MTAC Workgroup 115 Flat Mail Prep Entry

MTAC Workgroup 115 Flat Mail Prep & Entry in FSS Environment November 18, 2009

Agenda q FSS Update q USPS / IDEAlliance Think Tank II q MTAC 115 in Review q FSS Mail Prep - Next Steps MTAC 115 – November 18 2

® FSS Update Rosa Fulton Executive Director, FSS

Flat Volume by Class FY 2009 RPW Flat volume decline FY 2009 -13. 8% 6. 3 bil pieces -15. 3% -7. 4% -15. 3% MTAC 115 – November 18 4

Flat Volume Trend RPW Flat volume decline FY 2009 -13. 8% FY 2005 – FY 2009 Flat volume decline 26% 14. 3 billion fewer flats annually MTAC 115 – November 18 5

Operations & Installations q Sequencing Operations ● Dulles – 4 FSS ● Columbus – 2 FSS ● Kansas City – 2 FSS ● Phoenix – 3 FSS q MTAC 115 – November 18 Installation of 14 FSS in progress 6

FSS Operations – Ramp-up Status # FSS On-line # Delivery Units On-line # Zones On-line Dulles P&DC 4 39 52 Columbus FSS Annex 2 24 36 Kansas City P&DC 2 18 44 Phoenix (West Valley) L&DC 3 8 27 11 89 159 FSS Site Totals MTAC 115 – November 18 7

Installations – 14 FSS, 9 Sites FSS Location Area Install Start % Complete Install CM CURSEEN-MORRIS DC P&DC 12 -Sep-09 90% NE NEW JERSEY NDC 12 -Sep-09 95% NE MID-ISLAND NY P&DC 26 -Sep-09 65% NE NEW JERSEY NDC 26 -Sep-09 55% NE NW BOSTON MA P&DC 10 -Oct-09 45% SE ORLANDO FL L&DC 10 -Oct-09 20% PA VAN NUYS CA FSS ANNEX 24 -Oct-09 10% SE SOUTH FLORIDA L&DC 24 -Oct-09 10% EA TRENTON NJ P&DC 7 -Nov-09 5% SE SOUTH FLORIDA L&DC 7 -Nov-09 5% GL INDIANAPOLIS IN MPA 21 -Nov-09 NE MID-ISLAND NY P&DC 21 -Nov-09 NE NW BOSTON MA P&DC 5 -Dec-09 ORLANDO FL L&DC 5 -Dec-09 SE MTAC 115 – November 18 Install schedule of next 25 FSS in progress 8

FSS Redirection – New Deployment Plan q 19 FSS planned for redirection ● Deploy fewer FSS in 10 sites q Two sites removed from original plan q 12 new FSS sites q 42 FSS sites versus 32 MTAC 115 – November 18 9

Phase 1 A (Redirect Sites) Space Planning FSS Site # FSS Linthicum MD IMF Charlotte NC L&DC 1 Rochester NYL&DC 2 Philadelphia PA NDC 1 Philadelphia PA P&DC 2 Mid Island NY P&DC 1* Westchester NY P&DC 1 Stamford CT P&DC 1 North Metro GA P&DC 2 Atlanta GA L&DC 2 North Houston TX P&DC 1 Minneapolis / Eagan P&DC 2 San Diego P&DC MTAC 115 – November 18 1 2 * Mid-Island receiving 4 th FSS 10

® USPS / IDEAlliance Think-Tank II Susan Hawes Operational Requirements

Think-Tank II Meeting q WG 115 collaborated with IDEAlliance, again! ● ● Focus: Presort software programs and data files ● q Met September 2, 2009 Participants this time included production and systems/software representatives Provided context for Think-Tank II Participants ● Reviewed workgroup recommendations § § Non-compensated bundles § MTAC 115 – November 18 Auto-ready pallet Bundle heights 3”, 4”, or 6” 12

Modeling Exercise q What would FSS pallets look like today? ● ● q Volume and thickness of flats has changed since earlier modeling of bundles and pallets in 2007 Pallet prep the same as 5 -D/5 -D schemes today Test Plan included real “address lists” for destinating Dulles FSS site ● Using specific ZIP Codes processed on FSS ● Using real mailpiece characteristics and volumes MTAC 115 – November 18 13

Presort FSS Test Plan q Test plan included: ● ● ● q Bundle and pallet counts Current presort rules for comparison ‘Artificial’ Labeling List data to use when identifying FSS schemes Presort software that used LL to make up bundles and pallets Specified bundle heights for each presort processing Testing process was to: ● ● Run presort for all 3 -digits (201, 220 -223, 226 and 227) Roll up data for non-FSS 5 -digits using today’s rules Prepare individual FSS sort plan pallets (1 -4 5 D ZIPs per sort plan) Prepare multi FSS pallets based on each site MTAC 115 – November 18 14

Test Plan Results q FSS schemes: ● ● FSS sort plans mirror 5 -digit and 5 -digit scheme sort plans Dulles currently has 49 FSS sort plans § § q 19 sort plans with 1 5 -digit ZIP Code 20 sort plans with 2 5 -digit ZIP Codes 8 sort plans with 3 5 -digit ZIP Codes 2 sort plans with 4 5 -digit ZIP Codes Test results: ● ● ● Periodicals had few FSS sort plan pallets Pallet counts remained same for PER and STD mailings FSS scheme pallet (all sort plans at a site) has potential MTAC 115 – November 18 15

Test Plan Results Test # Bundle height # Bundles Pallet Presort # Pallets Weight Standard Mail 1 209, 694 1, 607 1, 331 2 207, 543 1, 602 1, 329 3 3 1, 217 FSS 19 675 4 3 870 FSS Scheme 5 1, 819 3 4 916 FSS 19 675 4 4 656 FSS Scheme 5 1, 819 3 6 614 FSS 19 675 4 6 441 FSS Scheme 5 1, 819 Periodicals Mail 1 105, 460 443 1, 310 2 105, 375 442 1, 311 3 3 - 4 3 142 3 4 - 4 4 70 3 6 - 4 6 68 MTAC 115 – November 18 FSS 0 FSS Scheme 1 781 797 666 16

® MTAC 115 in Review Joe Schick Industry Co-Chair Krista Finazzo Postal Co-Chair

Workgroup Focus – Issue Statement q Deployment Phase 1 FSS ● FSS program will impact: § § q Flats preparation How mail is presented and scheduled for entry Continuous process - mail owner to USPS ● Interdependencies of inputs and outputs through entire process, concept to delivery § § MTAC 115 – November 18 Will drive standards/requirements for prep & entry Will play a major role in determining efficiency of processing on FSS 18

Desired Results “Identify areas of impact to the USPS and customers associated with preparation and entry of flats in an FSS environment including the lowest combined cost model. ” MTAC 115 – November 18 19

Workgroup Action Items q Workgroup 96 handed off four items to MTAC WG 115: ● ● Bundle preparation Containerization Presort Parameters Destination entry MTAC 115 – November 18 20

Workgroup Activities q Developed a prototype system “Automated Flats Processor” (AFP) to improve: ● Productivity of bundle processing ● Equipment space required to process daily volume ● Capability to accept multi-zone pallets ● Flats auto processing – induction to piece sorting MTAC 115 – November 18 21

Workgroup Activities q AFP key functions are: ● Auto Depalletize Bundles – automatically unloads bundles from pallets ● Distribute Bundles based on sort plans with OEL readability – convey & prep bundles for processing ● Process Bundles – cut and remove bundle strapping and load bundles into ACTs ● Make Dollies – produce sort plan based dollies ● Dispatch Dollies – full ACTs, produced for specific sort plans, released for induct into flats sorting equipment MTAC 115 – November 18 22

Workgroup Activities q Bundle / Container testing: ● ● Evaluated – uniform bundle heights, compensation of bundles, containerization, and bundle securing methods ● q Built on auto-ready pallet concept Determined counter-stacked bundles of uniform height travel well through transportation / distribution system Bundle securing methods tested: ● ● Two cross-straps around length and girth Shrinkwrap “bellyband” with a single-strap as alternative to strap only MTAC 115 – November 18 23

Workgroup Activities q Discovered auto-ready pallet prep will allow bundles to flow directly to the bundle prep operation and bypass APPS processing q Evaluated potential pallet levels: ● Pure FSS (single scheme) ● Pure FSS (multiple schemes) ● Combined FSS and non-FSS MTAC 115 – November 18 24

Workgroup Activities q Assessed impact of volume reduction ● ● ● q Volume reduction has required more ZIP Codes and FSS sites than original plan Some original sites receiving fewer machines Volume reduction makes preparation of FSS singlescheme pallets more difficult Considered single preparation solution ● Lowest end-to-end cost achieved with one bundle preparation method § MTAC 115 – November 18 Prep compatible with FSS and AFSM process 25

Status of Action Items q Bundle ● ● q Container ● ● q Non-compensated bundles on compensated pallet Content determined by FSS scheme & destination Presort ● q Optimal bundle height of 3”, 4”, 6” Secured using two cross-straps Driven by FSS Label List and sort plan contents Entry ● Destination entry, at minimum, should not change and may contract with optimized network MTAC 115 – November 18 26

MTAC 115 – November 18 27

® FSS Mail Preparation Next Steps Rosa Fulton Executive Director, FSS Krista Finazzo Manager, Operational Requirements

FSS Flat Mail Prep – Next Steps q Propose new MTAC workgroup ● ● q Workgroup: “Implementing FSS Presort Parameters” Align under the “Optimization of Mail Preparation & Entry” focus area Charter of new workgroup: ● ● ● Develop and implement presort parameters to support defined (optional) FSS prep Identify timing of software updates related to FSS deployment Communicate timing & FSS Label List MTAC 115 – November 18 29

In closing MTAC 115 – November 18 30