1. 1 Mailers Technical Advisory Committee, Workgroup 114 MTAC Workgroup 114 Establish Service Standards and Measurement Workgroup Recommendations vs. USPS’ Proposed Standards Full Workgroup Meeting October 2, 2007

2. 2 Mailers Technical Advisory Committee, Workgroup 114 What does the Workgroup support in the USPS’ proposed service standards? Where do issues still exist? How do we work to resolve those issues?

3. 3 Mailers Technical Advisory Committee, Workgroup 114 Issue: –Workgroup urged USPS to perform in-depth review of existing standards against today’s network capabilities (March 2007) –USPS updated business rules to reflect existing network capabilities; applied realities of today’s mail entry environment (e.g., drop ship) –Workgroup expectation was minor adjustments, but no significant changes in existing service standards Workgroup Recommendation: –Mailers need to assess impact from specific 3-digit ZIP Code O/D pair changes USPS Standards Review (Section 206)

4. 4 Mailers Technical Advisory Committee, Workgroup 114 How do we work to resolve this issue? –Workgroup members need to assess the impact from specific 3-digit ZIP Code origin/destination pair changes –Comparing USPS’ proposed standards to existing standards may not be meaningful (e.g., Standard Mail, Package Services) –A better comparison might be the USPS’ proposed standards to existing service performance… –The Key Question: Would the USPS’ proposed standards meet your business needs if the USPS were to achieve those standards? USPS Standards Review (Section 206)

5. 5 Mailers Technical Advisory Committee, Workgroup 114 Issue: –Consistency of service important to all product users –Reduce “tail of the mail” (volume, length of tail) –The longer the tail of the mail (the time it takes to complete delivery of virtually all of a day's mail) the greater the cost to both businesses and their customers –Some product user segments more adversely impacted (e.g., Remittance mail users) Workgroup Recommendation: –USPS consistency performance goals recommended for all products How do we work to resolve this issue? Improve Service Consistency (WG Report Section 203)

6. 6 Mailers Technical Advisory Committee, Workgroup 114 Issue: –Product users model operations, logistics, mail preparation time lines working backwards from the CET in order to achieve desired service –CETs integrally linked to service expectations/standards –Today, USPS facilities locally set CETs, which allows for flexibility and customer negotiation, but local facilities can change CETs with little input from mailers and little oversight by USPS –CET data is currently not accessible to mailers or USPS in a central source –USPS plans to maintain locally set CETs for First-Class Mail and Periodicals; move to national standardized CETs for Standard Mail and Package Services Critical Entry Times (CETs) (Section 204)

7. 7 Mailers Technical Advisory Committee, Workgroup 114 Issue: (cont’d) –Mailers will not know details of USPS’ proposed CET changes before comment period for service standards (USPS plans to include CET changes as part of June 2008 plan) –Concerns that negative changes to CETs would significantly impact mailers’ ability to achieve desired service; and negatively impact USPS operations (too many mailers entering mail in shorter window to achieve CET) –Concerns that local offices could change CETs to improve service performance, while negatively impacting mailers Critical Entry Times (CETs) cont’d (Section 204)

8. 8 Mailers Technical Advisory Committee, Workgroup 114 Workgroup Recommendation: –New MTAC workgroup should be formed to collaborate on CET issues –USPS oversight of local facilities in setting/changing CETs –USPS should continue to consult with major customers entering mail at the postal facility in establishing/changing CETs –USPS should make CET data available to mailers, link to service standards –CETs must be tied to service performance measurement system How do we work to resolve these issues? –New MTAC workgroup? June 2008 Plan collaborative effort? Critical Entry Times Recommendations (Section 204)

9. 9 Mailers Technical Advisory Committee, Workgroup 114 Workgroup Recommendations vs. USPS’ Proposed Service Standards First-Class Mail

10. 10 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards Recommendations Needs of product users (Section 210.1.3) –Consistent, Timely, Accurate, and Cost Effective Delivery (for both business and individual non-business mail) –Business Mail Measurement (EXFC does not measure business FCM)

11. 11 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards on the U. S. Map Mailed from the West Coast (Los Angeles CA)

12. 12 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards on the U. S. Map Mailed from the East Coast (Washington DC)

13. 13 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards on the U. S. Map Mailed from the Midwest (Chicago IL)

14. 14 Mailers Technical Advisory Committee, Workgroup 114 What’s Not on the Map… Non-Reciprocal Origin/Destination City Pairs (Section 210.1.2) –This is not new, but perhaps not previously noticed –1,200 3-digit ZIP pairs where the service standard in one direction is one day -- and in the other direction is two days Non-Contiguous U.S. Locations (Section 210.1.3.4) –Alaska, Hawaii, Puerto Rico, etc. –Workgroup recommends USPS evaluate network capabilities for non-contiguous, publish specific standards for comment –While any new standard should reflect the existing network capabilities, it is important that the USPS not add to or extend the time for delivery beyond that which is being provided now, but simply reflect current reality.

15. 15 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards Recommendations Maintain existing standards (Section 210.1.3) –The USPS has regularly updated FCM service standards (most recently, a significant realignment in 2001) –Consistent, timely, accurate and cost effective mailpiece delivery expected by senders and receivers alike –Measure all FCM, not just collection mail Notification of changes in Standards/CETs (Section 210.1.3.7) –FCM product users generally have designed production scheduled around local USPS CETs (extensive dependency) –Therefore, concern around communication and notification of changes to CETs

16. 16 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards Recommendations Consistency (Section 210.1.3.1) –Need to measure (1) the time for delivery of mail (including mail that is not delivered with the current service expectation) and (2) the consistency of service (Individuals and Businesses) –Need to know …how long it will take for our mail to reach the addressees and …how long it will take to receive the addressees’ responses –Late arrival of either outgoing or return mail (often remittance mail) causes serious problems for both business mailers and their customers

17. 17 Mailers Technical Advisory Committee, Workgroup 114 Improve Consistency: Illustrative Report on Service Performance In the future, the annual performance review might reveal that performance could be improved by reducing the number of days required to achieve 99% delivery from perhaps 3 days for overnight mail to 2.5 days. Percent of Mail Delivered Within Standard # of Days to Complete Delivery of 99% 1 Day Delivery Area95%3 days 2 Day Delivery Area92%5 days 3 Day Delivery Area90%6 days If service standards performance reporting of both the percentage of mail in each service category that is delivered within the applicable service standard and the total time it takes to complete delivery of nearly all (99%) of the mail in each service were set according to current performance, they would be as follows:

18. 18 Mailers Technical Advisory Committee, Workgroup 114 Standards for Forwarded/Returned Mail (Section 210.1.3.5) U.S. is highly mobile culture, forwarding and return to sender are valued service features of FCM to businesses and recipients –Updating mailing lists (with COA info) is not only essential to further relationships (both business and individual), but is also required to obtain postal discounts Workgroup recommends: –Two service standards for the entry of COA data submitted 1) hardcopy and 2) electronically –Two service standards for mail forwarded 1) via PARS, 2) after carrier identification

19. 19 Mailers Technical Advisory Committee, Workgroup 114 Standards for Forwarded/Returned Mail (cont’d) Specifics associated with recommended standards reflect the process dependencies via each methodology – encourage you to look at the examples provided in the full report –Service Standards recommended assume that questions concerning customer-provided address information can be verified – eliminating the delays associated with obtaining and making corrections (with the customer) The processing of return-to-sender mail involves steps that haven’t been sufficiently mapped for the workgroup to recommend a standard at this time

20. 20 Mailers Technical Advisory Committee, Workgroup 114 First-Class Mail Service Standards Recommendations International Mail (all products) is 3% of total USPS revenue and.37% of total volume Confusion regarding scope since USPS product reorganization (April 2007), therefore workgroup recommendation is focused on single piece international International Single-Piece recommendations (Section 210.1.3.6) –Focus on Service Standards and Measurements for the domestic portion of the service: 6-day standard for 90% of the volume –USPS should not be held accountable for service performance on International Mail when it is outside the control of the USPS (Another country/post, or Military dept) –End users (both business and individual) value any end to end reporting that may be available

21. 21 Mailers Technical Advisory Committee, Workgroup 114 Workgroup Recommendations vs. USPS’ Proposed Service Standards Periodicals Mail

22. 22 Mailers Technical Advisory Committee, Workgroup 114 Publishing industry represents about 2% of the U.S. economy and includes: –magazines –newspapers –Newsletters FY 2006, USPS processed over 9 billion Periodicals, representing $2.2 billion in revenue 45% of Periodicals segment revenue comes from the largest 40 USPS Periodicals customers, but… –69% of all publications are small-medium distribution size Periodicals Service Standards Recommendations (Section 210.2)

23. 23 Mailers Technical Advisory Committee, Workgroup 114 Periodicals Mail Service Standards Recommendations Periodicals must have timely, reliable and consistent delivery The distribution of printed magazines and newspapers needs to be very quick. In an age where the American consumer can chose to get information they want and need from unlimited digital sources -- the successful Periodical will live and die by the ability to have addictive content and a totally efficient delivery system of that content That delivery system will be the United States Postal Service

24. 24 Mailers Technical Advisory Committee, Workgroup 114 Periodicals Mail Service Standards Recommendations Maintain existing standards (Section 210.2.3) Service Standards have been set by the USPS for over 30 years and have been updated quarterly. Periodical mailers must be provided an opportunity for feedback on changes. Emphasize importance of Critical Entry Times (Section 210.2.3.1) A change in CET could negatively affect customer business needs. Ensure standards can be met for small density mailers using end-to-end network (Section 210.2.3)

25. 25 Mailers Technical Advisory Committee, Workgroup 114 Periodicals Mail Service Standards Recommendations USPS should evaluate network capabilities for non- contiguous, publish proposed specific 3-digit ZIP Code origin/destination pairs for product user comment (Section 210.2.3b) No adjustment for seasonality/heavy volume period (Section 210.2.3i) Support FCM forwarding/return standards as applicable to Periodicals Mail (Section 210.2.3h)

26. 26 Mailers Technical Advisory Committee, Workgroup 114 Workgroup Recommendations vs. USPS’ Proposed Service Standards Standard Mail

27. 27 Mailers Technical Advisory Committee, Workgroup 114 Consistent Delivery is Critical for Product Users… (Section 210.3.3.8) Standard Mail is promotion-based with multiple promotions weekly tied to merchandise, staffing and other media spend. Early or late delivery harms business needs and reduces value Early – merchandise is not available; call center is not staffed to take orders; signage not ready. Customer make assumption able to use sale coupons as soon as they receive the piece. (customer does not always read the dates on the piece) In store advertising not ready. Other media not yet running – event relies on all components driving traffic to the store Late – sale is over, merchandise is sold out, already sent to liquidation, or just picked over extensively. Customer tries to use an expired Direct Mail piece, immediately the "experience" is in jeopardy. The pricing and signage has now been removed. Causes manual manipulation of the sales terminal

28. 28 Mailers Technical Advisory Committee, Workgroup 114 JCPenney WeekEventTypeIn Home DatesEvent Start Date Retail381Flat10/18-10/2010/21-10/27 Retail382Flat10/18-10/2010/21-10/27 Credit383Letter10/18-10/2010/21-10/31 Cat Outlet384Letter10/20-10/2310/24-10/27 Retail385Flat10/22-10/2410/24-11/7 Retail386Flat10/22-10/2410/25-10/31 Retail One Day Sale Event387Flat10/20-10/2310/24/2007 Cat Outlet388Letter10/22-10/2410/26-10/29 Retail389Letter10/22-10/2410/25-10/27 Catalog3810Catalog10/18-10/2010/20-10/22 Catalog3811Catalog10/18-10/2010/23-10/27

29. 29 Mailers Technical Advisory Committee, Workgroup 114 EventIn-Home Date Sep Wk 5 Columbus Day Book9/28 - 10/1 Clinique GWP Mailer9/29 - 10/1 Liz Denim Mailer (special event)10/3 - 10/5 Optical PC - Atlanta Only10/4 - 10/6 Berkshire Hosiery PC10/5 - 10/8 Liz Denim Mailer (non special event)10/9-10/11 Jones NY Classroom Mailer10/10 - 10/12 Clarins Time to Choose Mailer10/11 - 10/13 Bobbi Brown N. Point Opening PC10/11 - 10/13

30. 30 Mailers Technical Advisory Committee, Workgroup 114 Consistent Delivery is Critical for Product Users… (Section 210.3.3.8) Service consistency and predictability are the greatest possible benefit of established service standards and performance measurement Workgroup recommends USPS consistency performance goals as well as on-time performance goals Workgroup supports USPS’ plans to improve operational disciplines to improve Standard Mail service performance (e.g., limit deferability, keep local mail local, etc.)

31. 31 Mailers Technical Advisory Committee, Workgroup 114 Range of Delivery Days Needed (Section 210.3.3.2) Mail owner’s and service provider’s business systems and processes created to target a range of delivery days to include the 1 to 2 day product deferability so that the range for Destination Entry is no broader than a 3-day window. Origin entry could be a maximum of a 5-day delivery range using the ± 2 days and the O/D pairs A 5-day range for drop ship mail, for example, would be too broad to effectively plan pre- and post mailing activities, and also does not recognize the negative impact of “early” delivery. Maintaining a 2-3 day range of days is consistent with the USPS Fall Mailing Guidelines used since 1998.

32. 32 Mailers Technical Advisory Committee, Workgroup 114 Recommended Service Standards (Section 210.3.3.3) Workgroup Recommendation: Range of Days USPS Proposal EntryCarrier Route Non-Carrier Route Same standards for all presort levels DDU0 to 2 daysNA Up to 2 days DSCF2 to 3 days2 to 4 days Up to 3 days DBMC3 to 4 days3 to 5 days Up to 5 days Origin 3-digit O/D Pairs ± 1 or 2 days (depending on distance) 3 to 10 days No distinction in service standards based on shape

33. 33 Mailers Technical Advisory Committee, Workgroup 114 Use of Requested In Home Dates (Section 210.3.3.6) Inconsistent and unpredictable delivery has led to a common practice by product users: Use of Requested In Home Dates (on the piece, bundle slip and/or the pallet placard). Workgroup expects practice to continue for some years Workgroup recommends that USPS continue to honor Requested In Home Dates (RIHD) when possible New MTAC workgroup to be formed to explore: ground rules for inclusion of RIHD mail in service performance measurement, processing of RIHD mail, relationship between RIHD and service standards Workgroup supports inclusion of as much RIHD mail in service performance measurement as possible

34. 34 Mailers Technical Advisory Committee, Workgroup 114 Adjustment for Fall Mailing Season (Section 210.3.3.5) Because of the heavy volume during the months of September through December… …an additional processing day should be added to the service standard. Product users need to be able to accurately predict service expectations, and adjust those expectations when heavy volume period causes over-capacity of USPS system Service performance measurement scoring may not recognize sub-standard performance in a given month (e.g., annual scoring would average all months)

35. 35 Mailers Technical Advisory Committee, Workgroup 114 Workgroup Recommendations vs. USPS’ Proposed Service Standards Package Services Mail

36. 36 Mailers Technical Advisory Committee, Workgroup 114 Needs of Product Users (Section 210.4.3) Product Users: Businesses, libraries, governments, order-fulfillment services, and individuals Mail matter not required to be mailed as FCM or Periodicals Needs of Users: Standards that are reasonable and consistent with the price of the service Standards that meet delivery expectations of the customers –Deliveries outside of expected window lead to returns, customer complaints Consistency and reliability are key –Tail of the mail leads to higher customer service costs, lost revenues, and lost repeat business

37. 37 Mailers Technical Advisory Committee, Workgroup 114 Package Services Recommended Interim Service Standards & Goals (Section 210.4.4) Workgroup modified its recommendations based on USPS Network Analysis and proposal Origin standards reduced from current 2 to 9 days

38. 38 Mailers Technical Advisory Committee, Workgroup 114 Standard Mail Parcels Recommended Interim Service Standards & Goals (Section 210.4.4) Origin standards identical to current standards DBMC/ASF, DSCF standards differ from USPS Network Analysis Based upon Package Services +1 to reflect deferability –Workgroup believes that Package Services standards can be met in most cases, where deferability not needed

39. 39 Mailers Technical Advisory Committee, Workgroup 114 Standard Mail Parcels Recommended Interim Service Standards & Goals (Section 210.4.4) Cont’d Standard Mail parcels are small percentage of Standard Mail –Workgroup feels strongly that Standard Mail parcels be measured/reported separately from letters and flats In future, request that the Standard Mail parcels have stand- alone service standards –Separate from Standard Mail letters and flats –Would more accurately reflect processing differences based upon shape

40. 40 Mailers Technical Advisory Committee, Workgroup 114 Package Services – Service Standards Recommendations Existing Service Performance Gap (Section 210.4.4) –Current performance does not meet current origin standards –Propose that the gap be gradually closed within 2 years following implementation –Workgroup agrees with the USPS’ Network Operations reasoning that gap can largely be eliminated with adding costs to product Seasonality (Section 210.4.5) –Workgroup does not recommend seasonality adjustments to service standards –Should be dealt with at an operational level –Very important to order-fulfillment companies

41. 41 Mailers Technical Advisory Committee, Workgroup 114 Package Services – Service Standards Recommendations Specific results of USPS standards review needed –Standards/Measurement set as interim standards for one year –Re-evaluate when performance data available Drop-Ship entry packages service standards matrix –Request full matrix of drop ship entry standards (3 digit to 3 digit) Performance goals for on-time and outlier standards –Crucial to business needs –Consistency can drive future growth

42. 42 Mailers Technical Advisory Committee, Workgroup 114 Other Workgroup Recommendations

43. 43 Mailers Technical Advisory Committee, Workgroup 114 USPS by June 2008 must submit plan to Congress/PRC on how it will achieve service standards Product users should be afforded opportunity to review and provide input prior to final submission Critical issues still unresolved (CETs, cost implications, etc.) USPS advised workgroup it can achieve standards within existing network capabilities and resources (i.e., no significant cost increases) USPS Plan to Achieve Standards (Section 207)

44. 44 Mailers Technical Advisory Committee, Workgroup 114 Today, customers use whatever process returns the best result (inconsistent points of contact, no escalation process, frustration for USPS and customers) USPS should develop formal process for resolving service issues, including escalation process USPS and mailer access to common measurement data for diagnostics Separate MTAC workgroup should be formed to work on service issue resolution process Service Issue Resolution Process (Section 314)

45. 45 Mailers Technical Advisory Committee, Workgroup 114 Annual formal review process (USPS, PRC, mailers) Quarterly update process for minor changes (with advance notice to mailers, opportunity for feedback) Formal review process for significant changes (FSS, network redesign, etc.) with customer feedback process Review of 2008 standards (when performance data available) –Non-Contiguous U.S. locations –Forwarded/Returned Mail –Special Services Service Standards/Measurement Review Process (Section 400)

46. 46 Mailers Technical Advisory Committee, Workgroup 114 Service standards for all products need to be publicized, and detailed service standards information available to all product users Periodicals, Standard Mail and Package Services standards not widely communicated in the past USPS communication plan for Jan 2008 service standards implementation Communicate service standards products/tools and information availability Communication of changes in the future to product users Communication Recommendations (Section 209)

47. 47 Mailers Technical Advisory Committee, Workgroup 114 Better access to service standards information needed –Web-based tools –Service Standards CD –Retail versions for less sophisticated users/consumers Improved functionality of service standards tools –CET data should be available/linked –Workgroup provides list of potential enhancements; suggests users group be formed Service Standards Information/Tools (Section 208) Contractors must meet same standards or consultation process to change; measurement must include contractors Service Standards and Outsourcing (Section 211)

48. 48 Mailers Technical Advisory Committee, Workgroup 114 New MTAC workgroup(s) on measurement/reporting needed Workgroup prefers Intelligent Mail-based measurement USPS should leverage IPC relationship Workgroup recommendations on alternative (external) measurement systems Small volume mailstreams may use different measurement systems/methodologies Measurement quality metrics needed (Start/Stop-the-Clock) Service Performance Measurement (Section 300)

49. 49 Mailers Technical Advisory Committee, Workgroup 114 Measurement data quality access/retention recommendations Measurement reporting recommendations USPS should publish formal implementation time lines with milestones toward measurement systems Interim measurement solutions (including industry systems) should be explored External audit of measurement systems needed Outlined potential IM adoption barriers; IM gaps Service Performance Measurement (Section 300)

50. 50 Mailers Technical Advisory Committee, Workgroup 114 198 Workgroup Members + over 45 meetings + a diversity of USPS and industry experience = recommendations that reflect the needs of USPS product users We view this as an evolutionary process …which should continue to be built upon collaborative efforts (such as MTAC) that include product users New MTAC workgroups should be formed to continue dialog on unresolved issues, and on measurement Conclusion

51. 51 Mailers Technical Advisory Committee, Workgroup 114 Thank you for your participation!!