MTE Forecasting and Tracking Workgroup #108 Ability to effectively forecast and fulfill Mail Transport Equipment needs for customers and plants.

Update (Since 8/2/06) 3 Meetings: 3 Meetings: August 3, 2006 August 3, 2006 MTESC Presentation MTESC Presentation Key Industry Concerns Key Industry Concerns USPS Challenges USPS Challenges Output: Output: Need to bridge the gap between forecasting information the Postal Service needs (3 – 6 mos) and availability of accurate information mailers can provide (8 – 14 days) Need to bridge the gap between forecasting information the Postal Service needs (3 – 6 mos) and availability of accurate information mailers can provide (8 – 14 days) Laundry list of issues and suggestions Laundry list of issues and suggestions

2 nd Meeting September 21, 2006 September 21, 2006 Addressed/discussed each of the suggestions raised at August 3 meeting Addressed/discussed each of the suggestions raised at August 3 meeting Agreed on key areas of focus and developed four subgroups: Agreed on key areas of focus and developed four subgroups: Contingency Plan Contingency Plan Education/Communication Education/Communication Forecasting Pilot Forecasting Pilot Standardization Standardization (Note: Rate/Automation Impact tabled for January) (Note: Rate/Automation Impact tabled for January)

3 rd Meeting November 1, 2006 November 1, IBM Forecasting Model (New Buys) 2005 IBM Forecasting Model (New Buys) Methodology for determining next year’s buys Methodology for determining next year’s buys Physical Inventory Levels Physical Inventory Levels Daily Demand Daily Demand Required Days of Inventory Required Days of Inventory Current Year’s New Buys Current Year’s New Buys Key Assumptions Key Assumptions Networks, operations & behaviors remain the same Networks, operations & behaviors remain the same Demand remains constant Demand remains constant Leakage, condemnation and equipment misuse are all inherently factored into the analysis Leakage, condemnation and equipment misuse are all inherently factored into the analysis Days of the week weighted equally when calculating average daily volumes (7-day operation) Days of the week weighted equally when calculating average daily volumes (7-day operation)

IBM Forecasting Model Forecasting Outputs for 2006 Forecasting Outputs for 2006 Recommended Purchase vs. Actual Purchases Recommended Purchase vs. Actual Purchases Pallets1,244,273 vs. 1,700,010 EMM Trays0 vs. 6,440,448 MM Trays6,693,470vs Tray4,351,115vs.7,000,552 Pallets remain the only concern for FY’06 Pallets remain the only concern for FY’06 The data suggests a leakage cost for pallets in the amount of $39,650, (purchases vs. inventory) The data suggests a leakage cost for pallets in the amount of $39,650, (purchases vs. inventory) How do we stop this leakage????? How do we stop this leakage?????

Why didn’t the model work? Why didn’t the model work? Based purely on historical Based purely on historical Did not consider customers future needs Did not consider customers future needs Did not consider industry/marketing changes Did not consider industry/marketing changes Did not consider mail preparation changes Did not consider mail preparation changes Inventory tracked does not include that in the Postal Service and mailers plants. Inventory tracked does not include that in the Postal Service and mailers plants. How can it be improved How can it be improved Ongoing dialogue/input re customer needs Ongoing dialogue/input re customer needs Ongoing discussion re industry/marketing changes Ongoing discussion re industry/marketing changes Ongoing analysis which includes rate changes/make-up changes/industry trends. Ongoing analysis which includes rate changes/make-up changes/industry trends. Inventory knowledge in USPS/mailers plants Inventory knowledge in USPS/mailers plants The Downfall of the IBM Forecasting Model

Subgroup Reports MTE Forecasting Pilot MTE Forecasting Pilot FY06 Fall/Holiday Mail Planning FY06 Fall/Holiday Mail Planning BSN Service Improvement Team working in collaboration with Network Operations (weekly meetings) Created Beta Forecast Process (14 days out) Created Beta Forecast Process (14 days out) Identified 14 Customers for Participation Identified 14 Customers for Participation Analyzing Forecast Data vs. Actual Orders Analyzing Forecast Data vs. Actual Orders Workgroup Focus

MTE Forecasting Pilot Subgroup Reports Preliminary Findings Preliminary Findings Template Revision Template Revision Some mailers asked if they could use their own (some very rudimentary – some very sophisticated) Some mailers asked if they could use their own (some very rudimentary – some very sophisticated) Forecast Responsiveness Forecast Responsiveness Some mailers were more responsive than others. As mailers started to see a return on investment, they were more responsive. Some mailers were more responsive than others. As mailers started to see a return on investment, they were more responsive. Data Findings Data Findings There were large variances in the forecast vs. actual orders placed There were large variances in the forecast vs. actual orders placed ?? Lack of ability to forecast? (mail pieces vs. equipment needs) ?? Lack of ability to forecast? (mail pieces vs. equipment needs) ?? Inventory was already in the mailers plant? ?? Inventory was already in the mailers plant? Workgroup Focus

EIRS Revived EIRS – Equipment Inventory Reporting System EIRS – Equipment Inventory Reporting System Weekly Equipment Inventory Weekly Equipment Inventory USPS Plants USPS Plants Customer Plants Customer Plants MTESS provides inventory levels available at 23 MTESC sites and 3 commercial warehouses. There is no data available on the amount of equipment available at either postal plants or mailer plants. This leaves a knowledge gap in understanding all inventory in the system. MTESS provides inventory levels available at 23 MTESC sites and 3 commercial warehouses. There is no data available on the amount of equipment available at either postal plants or mailer plants. This leaves a knowledge gap in understanding all inventory in the system. Exploring SOP and means to automate reporting Exploring SOP and means to automate reporting Workgroup Focus

Subgroup Reports Standardization: Standardization: Mission: Develop a standardized national process for ordering MTE with a focus on technology/ease of use/tracking. Any “system” solution should fit in with overall USPS technology strategy. Mission: Develop a standardized national process for ordering MTE with a focus on technology/ease of use/tracking. Any “system” solution should fit in with overall USPS technology strategy. Telecon scheduled within the next two weeks. Telecon scheduled within the next two weeks. Workgroup Focus

Subgroup Reports Contingency Plan Contingency Plan Mission: Explore and create a contingency plan for industry/USPS when there is an equipment shortage for submission of mail to USPS. Mission: Explore and create a contingency plan for industry/USPS when there is an equipment shortage for submission of mail to USPS. Identified Two Major Tasks: Identified Two Major Tasks: Communications plan to ensure that mailings with alternative MTE will be accepted by BMA and processed without delay. Communications plan to ensure that mailings with alternative MTE will be accepted by BMA and processed without delay. Creation of a list of acceptable alternative MTE items to be used when insufficient equipment is available. Creation of a list of acceptable alternative MTE items to be used when insufficient equipment is available. Workgroup Focus

Subgroup Reports Education Communication Education Communication Key Areas for Communication Key Areas for Communication Industry Best Practices Industry Best Practices MTE Newsletter/Bulletin MTE Newsletter/Bulletin It’s A CRIME! Campaign It’s A CRIME! Campaign Improvement of system-generated communication (MTESS) Improvement of system-generated communication (MTESS) Whatever else may come out of other subgroups (Contingency Plan, Standardization, etc.) Whatever else may come out of other subgroups (Contingency Plan, Standardization, etc.) Workgroup Focus

Subgroup Reports Education/Communication Education/Communication Communication Resources Communication Resources USPS.com/RIBBS USPS.com/RIBBS Alerts Alerts Articles in trade magazines, company newsletters, association newsletters and/or websites Articles in trade magazines, company newsletters, association newsletters and/or websites USPS publications, both internal and external USPS publications, both internal and external BSN BSN BMAU BMAU Area MTE Coordinators Area MTE Coordinators USPS Sales Force USPS Sales Force PCC’s, etc. PCC’s, etc. Workgroup Focus

NEW SUBGROUP Industry Best Practices Industry Best Practices Find customers who have developed successful MTE forecasting and inventory processes Find customers who have developed successful MTE forecasting and inventory processes Gather input from other stakeholders Gather input from other stakeholders Create a standard SOP/Guidebook based on their best practices Create a standard SOP/Guidebook based on their best practices Workgroup Focus

Discussion/Possible Presentation from distribution trade organization (already contacted). Discussion/Possible Presentation from distribution trade organization (already contacted). Discussion/Possible Presentation with FAST/Postal One regarding data values/communication link Discussion/Possible Presentation with FAST/Postal One regarding data values/communication link Subgroup Meetings and output Subgroup Meetings and output Next Workgroup Meetings: Next Workgroup Meetings: Mid-December (proposed) Mid-December (proposed) February 21, 2007 February 21, 2007 MTE Workgroup NEXT STEPS