Corporate Flats Strategy

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Corporate Flats Strategy
MTAC November 7, 2002
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Presentation Overview

• Background
• Near Term Actions (FY 2003 and 2004)
• Longer Term Planning (FY 2005 and beyond)
• Delivery Vision
• Summary

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Importance of Flats
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Corporate Flats Strategy
Introduced at the September 2000 Postal Forum
USPS Committed to Flats
Grow Customers Business
Increase Capital Investment Maintain
Affordability Improve Processes
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Corporate Flats Strategy
Distributed in July 2001 Introduced the
Delivery Vision Focused on Improvements in the
Near Term Overviewed the Longer Term Plans
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Corporate Flats Strategy

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

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Last Years Progress

• Completed AFSM 100 Deployment
• Started FSM 1000 Modifications
• Explored Mail Preparation Alternatives
• Logs
• Flats Feeder Assist Device
• Fiberboard Trays
• Pallet Movers

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Near Term Actions

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

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Manage the Base

• Improve Operational Performance
• Up-the-Distribution-Ladder
• Increase Productivity
• Reduce Mail Preparation Costs
• Standardize Opening Units
• Standardize Flats Distribution
• Capture Savings

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Summary
QTR 1 FY 2001
QTR 4 FY 2002
11
piece handlings per workhour
Qtrs. 1 to 4
Qtrs. 1 to 4
FY 2001
FY 2002
end of year FY 2000
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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)

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Increase Customer Involvement

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

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Where We Were

• 4 Mail Streams
• Automated
• Mechanized
• FSM 1000
• Manual
• Significant Piece Handling Costs
• Increasing Mail Prep Costs
• Increased Rates

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Where We Want To Go

• From 4 Mail Streams to 2
• Automated
• Manual
• Maximize 11 Digit Barcoded Volume
• Minimize (eliminate) Small Bundles
• Standardize
• Physical Characteristics
• Address Placement
• Make-up and Presentation

Then to 1 DPP
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How Do We Get There?

• Optimizing Readability
• Conducting Mail Characteristics Study
• Developing Alternative Flats Packaging
• Developing Mail Preparation Alternatives
• Reducing Bundle Breakage
• Developing Irregularity Reporting

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MTAC Workgroups
Optimizing Readability

• Address Block Location
• Destination Address Format
• Barcode Placement
• Adhesive Labels
• Extraneous Information

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Developed Voluntary Guidelines for Flat Mail
MTAC Workgroups
Optimizing Readability
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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

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MTAC Workgroups
Alternative Flats Packaging

• Identify Cost Effective Bundle Packaging for
  Mailers and USPS
• Balance Cost of Material With Package Integrity

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MTAC Workgroups
Mail Preparation Alternatives

• Working with Mailers through MTAC
• Mutually Acceptable Preparation and Handling
  Methods
• Drive Down Combined Cost

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MTAC Workgroups
Mail Preparation Alternatives

• Flats Feeder Assist Device allows operator to
  handle heavy loads

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MTAC Workgroups
Reducing Bundle Breakage

• Controlled Testing of Various Packaging Materials

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Long Term Plan NO SACKS
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MTAC Workgroups
Irregularity Reporting

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

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Longer Term Plans

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

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Implement the Delivery Vision

• Minimize In-Office Costs
• Maximize Street Efficiency

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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.

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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.

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The Postal Services Delivery Vision Option 1
Delivery Point Packaging
NEAR TERM FY 2003 FY 2004
MID TERM FY 2005 to FY 2006
Current Operations
DPS Letters Direct to Street
This time period will be used for planning
purposes.
Residue Letters All Flats Cased
Sector/Segment Firms Direct to Street
Walk Sequence/ Marriage Mailings Direct to Street
Start Research Development for DPP
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The Postal Services Delivery Vision Option 1
Delivery Point Packaging
NEAR TERM FY 2003 FY 2004
LONG TERM FY 2007
MID TERM FY 2005 to FY 2006
Current Operations
Letters (DPS Not Required)
DPS Letters Direct to Street
Operational Planning
Residue Letters All Flats Cased
One Bundle 100 Letters Flats Direct to Street
Flats (5 Digit Presort, No Carrier Route)
Sector/Segment Firms Direct to Street
Walk Sequence/ Marriage Mailings (Entered at DPP
Location)
Walk Sequence/ Marriage Mailings Direct to Street
Start Research Development for DPP
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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.

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The Postal Services Delivery Vision Option 2
Flats Sequencing System
NEAR TERM FY 2003 FY 2004
Current Operations
MID TERM FY 2005
DPS Letters Direct to Street
This time period will be used for planning
purposes.
Residue Letters All Flats Cased
Sector/Segment Firms Direct to Street
Walk Sequence/ Marriage Mailings Direct to Street
Start Research Development for FSS
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The Postal Services Delivery Vision Option 2
Flats Sequencing System
NEAR TERM FY 2003 FY 2004
LONG TERM FY 2006
Current Operations
MID TERM FY 2005
DPS Letters Direct to Street
DPS Letters Direct to Street
Operational Planning
Residue Letters All Flats Cased
FSS Flats Direct to Street
Sector/Segment Firms Direct to Street
Residue Letters Flats Walk Sequence/ Marriage
Mailings Cased
Walk Sequence/ Marriage Mailings Direct to Street
Start Research Development for FSS
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Prioritize Key Decision Points

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

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Identify Potential Customer Impacts
DPP FSS
REQ REQ
? REQ
YES YES

• 11 Digit Barcode
• Standardized Piece Design
• ID Tag
• Presort (For Automated Zones)
• Carrier Route Sorting
• Make-up and Presentation
• Entry Point

? ?
CHG CHG
CHG CHG
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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)

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Summary

• Near Term (FYs 2003 2004)
• Increase Equipment Utilization
• Reduce Mail Preparation Costs
• Manage the Base
• Involve Customers

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Summary

• Longer Term (FY 2005 beyond)
• Refine the Delivery Vision
• Evaluate DPP FSS Options
• Develop DPP FSS Technologies
• Involve Customers

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Corporate Flats Strategy