Corporate Automation Plan PHASE 2

February 4, 2004 Washington D.C.

Slide 2

OVERVIEW History of CAP CAP Accomplishments to Date Comparison to the Original CAP CAP Phase 2

■ Letters ■ Trays

■ Flats ■ Containers

■ Parcels ■ Scanning/Tracking

■ Bundles ■ Information Flow

Automation Program Support Longer Term Plans Partnership With Industry Next Steps

CORPORATE AUTOMATION PLAN

Slide 3

HISTORY OF THE CORPORATE AUTOMATION PLANCORPORATE AUTOMATION PLAN

Letters

Flats

Parcels

Slide 4

ACCOMPLISHMENTS TO DATE

Letter Automation

CORPORATE AUTOMATION PLAN

Slide 5

ACCOMPLISHMENTS TO DATE (Letters)CORPORATE AUTOMATION PLAN

0

20

40

60

80

100

120

140

160

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

Total Letters

Barcoded Letters

volu

me

in b

illio

ns

(est

imat

ed)

Slide 6

ACCOMPLISHMENTS TO DATE (Letters)CORPORATE AUTOMATION PLAN

0%

10%

20%

30%

40%

50%

60%

70%

80%

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002

FY2003

DP

S %

of

To

tal

Inco

min

g S

eco

nd

ary

Vo

lum

e 74.9%

Slide 7

Flats Automation

50+%non-Carrier Route Flats Sorted by

Automation

ACCOMPLISHMENTS TO DATECORPORATE AUTOMATION PLAN

Slide 8FY 2001 FY 2002end of year

FY 2000

fla

ts d

istr

ibu

ted

per

wo

rkh

ou

r

Flats distribution productivity in the plants

has doubled since the end of FY 2000

FY 2003

1170

557

ACCOMPLISHMENTS TO DATE (Flats)CORPORATE AUTOMATION PLAN

Slide 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

AF

SM

100

FS

M 8

81

FS

M 1

000

Man

ual

AF

SM

100

FS

M 8

81

FS

M 1

000

Man

ual

AF

SM

100

FS

M 8

81

FS

M 1

000

Man

ual

AF

SM

100

FS

M 8

81

FS

M 1

000

Man

ual

Processing Centers

Up-the-Distribution-Ladder

FY2000 FY2001 FY2002 FY2003

79%

% o

f to

tal

fla

ts d

istr

ibu

ted

by

typ

e o

f o

per

atio

n

CORPORATE AUTOMATION PLANACCOMPLISHMENTS TO DATE (Flats)

Slide 10

0

5

10

15

20

25

FY2000 FY2001 FY2002 FY2003

volu

me

in b

illio

ns

A Decline in Manual Flats Distribution in Post Offices of 11.5 Billion

FY 2001FY 2000 FY 2002 FY 2003

CORPORATE AUTOMATION PLANACCOMPLISHMENTS TO DATE (Flats)

23.5

12

Slide 11

WORK HOURSFlats Distribution in Plants

0

10

20

30

40

50

60

FY 2000 FY 2001 FY 2002 FY 2003

$50.51

$40.51

$30.21

$26.56

Cost per Thousand Flats Distributed Has Decreased

47.4%

wo

rkh

ou

rs in

mill

ion

s

CORPORATE AUTOMATION PLANACCOMPLISHMENTS TO DATE (Flats)

Slide 12

Parcel/Bundle Automation

ACCOMPLISHMENTS TO DATECORPORATE AUTOMATION PLAN

Slide 13

Corporate Automation Plan Phase 2

Prepared by Strategic Operations Planning March 2004

CAP PHASE 2CAP PHASE 2 CONTENTS COMPARED TO ORIGINAL CAP

Slide 14

CAP PHASE 2 CONTENTS COMPARED TO ORIGINAL CAPCAP PHASE 2

Automate Letter Distribution Automate Flat Distribution Automate Parcel Sorting Automate Bundle Processing Automate Tray & Container

Processing Longer Term Plans

Delivery Automation Transportation Scanning and Tracking

Original

CAP

CAP

Phase 2

YES YES

YES YES

YES YES

YES

YES

YES

YES

YES

YES

Slide 15

Continue Deploying Technological Advances

Increase Remote Encoding Center Efficiency

Expand Letter Mail Processing Technology’s Reach

Reduce Manual Distribution and Casing

LETTER AUTOMATIONCAP PHASE 2

Slide 16

FLATS AUTOMATIONCAP PHASE 2

Increase Flats Processing Performance

Enhance Flats Image Processing

Use Technology to Increase Flats Automation

Reduce Manual Distribution and Casing

Slide 17

PARCEL AUTOMATIONCAP PHASE 2

Deploy the APPS Machines

Standardize Barcode Formats

Increase Automated Parcel Volume

Enhance BMC Operations

Slide 18

BUNDLE AUTOMATIONCAP PHASE 2

Deploy the Automated Package Processing System

Automate Bundle Processing

Optional Endorsement Lines

Pressure Sensitive Barcoded Labels

Reduce Sack Usage

Slide 19

AUTOMATING TRAY TRACKING AND PROCESSINGCAP PHASE 2

Automate Tray Receipt & Dispatch

Automate Tray Processing

Automate Tray Tracking

MEM

MEM

MEM

Slide 20

Automate Container Processing

Automate Container

Tracking

CAP PHASE 2AUTOMATING CONTAINER TRACKING AND PROCESSING

UniqueLicense

Plate

Placard withRoute andDestination

USPSUSPS

2717

Transportation Visibility Plan

Slide 21

AUTOMATING SCANNING/TRACKING PROCESSESCAP PHASE 2

Enhance Delivery Confirmation and CONFIRM

Develop Innovative Tracking Systems

Non-Special Service

Flat or Parcel

PVI Label PVI PIC Label

Non-Special Service

Flat or Parcel

PVI Label PVI PIC Label

Slide 22

Incorporate Operational

Data Into the Enterprise

Data Warehouse (EDW)

Increase Data Availability

CAP PHASE 2AUTOMATING INTERNAL DATA INFORMATION FLOW

Slide 23

CAP PHASE 2

The data warehouse is structured to support reporting across the organization.

• Predefined/Canned Reports• Enterprise-wide reporting

• Single repository for enterprise wide data

• “Data Marts” or “Views” provide a customized method for navigating by functional area within the EDW

Human ResourcesHuman ResourcesFinanceFinanceMarketingMarketingOperationsOperations

Corporate Level ReportsCorporate Level ReportsDa

taA

cc

es

sD

ata

S

tora

ge

Da

taA

cc

es

sAUTOMATING INTERNAL DATA INFORMATION FLOW

Slide 24

Intelligent Mail and Address Quality

Vision: An information-rich code for each mail type, which enables end-to-end visibility

AUTOMATION PROGRAM SUPPORTCAP PHASE 2

Slide 25

Develop

and Deploy Enabling

Infrastructure

Uniquely

Identify Mail

Enhance Address Quality

Code

Overview of Intelligent Mail

Strategies

AUTOMATION PROGRAM SUPPORTCAP PHASE 2

Intelligent Mail

Intelligent Mail

Slide 26

MERLIN

AUTOMATION PROGRAM SUPPORTCAP PHASE 2

Presort/Mail Makeup Walk Sequence AccuracyWeight and Piece CountMailpiece DimensionsBarcode ReadabilityEndorsements and Rate MarkingsTray Label AccuracyCombined MailingsAddress and Barcode AccuracyMeter Identification and Date

Quality

Accuracy

Slide 27

AUTOMATION PROGRAM SUPPORTCAP PHASE 2

Automates BMEU Acceptance ProcessMakes BMEU Information Available Quicker

Slide 28

Delivery Automation

LONGER TERM PLANSCAP PHASE 2

The Delivery Vision

Today’s Operations

DPP

FSS

Slide 29

TIMELINECAP PHASE 2

Today 2006 2007 200820052004

FULLY AUTOMATED OPERATIONS

Mailer Input

Mailer Input

Mailer Input

Mailer Input

Mailer Input

Improve Letter and Flat Image Processing

2009 2010

Deploy APPS

Extend PARS to Flats

Increase REC Efficiency

Research the Potential for Either DPP or FSS

Mailer Input

Mailer Input

Slide 30

PARTNERSHIP WITH INDUSTRYCAP PHASE 2

Mail Presort Requirements Will Change As

Technology Evolves

Working Together is Important

Industry Participation Adds Value Helps to Keep Each Other Informed

Facilitates Sharing of Ideas and Suggestions

Keeps Rates Stable

Slide 31

WORK WITH THE MAILING INDUSTRY TO:

Ensure Lowest Combined Processing Costs

Pass Through Savings

Explore Innovative Processing Options

Match Products to Automated Equipment

Establish Lead Times For Changes

CAP PHASE 2PARTNERSHIP WITH INDUSTRY

Slide 32

CAP PHASE 2

Drive Down Costs Through

Automation

Maintain Stable Rates

Improve Performance and Service

PARTNERSHIP WITH INDUSTRY

Slide 33

MTAC & USPS Working TogetherMTAC & USPS Working Together

Publication Watch

Presort Optimization

Planet Code Value

Delivery Standards & Business Mail Measurement

DDU Drop Shipment Service

CAP PHASE 2PARTNERSHIP WITH INDUSTRY

Flats Container Development Parcel Processing Field Study Mail.dat & PostalOne! Flat-Size Mail Design

Guidelines In-Home Delivery Instructions Periodical Co-Palletization

Guidelines

Slide 34

MTAC & USPS Working TogetherMTAC & USPS Working Together Mail Irregularity Feedback Process

Enhancing CONFIRM

Flat Mail Preparation Optimization

Parcel Delivery Performance Measurement Effectiveness

PostalOne! Postage Payment and Statements

CAP PHASE 2PARTNERSHIP WITH INDUSTRY

Slide 35

CAP PHASE 2NEXT STEPS

Work With Our Customers to Increase Production, Processing and Delivery Efficiency

Use Technology to Reduce Costs

Leverage Technology to Keep Rates Stable

Enhance the Flow of Mail Related Information

Use Information to Manage the Business Better

Increase the Market Value of Mail By Not Restricting Its Size or Shape

Explore Ways to Realize Our Delivery Vision

Slide 36

IDENTIFY POTENTIAL IMPACTS

CAP PHASE 2

11 Digit Barcode Standardized Address Location ID Tag Presort (For Automated Zones)

Carrier Route Sorting Make-up and Presentation Entry Point

PARTNERSHIP WITH INDUSTRY

Slide 37

Thank you.Thank you.