1. 1 Postal Automation: Initiatives, Transitions & Best Practices Postal Automation: Initiatives, Transitions & Best Practices Part II

2. 2 Jack Widener Director, Finishing and Distribution Newsweek Rosa Fulton Executive Director, Flats Sequencing System United States Postal Service Panel Members Postal Automation: Initiatives, Transitions & Best Practices Joe Schick Director, Postal Affairs Quad Graphics Marc McCrery Manager, Operational Requirements & Integration United States Postal Service

3. 3 Agenda  Flats Background  Flat Volume  Current Flat Operations  Delivery Vision  Flats Strategy  Flats Sequencing System (FSS)  Machine deployment and Schedule

4. 4 Flat Volume Periodicals 17% First-Class 8% Standard 75% Standard 75% 53.2 Billion Flats FY 2006 (RPW) FY 06 Revenue From Flats: $16.7 Billion

5. 5 2006 Flats Processing / Handling Presorted to Carrier Route 58% Needs Processing 42% 53.2 Billion Flats FY 2006 (RPW)

6. 6 Today’s Flats Processing AFSM 100 Automated Tray Handling Systems (ATHS) Automatic Induction (AI) UFSM 1000 Auto Flats Feeder Manual Keying APPS Flat Bundle Sorting

7. 7 2006 Flat Volume Delivery Unit Handling Saturation80%80% 20% Needs Casing By Carrier

8. 8 Current Flat Operations  Up-the-Distribution Ladder  Carrier Route Processing  Customer Participation / Work-sharing  Increased Productivity  Centralize Distribution Operations  Standardization / Certification  Reduce Flat Mail Preparation / Handling  Substitute Technology for Labor

9. 9 USPS Total Operating Costs: $71.9 Billion Delivery 43% Mail Processing 22% Support 0.9% Other Functions 9% Customer Service 16% Maintenance 6% Vehicle Services 2.4% Compensation 79% of Total Operating Expense

10. 10 Delivery Strategy  Letters and Flats Sorted Separately  DPS Letter Sorting Continues  Flats Sequencing in Delivery Point Order  Saturation Mail Continues  Reengineer Our Processes for Handling “Residue Volumes”

11. 11 Delivery Vision  Minimize Carrier In-office Time  Substitute Technology for Manual Carrier Casing Sequence Letters and Flats  Benefit from Street Opportunities  Carriers Start Street Delivery Earlier  Consistent Delivery Times  Manage Growth  Optimize Routes  Other Benefits  Delivery Day Visibility  Capture Real Estate Opportunities  Manage Vehicle Fleet

12. 12 Flats Sequencing System (FSS) Automatic High Speed Feeders Dolly Induction Subsystem Carousel-style Sorter Tray Staging Integrated Tray Converters Mail Prep Subsystem

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14. 14 Increase Customer Applied Delivery Point Barcodes 11-digit 60% 9-digit 33% No Barcode 7% 5-digit <1% 2007 Flat Barcode Analysis Barcode sampling results - January 2007 ● Transition from 9-Digit to 11-Digit ● Move From 11-Digit to Intelligent Mail Barcode ● Intelligent Mail Barcode Available for Flats in Spring 2007

15. 15 Improve Address and Barcode Readability  Standard Destination Address Block  Address Construction Improvements  Font Size, Horizontal and Vertical Character Spacing, and Extraneous Information  Barcode Location  Reduce OCR Return Address Reading Conflicts  CASS Certification™  DPV™

16. 16 Standard Address Placement  Orient Address Location for Carrier Street Handling This could represent the front cover or back cover of the mail piece. Customer address and optional delivery endorsement can appear anywhere in the address zone (top third above the dotted line) when the bound edge is aligned to the right. Customer number, source code and messaging can appear anywhere on catalogs. John Doe 123 Main St Anywhere, USA 12345 John Doe 123 Main St Anywhere, USA 12345 Can face left or right John Doe 123 Main St Anywhere, USA 12345 Can be left or right justified, or centered. Bound edge on right John Doe 123 Main St Anywhere, USA 12345 Address orientation restrictions will be determined by the USPS (e.g., cannot read upside down when at the top) based on the needs of delivery. Implement MTAC Workgroup 101 Results

17. 17 Maximizing Machine Efficiency  Match Mail Preparation Requirements to Processing Needs  Packaging, package and container make-up  Structure Rates to Support Sortation / Handling

18. 18 Multi-phase Development / Deployment  Prototype – Indianapolis INApril 2006  BOG Approval of 100 FSS MachinesDec 2006  Pre-production Install – Dulles P & DCApril 2007  Pre-production – Live OperationsSept 2007  Production First ArticleJune 2008  Phase 1 Deployment BeginSept 2008  Phase 1 Deployment EndSept 2010

19. 19 Phase 1 Deployment  100 FSS Systems  29 Districts  32 FSS Processing Facilities 26 Existing Processing Centers 7 New Facilities / Locations  1403 Zones  2 - 6 Systems per Facility

20. 20 Phase 1 Deployment AreaDistricts # FSS Plants / Facility NYM Northern NJ Long Island NY Central NJ 433433 NJ BMC Mid Island NY P & DC Trenton NJ P & DC NE Boston Massachusetts Connecticut SE New England 34533453 Northwest Boston P & DC Middlesex Essex P & DC Springfield BMC Providence RI P & DC EAColumbus3Former Columbus P & DC SE South Florida Atlanta Central Florida 52245224 New Miami Facility Project Atlanta AMC North Metro GA P & DC Orlando P & DC WE Colorado / Wyoming Arizona Mid America 552552 Denver P & DC New West Valley (Phoenix) Facility Project Kansas City P & DC

21. 21 Phase 1 Deployment AreaDistricts # FSS Plants / Facility PA Los Angeles Sacramento Bay-Valley/San Francisco Sierra Coastal Santa Ana San Diego 234452234452 Herb Peck Annex Sacramento P & DC San Jose P & DC Van Nuys Main Office New Aliso Viejo Facility Project New Perris DPC Facility Project CM Greensboro Northern VA Richmond Capital 2244222442 Raleigh P & DC Greensboro P & DC Dulles P & DC New Richmond Facility Project Curseen-Morris P & DC GL Greater Indiana Northern IL Central IL Southeast MI 232222232222 Indianapolis MPA Palatine P & DC Carol Stream P & DC Fox Valley P & DC South Suburban P & DC New Royal Oak Facility Project

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