1. Product Redesign MTAC Update November 7, 2002

2. Workgroups Joint Meeting of Workgroups –Originally Planning For Early 2003 –Primarily Information Sharing –If Get CSRS Legislation Soon, Might Want to Adjust Timing and Content Packages/BPM –USPS Internal Information Gathering Underway –Reactivate Workgroups When Complete PRODUCT REDESIGN

3. Timing for Implementation of Ideas Ideas That Do Not Require Postal Rate Commission (PRC) Approval –Implement Near Term Small Cases/Experiments/Negotiated Service Agreements (NSAs) –Implement Prior to Omnibus Case Include in Regular Omnibus Rate Case –Dependent on Timing and Complexity of Omnibus Case Full Product Redesign Case Only –Major Changes PRODUCT REDESIGN

4. For AFSM-100 Compatible Standard Mail Flats Five-Digit Bundles Are Now: –Optional From 10 - 16 Pieces –Required Only For 17 or More Pieces Have Received Some “Before & After” Data –Please send any additional data to Cheryl Beller Anita Pursley Will Coordinate Information Gathering on Extent of Use Implement Near Term - No PRC Approval Required PRODUCT REDESIGN A First Step Toward Flexible, Cost-Based Rates

5. Need Your Help to Learn About Effects Real Mailings, Not Simulated Mailings Make-up at 10-pieces & alternative minimum Constraints on Make-up other than 20 lbs. –Maximum Heights for Bundles in Sacks –Maximum Heights for Production Reasons See Postal Bulletin for Details on Information Needed PRODUCT REDESIGN

6. Mailer Suggestions Lead to Opportunity for Standard Parcels: Allow DDU entry of Standard Parcels at DBMC or DSCF rates –Improve Service Consistency for Customers –Postal Service Cost Savings Implement With Customer Support Ruling –Allow DBMC Rate With No Minimum –Allow DSCF Rate With 10 pounds for a 5-Digit Ruling Drafted, Internal Coordination Underway Expect to Implement in 2002 PRODUCT REDESIGN Implement Near Term - No PRC Approval Required

7. Co-palletization: Periodicals Flats Bundles For small volume mailings now origin- entered in sacks Additional incentives for bundles that are newly: –Co-palletized on ADC and SCF pallets and –Drop shipped to DADC or DSCF Settlement Discussions Going Well Small Cases/Experiments/NSAs - Before Omnibus Case PRODUCT REDESIGN

8. Parcel Select™ Return Service Low cost, no frills merchandise returns service – Capitalize on USPS operational savings Mailer or Consolidator Picks up Bulk Returns at DDU, DBMC, or “Origin” BMC – Allows providers to offer value added services – Credit returns – Redirect merchandise Planned Schedule: –File Fall 2002 (Fall Extends through December 20) –Implement Spring 2003 PRODUCT REDESIGN Small Cases/Experiments/NSAs - Before Omnibus Case

9. Simplified Preparation Option in Standard Mail Adjust Bundle Minimum At Least for 5-Digt Standard Flats Shape-Based First-Class Rates – Convert Lightweight Flats to Auto-Compatible Letters – Increase Flats Worksharing Incentives for Additional Work-Sharing for Standard Parcels Etc. PRODUCT REDESIGN Possibly Include in Omnibus Case

10. Until Legislation Passed, Omnibus Rate-Case Preparation Will Continue to Take Priority With Legislation, Major Opportunity for Earlier Benefits from Redesign Ideas One Major Redesign Case or Several “Medium-Size” Cases? Need to Work Through Many “Details” Before Decisions Can Be Made – Internally – Redesign Steering Committee PRODUCT REDESIGN Implications of CSRS Legislation for Redesign