Postal Automated Redirection System (PARS) John Keegan Manager, Automation Equipment USPS Engineering

Background on USPS mail forwarding operations Overview of PARS Agenda Background on USPS mail forwarding operations Overview of PARS PARS cost reduction Areas Change of Address Card Data Entry Forwarding Process Address Correction Service Lessons Learned . PARS takes cost out of many of the forwarding mail processes. This presentation touches only three of the major processes.

The United States has half of the worlds mail Background The United States has half of the worlds mail Since 1988 USPS Engineering has purchased over 10,000 pieces of automation equipment to sort the letters and flats . PARS takes cost out of many of the forwarding mail processes. This presentation touches only three of the major processes. Delivery Bar Code Sorter Advanced Facer Canceller Flat Sequencing System

2003 cost to forward mail was over $1.5 billion What is PARS? …An initiative by the US Postal Service that drastically reduces the cost of forwarding mail to a customer’s new address by automating each of the manual or mechanized processes. 2003 cost to forward mail was over $1.5 billion . PARS takes cost out of many of the forwarding mail processes. This presentation touches only three of the major processes.

1,080 Advanced Facer Canceller Systems upgraded PARS History Signed a contract with Siemens in 2002 and from 2003 through 2007 PARS delivered the following items at 283 processing centers nationwide at a cost of over $700 million: 290 delivery bar code sorters retrofitted with a PARS labeling module – Combined Input Output Sub-system (CIOSS) 4,527 delivery bar code sorters (DBCS) upgraded with new computers to intercept forwarded mail. 8,270 computer servers installed to provide optical character recognition and directory service. 1,080 Advanced Facer Canceller Systems upgraded 3,084 computer terminals placed at remote encoding sites for image keying 85 Change of Address Card Scanners . PARS takes cost out of many of the forwarding mail processes. This presentation touches only three of the major processes.

55 million Change-of-Address orders for customers that moved in 2008 PARS Statistics 55 million Change-of-Address orders for customers that moved in 2008 18% through the internet As you may know, keeping up with changing addresses is a time consuming, labor intensive and costly business. The Census Bureau tells us that nearly 20% of Americans change addresses each year.

2.4 billion USPS forwarded over pieces of mail in 2008 PARS Statistics It is estimated, that the Postal Service incurs an average additional cost of 21 cents if a mail piece has to be forwarded, and 59 cents if it has to be returned to sender.

Original Change of Address Process Delivery Unit Forwarding Unit Change Card Each newly received Change of Address card is sent to the letter carrier that serves the customer's old address. This core information, prepared entirely by hand, keeps carriers up-to-date about forwarding instructions for each of their customers who have moved. Each day, after carriers have updated their file the cards are transported to the Forwarding Unit, There are 219 CFS Units located across the United States, with each serving a specific geographic area. Here, clerks key information from each card into a computer. Once the addresses are validated, the updates are electronically transferred to the National Change of Address database. The cards are returned to the delivery unit where they are filed and maintained for a minimum of 18 months. National Center Memphis TN database Change cards on file 18 months

PARS Change-of-Address Process Memphis TN National Center The improved process starts with a new form that is more OCR readable The cards are scanned at one of 86 Forwarding units. The images are OCR processed and the information is verified by Remote Encoding Operators Redesigned Change-of- Address form Scanned and processed by OCR software along with remote video operators at 4 locations

Old Mail Forwarding Process

If the delivery point bar code and patron name matches the database PARS Interception The PARS process of interception changes everything. PARS intercepts and labels over 60% of the forwarded mail with the new address If the delivery point bar code and patron name matches the database

Overview – System Architecture Advanced Forwarding Reader (AFR) finalizes over 60% of images Remote Encoding Forwarded mail pieces are identified on all equipment Images are processed on the AFR If the AFR cannot resolve, the image goes to a remote encoding operator Any non intercepted pieces the carrier sends to the CIOSS At participating plants, selected automation equipment compares the name and address on each mail piece with a copy of the current national Change of Address database. Those mail pieces that are identified as Undeliverable as Addressed by these machines will be discharged into output stackers, and their images will be sent to a new, special purpose computer called Advanced Forwarding Reader. In those cases where the Advanced Forwarding Reader cannot successfully process the captured UAA image, the image will be transmitted to a Remote Encoding Site. The procedure used will be similar to those currently in place for resolving ZIP+4 addresses. To perform this expanded mission, encoding sites will need upgrades of software, hardware and transmission capabilities.

Combined Input Output Subsystem (CIOSS) The Combined Input/Output Subsystem (CIOSS) module will be added to the Delivery Bar Code Sorter. The CIOSS adds a labeling module, capable of high speed generation and application of yellow forwarding labels onto the redirected mail. This is the PARS workhorse that automates the currently mechanized process and eliminates the 1377 terminals. This upgrade will increase the length of the machine by 25 feet. Applies and prints labels with new address’s at over 30,000 pieces/hour CIOSS

Combined Input Output Subsystem (CIOSS)

Combined Input Output Subsystem (CIOSS)

High Speed Label Applicator

Original Address Correction Service Address Correction Service is provided to mailers that want to know if their customers have moved Pieces that require notification were identified Pieces were manually copied onto card stock with the new address and sent to the mailer via manual mail handling operations The mailer pays $.70 for each card sent Very costly and labor intensive process, that creates a manual stream of cards.

Postal Automated Redirection System Address Correction Service Cards are automatically generated, sorted by city, and printed at the National Center 75 million cards printed in 2008 Form 3547 Fee due 70 cents ACME Publishing PO Box 15223 Somewhere NY 10013 John Doe 7 Miner Street Apt. 3 Anywhere MA 07890 The 800,000 cards are printed per day, requires a 1,000 pound roll of paper that is over 37 miles long. 7 Miner Street Apt. 3 Anywhere MA 07890 TO THE POSTMASTER OF ACME Publishing PO Box 15223 Somewhere NY 10013 10 Main Street Smalltown CA 90210

Centralized Address Change Printer Located at the National Center, Memphis TN

Incentive Based Contract Business Case based on paying for a multiple of actual USPS savings

Acceptance and training of field operations personnel was key Lessons Learned Business Performance based incentive contract was low risk and a win win for both USPS and Siemens Implementation Acceptance and training of field operations personnel was key Testing Delays could have been avoided by gradual systematic testing Testing at various sized sites would have been beneficial

A positive affect was the reduction of customer complaints Lessons Learned Customer Service A positive affect was the reduction of customer complaints 60 % reduction in complaints on forwarded mail Complaints on fraudulent address change cards reduced from 27,000 in 2004 to only 368 in 2008 Technical Good results from Siemens using a graphical decision tree representation to document over 3,000 forwarding rules Excellent error rate on change of address cards with two OCRs and keyers. Adding too many features into one release caused the delay of valuable software that reduced operating costs.

Improved operational efficiency Summary of Benefits Improved operational efficiency Change-of-Address Cards – reduce manual entry Interception – Eliminates extra handlings and reduces manual keying workload Address Correction Service – eliminates manual copying and sorting of mail Faster and more accurate service to customers Significant system performance improvements since 2004 Interception rate went from 50% to 69%. The average OCR finalization rate 37% to 60%. Over $400 million in annual cost savings

Future PAR Plans Continue incentive based contracts to further improve interception AFR read rate , rejects and errors Planning PARS for Flats by retrofitting flat sorting machines and using the same PARS OCR and keying terminals This is the first time we have entered into an incentive contract with a vendor to take costs out of entire operation. We awarded the contract to Siemens in June of 2002. The USPS will pay a percentage of the costs savings achieved through the technology Email any questions to John.F.Keegan@USPS.com

Questions