1 Service Standards & Measurement Status Report MTAC: February 18, 2009

2  Postal Act of 2006 required USPS to “establish modern service standards”  By December 20, 2007, in consultation with the PRC for all Market Dominant Products  Consideration of Various Objectives and Factors  Value, access, reliability, measurability  New Service Standard Business Rules  Based on Operating and Logistics capabilities by product  Class based, independent of shape  Integrate origin entry and destination entry standards Modern Service Standards Established Service Standards

3  Two Levels of Service Standard Review  Ongoing Maintenance - Quarterly  Localized adjustments  National Systemic Review - Annual Review  System wide review  First annual internal review Oct - Dec  Evaluate business rules  Considerations  Operationalizing service standard initiatives  Network plan  Full year of performance measurement data Ongoing Review Process Service Standards

4  External: Single-piece Domestic and International First-Class Mail, Periodicals  Hybrid: Presort First-Class, Standard  Internal: Packages (Parcel Post, Library Mail, Media Mail, and Bound Printed Matter), Special Services Gathering data through three approaches: Service Measurement

5 External Measurement:  Applies to:  First Class Mail® (Single-Piece) - EXFC  Single Piece International – IMMS  Third-party vendor creates “test mail”  “Test Mail” anonymously dropped into USPS network; date/time recorded  “Test Mail” received by panel of recipients; date recorded Service Measurement

6 USPS Mail Processing Test Mail Fabrication Test Mail Induction Test Mail Receipt Collection Origin Processing Destination Processing Delivery Single-piece First Class Mail / External First-Class (EXFC ) Service Measurement

7 EXFC Points of Emphasis:  As of October 1, 2009, virtually all 3-Digit SCF’s are included in EXFC  99.9% mail coverage; 891 three-digit ZIP Code spans  Reported quarterly to the district level  IMMS reported at the area level  Specific 3-Digit, and in limited cases 5- Digit, exclusions submitted to PRC Service Measurement

8 Hybrid Measurement:  Will take effect with the implementation of Intelligent Mail® – Release 2  First-Class Mail (Presort)  Standard  Periodicals  Supplements mail scans from internal Intelligent Mail® system with externally collected data Service Measurement

9 Hybrid Measurement Approach Origin Processing Destination Processing Delivery Acceptance Transport to Delivery Unit Transport to Destination Delivery Unit Processing Stop-the-Clock External reporters scan IMb on mail at delivery Visible through Intelligent Mail, up to final MPE Operation Code or other scan event  External Measurement  External Reporters will scan live mail  Contractor will calculate last mile delivery factor for each mail class  Factor combined with IM data to form end-to-end service measurement Delivery Factor External Stop-the-Clock Service Measurement

10 FCM Presort and Standard Interim Approach  Uses “first processing scan” at point of entry as a proxy for Start-the-Clock; “last processing scan” plus last mile delivery factor, based on EXFC reporters, as Stop  Processing scan on USPS automated equipment clearly demonstrates the mailing has been entered into USPS Network  As Mailers/USPS demonstrate capability, we will transition to container scans at entry  Pilot data being used to calculate performance; data reported at the area level, quarterly Service Measurement

11 Periodicals Interim Approach  Use two external systems -  Red Tag and DelTrak  Measurement reported by external provider  Data reported quarterly at the area level  Once IMb adoption is sufficient, measurement process similar to commercial letters and flats Start-the-ClockStop-the-Clock FAST appointment and container scans Delivery date reported by each system’s monitors Service Measurement

12 Internal Measurement:  Applies to:  Package Services  Special Services  Package Services rely upon Delivery Confirmation data (Retail and Bulk Entry)  Data reported quarterly to the district level  Special Services cover a broad range of products with distinctly different data Service Measurement

13 Special Services  PO Box Uptimes  Percent on time reported quarterly to the district level  Delivery Services (eReturn Receipt, Del Con, Certified, Registered, etc.)  Scans available within 24 hours of scanned event; reported quarterly to the district level  Insurance Claims, CONFIRM, Money Order Inquiry, Address Correction Services, Address List Services  Reported quarterly at the national level Service Measurement

14  Implementing saturation flat mail measurement  “Home Depot” method  Start the clock: saturation mail barcode scanned to indicate “arrival at unit”  Stop the clock: saturation mail barcode scanned when delivered  Developing remittance mail analytics  Supplements EXFC diagnostic data  Uses sort plan data from postal processing equipment Measurement Enhancements: Service Measurement

15 Observations  Work in progress  Multiple systems  Cost implications  Communication  Monthly consultations with PRC  Dialogue with customers, mailing community  Bi-weekly SSMOC  Results posted on usps.com Service Measurement

16 FY09 Targets - Market Dominant Products Annual Targets

17 National Performance PQ 1, FY 2009 Source: IBM Global Business Services Market Dominant Mail Class Overnight % On-Time Two-day % On-Time Three-Five Day % On-Time Single-Piece First-Class Mail M.D. Mail Class Within +1 day Within +2 days Within +3 days Within +1 day Within +2 days Within +3 days Within +1 day Within +2 days Within +3 days Single-Piece First-Class Mail OvernightTwo-DayThree-Five Day PQ1 Results

18 Source: IBM Global Business Services M.D. Mail Class % On-Time Overnight % On-Time Two-Day % On-Time Three-Day Presort First-Class Mail M. D. Mail Class Within +1 day Within +2 days Within +3 days Within +1 day Within +2 days Within +3 days Within +1 day Within +2 days Within +3 days Presort First-Class Mail OvernightTwo-DayThree-Five Day National Performance PQ 1, FY 2009 PQ1 Results

19  Presort First-Class Mail®  Pilot data  Limited district induction points  Mostly letters  Representation limited  Customer identification possible  Area level public reporting  Remittance Mail to begin in 2009 Issues and Challenges PQ1 Results

20 Source: IBM Global Business Services Market Dominant Mail Class Percent On-Time Single-Piece First-Class Mail International86.2 Market Dominant Mail Class Within +1 day Within +2 days Within +3 days Single-Piece First-Class Mail International Inbound/Outbound National Performance PQ 1, FY 2009 PQ1 Results

21 Source: IBM Global Business Services Market Dominant Mail Class % On-Time Destination Entry % On-Time End-to-End Standard Mail M. D. Mail Class Within +1 day Within +2 days Within +3 days Within +1 day Within +2 days Within +3 days Standard Mail Destination EntryEnd-To-End National Performance PQ 1, FY 2009 PQ1 Results

22  Standard Mail  Mostly letters  Limited induction points  Excludes destination entry and saturation flats  Representation limited  Customer identification possible  Area level public reporting Issues and Challenges PQ1 Results

23 Source: IBM Global Business Services Market Dominant Mail Class% On-Time Periodicals69.8 Market Dominant Mail Class Within +1 day Within +2 days Within +3 days Periodicals National Performance PQ 1, FY 2009 PQ1 Results

24  Periodicals  Temporary process  Very limited validation for start the clock  Lack of rigorous reporter discipline  Sampling error is a concern  Address Change Service for FY 2009 Issues and Challenges PQ1 Results

25 Source: IBM Global Business Services Market Dominant Mail Class% On-Time Ground Package Services64.7 Market-Dominant Mail Class Within +1 day Within +2 days Within +3 days Ground Package Services National Performance PQ 1, FY 2009 PQ1 Results

26 Source: IBM Global Business Services Delivery Information Special Services Combined Score Post Office Box Up-Time % On-Time Special Services CONFIRMAddress Correction Insurance Claims Processing Address- List Services Money Order Inquiry % On- Time Special Services National Performance PQ 1, FY 2009 PQ1 Results

27  Special Services  ACS customers converting to daily fulfillment  Completion in Quarter 2  Denominator programming changes will be completed for Quarter 2 Issues and Challenges PQ1 Results

28  Standards in Place  Measurement Systems Developed and Working  Service Opportunities Identified  Issues and Challenges Identified Summary PQ1 Results