1. Business Mail Acceptance Update Mailer’s Technical Advisory Committee (MTAC) November 19, 2009 Pritha Mehra Frank Neri Bob Galaher

2. Business Mail Acceptance Update 2 Agenda  SOX/Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

3. Business Mail Acceptance Update 3 BMA SOX  Funds on Hand  Proper acceptance and verification of business mail  Timely and accurate reporting of revenue  Revenue Completeness/Assurance  Authorization for key overrides  Identification of and action on bypass mail  Management of Inactive accounts  Sites in Balance Key Financial Control Issues

4. Business Mail Acceptance Update 4 Benefits of LMAP  Improves Customer Experience  Improves Service Performance  Improves operational efficiency  Standardizes the acceptance and verification processes  Helps to eliminate bypass mail  Increases compliance of financial controls Lean Mail Acceptance Process (LMAP)

5. Business Mail Acceptance Update 5 Implementation Strategy  Assemble LMAP team  Observe unit  Create Current State VSM and Flow Diagram  Implement Five Standard Processes  Metrics monitored to ensure sustainability Lean Mail Acceptance Process (LMAP)

6. Business Mail Acceptance Update 6 Implemented Five Standard Processes  Postage Statement Bins  First-in, First-out (FIFO) a.k.a. Customer Presentation of Mail  Team Acceptance/Verification of Mail  Optimize BMEU Configuration  IOP Agreements Lean Mail Acceptance Process (LMAP)

7. Business Mail Acceptance Update 7 Optimize BMEU Configuration: Numbered Swim Lanes, Signage Staging Areas Lean Mail Acceptance Process (LMAP)

8. Business Mail Acceptance Update 8 Postage Statement Bins Lean Mail Acceptance Process (LMAP)

9. Business Mail Acceptance Update 9 Approach  Deploy LMAP Business Mail Entry Units  Validate Detached Mail Units Acceptance Procedures –Ensure Adequate Staffing –Perform Verification Procedures per DM-109 –Ensure Timely Recording of Revenue –DMU Acceptance Compliance Checklist  Drop-Ship Process Improvements SOX Remediation Approach

10. Business Mail Acceptance Update 10 Drop Shipment Enhancements  Plant-Verified Drop Shipment (PVDS) Improvement Identify and implement solutions that will create standard PVDS procedures and protect revenue Map out the current PVDS verification process Develop solutions to improve the current process Implement solutions Nationwide Lean Mail Acceptance Process (LMAP)

11. Business Mail Acceptance Update 11 Drop Shipment Enhancements  Plant-Verified Drop Shipment (PVDS) Improvement –Process Changes PS Form 8125 is the only document accepted from the driver When defects arise, the SDO or MDO will become involved until resolution is achieved –Process Compliance Require pallet count verification Enforce scanning of 99M placard barcode Only accept correct and completed PS Form 8125 Consistent use of PS Form 8125 –Training and Documentation Easy ‘Step by Step Guide’ to follow for drop shipment acceptance at destination Update Pub 804 to include process changes and ‘Step by Step Guide’ Develop drop shipment training course Lean Mail Acceptance Process (LMAP )

12. Business Mail Acceptance Update 12 Agenda  SOX/Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

13. Business Mail Acceptance Update 13 Streamlining Hard Copy Postage Statements  Starting March 15, 2010, the Postal Service will no longer fill out the USPS® section of a hard copy postage statement nor round-stamp the document.  After March 15, 2010, mailers are encouraged to go online to view their mailing activities and retrieve processed postage statements. This procedural change will speed and improve service and reduce the amount of paper generated.  Upon request, a customer may obtain a hard copy receipt of the postage statement or Statement of Mailing/ Weighing and Dispatch Certificate, PS Form 3607, after acceptance and verification are completed. March 2010

14. Business Mail Acceptance Update 14 Agenda  SOX/Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

15. Business Mail Acceptance Update 15 Performance Based Verification  Statement of Ownership Reviews  Annual Periodicals Review  Manifest Mailings  Full-Service Mailings March 2010

16. Business Mail Acceptance Update 16 Agenda  SOX/Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

17. Business Mail Acceptance Update 17 Move Update March 2010  Verifications performed at sites with MERLIN  Threshold effective January, 2010 - Must be more than 5 pieces with COAs that were not updated -Passing score requires 70% or more of the COAs must be updated -First-Class Mail and Standard Mail assessed 7 cents for each piece -Current appeal process applies

18. Business Mail Acceptance Update 18 Move Update for Combined Mailings  Assessment can be targeted to only clients with issues - if there are no more than 3 clients with issues in the mailing  Penalty will be re-calculated to be applied to only the clients with issues -Example: Mailing size is 1,000,000 for 10 clients, only 2 clients were found with Move Update issues -The 2 clients account for only 5,000 pieces in the mailing -Move Update penalty will be re-calculated based on only 5,000 pieces in this example March 2010

19. Business Mail Acceptance Update 19 Agenda  Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

20. Business Mail Acceptance Update 20 Full-Service Intelligent Mail Device (IMD) Acceptance Procedures  Full-Service IMD enables acceptance employees to ensure Full-Service mailings meet barcode, preparation and data requirements to qualify for Full-Service prices  Two types of Scans –Initial Verification Sampling Scans –Container Release Scans  Three types of mailing processes –Staged - single mailing presented in its entirety with all electronic documentation (eDoc) (postage ready to pay) –Continuous - single or multiple mailings produced over an entire day or multiple days, planned eDoc is submitted at the beginning of the mailing and postage statements are submitted at the end of the mailing or when the mailing is ready to drop ship –Third party Co-palletized Full-Service Assessment Approach

21. Business Mail Acceptance Update 21 Full-Service IMD Sampling Scans  Full-Service IMD Sampling Scans will be conducted based on the mailers operation –Staged - when mailing and documentation are completed –Continuous - Pallet / Container Full-Service Mail Sample Sampling scans conducted in addition to the VRSR samples identified in the PBV model Sampling is conducted as mail is produced Sampling is conducted for each mail job, not postage statement –Third-Party Co-palletization site Full-Service IMD Sampling Scan will be performed on Third-Party Co-palletized mailings even if a sampling was conducted at the “origin” verification unit No mailpiece level sampling scans will be conducted at Third-Party Co- palletization facilities Full-Service IMD Acceptance Procedures

22. Business Mail Acceptance Update 22 Agenda  Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

23. Full-Service IMD Sampling Scans Container Scan 3 Containers (or all if less than 3) Trays/Sacks Pick 1 Container ( from the sampled) Scan 5 Trays/Sacks per Container Bundles Pick 1 Container (from the sampled) Scan 5 Bundles per Container Pick 3 out of 5 Trays or Sacks (from the sampled) On ContainerOn Tray or Sack Mailpieces In Trays or Sacks In Bundles Pick 3 of 5 scanned trays/sacks Scan 10 Mailpieces per tray/sack Pick 3 of the 5 scanned bundles Scan 10 Mailpieces per bundle Scan 5 Bundles per Tray or Sack Full-Service Assessment Approach

24. Business Mail Acceptance Update 24 Full-Service IMD Container Release Scans  Container Release scans –Performed at Detached Mail Units (DMUs) –For mailings on USPS Transportation for Origin Entry –Performed for each dispatch –Completed just prior to the mailer loading the vehicle and the acceptance employee sealing the vehicle –Document the release date / time  Continuous Mailing Operation –A minimum of 2 containers are required to be scanned  Staged Mailing Operation –All containers are required to be scanned Full-Service Assessment Approach

25. Business Mail Acceptance Update 25 Agenda  SOX/Lean Mail Acceptance Process (LMAP)  March 2010 –Streamlining Postage Statements –Performance Based Verification (PBV) Updates –Move Update  Full-Service Assessment Approach –Sampling and Container Release Scanning –Error Assessments

26. Business Mail Acceptance Update 26 Error Assessment: Disposition of Mailings when Errors are Detected  Full-Service sampling is performed during initial review of mailing  Focus on Content, Readability, Uniqueness  Disposition of mailings is dependent upon the errors found and corrective action taken by the mailer  Errors that can result in Loss of Full-Service discounts and benefits –Electronic Documentation (eDoc) not submitted for Full-Service mailing –Missing, Incorrect or Unreadable Container Placard –Missing, Incorrect (missing IMtb), or Unreadable Handling Unit Labels –Unreadable IMb on Mailpiece Full-Service Assessment Approach

27. Business Mail Acceptance Update 27 Question and Answer Session