® Product Visibility Baltimore PCC Jeff Freeman Manager, Network Visibility Systems March 16, 2012

®  Product Visibility Power of Business Intelligence  Package Visibility  Mail Visibility  Full Service Moving Forward AGENDA

® 3  Product visibility is essential to transform our business  Visibility enhances DMAIC approach to systemic improvement  Enhances business knowledge  Drives world class service  Creates customer value – generates revenue  Creates business value – efficiency Product Visibility Creates Business Intelligence

® Mail Processing and Other Equipment – Successfully read barcodes Infrastructure – Successfully moves data Systems – Deploy actionable reporting & analytics to achieve benefits of increased visibility Intelligent Mail and Package Barcodes – Unique barcodes on all pieces, trays and containers Real-time data availability – All systems provide real-time data Building Blocks to Achieve Visibility

® Event Full Service Letters/Flats Packages Acceptance Depart Post Office/BMEU Arrive USPS Sort Facility (Origin) Processed through USPS sort facility (enroute) Depart USPS Sort Facility Enroute Tray and Sack Events Arrive USPS Sort Facility (Destination) Processed through USPS Sort Facility (enroute) Depart USPS Sort Facility Arrival at Post Office Processing Complete Out for Delivery Delivered Complete Tracking Capability End of FY 2011 Real Time Scanning

® Tracking Capability End of FY 2012 (Work in Progress) Event Full Service Letters/Flats Packages Acceptance Depart Post Office/BMEU Arrive USPS Sort Facility (Origin) Processed through USPS sort facility (enroute) Depart USPS Sort Facility Enroute Tray and Sack Events Available Now! Arrive USPS Sort Facility (Destination) Processed through USPS Sort Facility (enroute) Depart USPS Sort Facility Arrival at Post Office Processing Complete Out for Delivery Delivered Work in Progress Complete Real Time Scanning

® How Mail Performed Right mail, to the right customer, at the right time – every time! Support Customer Inquiries Using mail data to improve ROI Value of reliable service performance Root Cause, MP WIP, Elapsed Time USPS Vital Few Delayed Status What plant, what shape, what failed? Analytics capture the benefits of 100% Product Visibility

® Package Visibility

® What is World Class Service?  Time-in-transit service performance All products are day certain Service performance must be consistently reliable Measure all products in-transit to all destinations

® USPS Tracking # Visibility Drives Customer Satisfaction and Performance Scanning is Fundamental

® Network Enroute Scan Performance – 58% Operational Performance Jan FY11

® Package Nesting Solution  Deployed to 62 APPS sites - June 2011 Package Barcode Reader Program  4,000 ring scanners to over 200 plants - June ~ December 2011 Automated Package Bundle Sorter  Deployed 194 retro-fits - December 2011 Product Tracking System Reengineer  On schedule for Spring 2012 Investment in Technology

® 3.9 BILLION new package tracking events in 5 Months! Growth in Package Tracking Events FY 09 FY 12 FY 10 FY 11 Number of Events in Billions

® Scan events turn data into customer business value - helps grow the business Transformational

® Network Enroute Scan Performance – 92% Operational Performance Jan FY12

® Next Generation - Intelligent Mail Device Next generation – move to real-time scanners  Wireless communication  Requires software modification and new hardware  Targeting Commercial Off-the- Shelf (COTS) scanners  Phased roll-out Investment in Technology

®  A barcode on every piece  End-to-end visibility  10 to 12 tracking events per piece  Scan performance is 99%+ and real time  Barcode provides – business value Operational service analytics Cost ascertainment Volume planning for workload Transportation efficiency Customer level data for pricing Payment initiation Revenue assurance World Class Package Visibility Information is Essential

® Mail Visibility

® Full Service Provides Visibility

® 16,232,020 Electronic Info for Containers and Trays Received 560,950 Entered at USPS SV Unload Scan 2,305,810 Enroute Depart Scan for Containers and Trays 1,827,900 Enroute Arrive Container and Tray Scans 11,116,070 Enroute Tray Scans 12.5 Billion Piece level automation scans Full Service Customers Only All IMb™ Users Full Service - Free Visibility January 7 - February 29, 2012 New Visibility for Mailers

® What is World Class Service?  Time-in-transit service performance All products are day certain Service performance must be consistently reliable Measure all products in-transit to all destinations

® Service Performance Diagnostics

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® Manage Work in Process (WIP)

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® Inverse Correlation between WIP & Service Level PQ 1 FY 12 - NDC Letters

® Container at Risk Alerts From: Sent: Wednesday, March 14, :54 AM To: PLANT MANAGER Subject: MAIL AT RISK FOR SERVICE FAILURE (TOMORROW) Plant Manager - USPS L&DC Facility The following Standard mailers have entered mail at your facility in which we have yet to see an automation scan that indicates the mail will meet service performance expectations.  THIS MAIL IS AT RISK FOR SERVICE FAILURES with a Start the Clock Date of 02/12/2012 and a last day to meet service standard of 02/15/2012  HARTE-HANKS WILKES BARRE ( ) JOANN FABRIC & CRAFT STORES ( ) Standard Letter IM Container Barcode(s): ●99M (Unload: 02/12/ :28:43) IMtb: (High Speed Tray Sorter : 02/13/ :13:56 USPS L&DC)  DATA-MAIL, INC. -NEWINGTON ( ) Bank Of America ( ) Standard Letter IM Container Barcode(s): ●99M (Unload: 02/12/ :26:43) IMtb: (High Speed Tray Sorter : 02/13/ :04:27 USPS L&DC) 99M (Unload: 02/12/ :21:29) IMtb: (High Speed Tray Sorter : 02/13/ :35:11 USPS L&DC)  QUAD/GRAPHICS-THE ROCK ( ) QUAD/GRAPHICS-SUSSEX (FAST) ( ) Standard Letter IM Container Barcode(s): ●99M PT (Unload: 02/12/ :46:29) IMtb: (High Speed Tray Sorter : 02/13/ :01:02 USPS L&DC)

® Operational Performance Visibility creates operational inventory to help managers anticipate volume & schedule proactively

® Service Performance Measurement

® Measurement Volume by Quarter

® Commercial First-Class Mail FY11 & FY12 Performance By Month All Mailers in Measurement Commercial First-Class Mail Service Performance Diagnostic Tool Launched

® FY12 First-Class Service

® FY12 Standard Mail Performance Source: iMAPS By Week through Mar 2, 2012 Introduced new SPD Tools, MP WIP

® Source: iMAPS By Week through Mar 2, 2012 Introduced new SPD Tools, MP WIP FY12 Standard Mail Performance

® Source: iMAPS By Week through Mar 2, 2012 Introduced new SPD Tools, MP WIP FY12 IMb™ Periodical Performance

® Full Service is Essential!

® Growth in Full Service is not sufficient to achieve business benefits YTD FY 12 – Oct - Jan

® Intelligent Mail vs. Full Service Volume Growth 7,954

® Full Service Value Proposition Value to Industry Service  Visibility & tracking across the mail supply chain  Customers receive consistent & reliable service  Utilization of information to drive service improvement Customer Applications  Advance remittance intelligence  Test mail piece creative results  Integrate multi-channel marketing strategy  Measure success of each mail campaign  Efficient staffing of customer call centers

® Full Service Value Proposition Value to Industry Financial Incentives  Elimination of permit fees  Access to promotions & incentives  Discounted or free addressing products & services  Maximize automation discounts moving forward  Reduce USPS costs, protect price for mailers Ease of Use  Eligibility for eInduction and Seamless Acceptance  Postal Wizard Enhancement  Customized data provisioning options  Opportunity for automatic move update qualification

® Steps to Attain Adoption January 2013  IMb required for automation rates  Sunset POSTNET eligibility for automation rates  Restructure Full Service discounts to increase incentives for participation January 2014  Sunset IMb Basic eligibility for automation rates  Require Full Service for automation discounts

® POSTNET Barcode Discontinuation  Received immediate feedback on Federal Register proposal, published on March 2, to the clear zone requirement for letters and flatsFederal Register  Final rule will exclude the clear zone requirement  Focus must be on the important aspects of the Intelligent Mail Barcode (IMb) implementation  Encourage the mailing community to continue commenting on retiring POSTNET for automation pricing eligibility

® Full Service Communication Plan

® 44  Essential to compete  Creates customer value  Creates business value  Drives world class service  Provides information to improve our processing system  Foundation for improved costing system  Provides information to eliminate non-value added processes Product Visibility will Transform our Business Recap

® Thank You