We Were
   4 Mail Streams:
    –   Automated
    –   Mechanized
    –   FSM 1000
    –   Manual
   Significant Piece Handling Costs
   Increasing Mail Prep Costs
   Increased Rates
                                       Slide 14
Where We Want To Go
   From 4 Mail Streams to 2
    –   Automated
                    Then to 1: DPP
    –   Manual
   Maximize 11 Digit Barcoded Volume
   Minimize (eliminate) Small Bundles
   Standardize
    –   Physical Characteristics
    –   Address Placement
    –   Make-up and Presentation
                                     Slide 15
 How Do We Get There?

 MTAC & USPS Working Together
 Optimizing   Readability
 Conducting   Mail Characteristics Study
 Developing   Alternative Flats Packaging
 Developing   Mail Preparation Alternatives
 Reducing   Bundle Breakage
 Developing   Irregularity Reporting
                                        Slide 16
MTAC Workgroups

Optimizing Readability
 Address   Block Location
 Destination   Address Format
 Barcode   Placement
 Adhesive   Labels
 Extraneous    Information

                                 Slide 17
MTAC Workgroups

Optimizing Readability

Developed   Voluntary Guidelines for
 Flat Mail




                                    Slide 18
MTAC Workgroups

Mail Characteristics Study
Determining the Spectrum of Mail the
AFSM Can Successfully Process
     Basic size dimensions remain the
      same
     Increase the maximum weight to
      20 oz

                                   Slide 19
MTAC Workgroups

Alternative Flats Packaging
 Identify
        Cost Effective Bundle
 Packaging for Mailers and USPS
 Balance
        Cost of Material With
 Package Integrity




                                  Slide 20
  MTAC Workgroups

  Mail Preparation Alternatives
Working with Mailers through MTAC
     Mutually Acceptable Preparation and Handling Methods
      Drive Down Combined Cost




                                                             Slide 21
     MTAC Workgroups
     Mail Preparation Alternatives

 Flats Feeder
  Assist Device
  allows
  operator to
  handle heavy
  loads




                                     Slide 22
         MTAC Workgroups

         Reducing Bundle Breakage
   Controlled Testing
    of Various
    Packaging Materials
    Solution
    –   Shrink wrap
    –   Double band
    –   Palletize
    –   Weight – 20 pound max
    –   Height – 6 inch max

                                    Slide 23
Long Term Plan: NO SACKS




                           Slide 24
MTAC Workgroups

Irregularity Reporting

Develop a Mechanism to Report
Preparation Irregularities to Mailers
and Mail Owners In a Timely Manner to
Prevent Recurrence



                                 Slide 25
    Longer Term Plans

   Evaluate Delivery Point Packaging
   Prioritize Key Decision Points
   Identify Potential Customer Impacts




                                        Slide 26
    Implement the Delivery Vision



   Minimize In-Office Costs

   Maximize Street Efficiency




                                    Slide 27
Evaluate Delivery Sequencing Options
 OPTION 1: Delivery Point
  Packaging
    Develop a machine that will use a one-pass
    system to sequence both letters and flats in
    delivery order.

   OPTION 2: Flats Sequencing
    System
    Develop a machine that will use a two-pass
    system to sequence flats in delivery order.



                                                   Slide 28
Evaluate Delivery Sequencing Options
 OPTION 1: Delivery Point
  Packaging
  Develop a machine that will use a one-pass
  system to sequence both letters and flats in
  delivery order.




                                                 Slide 29
                                 The Postal Service’s Delivery Vision

   NEAR TERM                     Option 1: Delivery Point Packaging
FY 2003 & FY 2004

                       MID TERM
     Current
    Operations          FY 2005
                            to
                        FY 2006
    DPS Letters
  Direct to Street
                     This time period
                     will be used for
 Residue Letters &       planning
     All Flats          purposes.
      Cased

  Sector/Segment
       Firms
  Direct to Street


 Walk Sequence/
 Marriage Mailings
 Direct to Street


 Start Research &
 Development for
        DPP
                                   The Postal Service’s Delivery Vision

   NEAR TERM                       Option 1: Delivery Point Packaging
FY 2003 & FY 2004
                                         LONG TERM
                     MID TERM              FY 2007
     Current
    Operations        FY 2005
                         to
                                          Letters
                      FY 2006
    DPS Letters                          (DPS Not
  Direct to Street                       Required)
                     Operational
                      Planning
 Residue Letters &                                         One Bundle
     All Flats                              Flats
                                                          100% Letters &
      Cased                           (5 Digit Presort,
                                                               Flats
                                     No Carrier Route)
                                                          Direct to Street
  Sector/Segment
       Firms
  Direct to Street                    Walk Sequence/
                                     Marriage Mailings
 Walk Sequence/                       (Entered at DPP
 Marriage Mailings                       Location)
 Direct to Street


 Start Research &
 Development for
        DPP
Evaluate Delivery Sequencing Options
 OPTION 1: Delivery Point
  Packaging
    Develop a machine that will use a one-pass
    system to sequence both letters and flats in
    delivery order.

   OPTION 2: Flats Sequencing
    System
    Develop a machine that will use a two-pass
    system to sequence flats in delivery order.



                                                   Slide 32
                               The Postal Service’s Delivery Vision

   NEAR TERM                  Option 2: Flats Sequencing System
FY 2003 & FY 2004

     Current
    Operations        MID TERM
                       FY 2005
    DPS Letters
  Direct to Street
                     This time period
                     will be used for
 Residue Letters &       planning
     All Flats          purposes.
      Cased

  Sector/Segment
       Firms
  Direct to Street


 Walk Sequence/
 Marriage Mailings
 Direct to Street


  Start Research &
  Development for
         FSS
                                   The Postal Service’s Delivery Vision

   NEAR TERM                       Option 2: Flats Sequencing System
FY 2003 & FY 2004
                                        LONG TERM
     Current                              FY 2006
    Operations       MID TERM
                      FY 2005
    DPS Letters                            DPS Letters
  Direct to Street                        Direct to Street
                     Operational
                      Planning
 Residue Letters &
     All Flats                               FSS Flats
      Cased                               Direct to Street


  Sector/Segment
       Firms
  Direct to Street                       Residue Letters &
                                               Flats
                                          Walk Sequence/
 Walk Sequence/                          Marriage Mailings
 Marriage Mailings                            Cased
 Direct to Street


 Start Research &
 Development for
        FSS
Prioritize Key Decision Points

   Fund Research and Development
   Examine Competitive Prototypes
   Evaluate Impact on Plant & Delivery
    Operations




                                     Slide 35
Identify Potential Customer Impacts
                                    DPP   FSS

   11 Digit Barcode                REQ REQ
   Standardized Piece Design        ?  REQ
   ID Tag                          YES YES
   Presort (For Automated Zones)
     – Carrier Route Sorting         ?   ?
   Make-up and Presentation        CHG CHG
   Entry Point                     CHG CHG



                                          Slide 36
Implement the Delivery Vision

   Minimize In-Office Costs
    – Sequencing Letters and Flats

   Maximize Street Efficiency
    – Sequence Letters and Flats Together

    – One Delivery Point Package (DPP)



                                         Slide 37
Summary
Near Term (FYs 2003 & 2004):

      Increase Equipment Utilization

      Reduce Mail Preparation Costs

      Manage the Base

      Involve Customers


                                        Slide 38
Summary
Longer Term (FY 2005 & beyond):

     Refine the Delivery Vision

     Evaluate DPP & FSS Options

     Develop DPP & FSS Technologies

     Involve Customers


                                   Slide 39
  Corporate
Flats Strategy

								
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