1. ® Flats Track for Periodicals, Catalogs & Printers David Mastervich Manager, Periodicals, Catalogs & Saturation Rosa Fulton Executive Director, FSS National Postal Forum ®

2. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 2 National Postal Forum ® Speakers Rosa Fulton Executive Director, FSS United States Postal Service David Mastervich Manager, Periodicals, Catalogs & Saturation United States Postal Service

3. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 3 National Postal Forum ® Rosa Fulton Executive Director, FSS United States Postal Service

4. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 4 National Postal Forum ®  Facts About Flats  Flats Strategy  Aligning USPS and Industry Processes & Systems Agenda

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6. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 6 National Postal Forum ® Annual Flat Volume Periodicals 20% First-Class 7% 39.6 Billion Flats FY 2009 (RPW) 39.6 Billion Flats FY 2009 (RPW) Standard 73%

7. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 7 National Postal Forum ® Flat Volume by Class & Sort Level

8. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 8 National Postal Forum ® 2005 – Total Flat Volume 53.4 billion 2009 – Total Flat Volume 39.6 billion 2005 & 2009 Flat Volume Comparison

9. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 9 National Postal Forum ® 2005 – Total Flat Volume 53.4 billion 2009 – Total Flat Volume 39.6 billion 2005 & 2009 Flat Volume Comparison

10. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 10 National Postal Forum ® Flat Volume Trend RPW Flat volume decline FY 2009 -13.8% FY 2005 – FY 2009 Flat volume decline 26% 14.3 billion fewer flats annually FY 2005 – FY 2009 Flat volume decline 26% 14.3 billion fewer flats annually

11. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 11 National Postal Forum ® Flat Volume Trend RPW QTR 1, 2010 Flat volume decline -14.9% QTR 1, 2010 Flat volume decline -14.9%

12. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 12 National Postal Forum ® Flat Volume Trend RPW -13.9% -13.7% -8.3% January 2010 Flat volume decline -9.9% January 2010 Flat volume decline -9.9%

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14. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 14 National Postal Forum ®  Fully Automate Flats Processing ● Flats Sequencing ● Automate Mail Preparation ● Process improvements  Create Value  Customer Involvement Flat Strategy

15. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 15 National Postal Forum ® Flat Mail Entry Collection Mail Mailboxes Post Offices Origin Entry Bulk Mail Entry Units Drop Shipment DNDC Entry DADC DSCF Entry DDU Entry P&DC / Post Office Mailers

16. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 16 National Postal Forum ® Flats Process Today Mailers Bundle DistributionBundle PrepPiece DistributionDelivery

17. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 17 National Postal Forum ® Eliminate Non-Value Added Work/Processes Mailers Bundle DistributionBundle PrepPiece DistributionDelivery

18. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 18 National Postal Forum ® Flats Process Future Mailers Flats Sequencing Delivery Automated Bundle Preparation

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20. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 20 National Postal Forum ® USPS & Industry Focus of process improvements Overview of Flat Process Print Create Mailing Bind Personalize Stitch/Staple Strap / Wrap Strap/wrap bundles Palletize Load bundles & wrap pallets Design Mailing Mailer Deliver Integrate flats / letters & deliver Sort & Sequence Piece distribution Manual / AFSM & FSS Flat Prep Unwrap / un- strap bundles Dump & Sort Bundle Distribution APPS / SPBS Unload & Transfer Flow to bundle distribution or dock transfer Mail OwnerMail Preparer USPS

21. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 21 National Postal Forum ® Background 1. MTAC 58, 2000 – 2002 ● Preparing Flats Using Alternate Packaging 2. MTAC 71, 2002 – 2003 ● Flats Container Development 3. MTAC 81, 2003 – 2005 ● Flat Mail Preparation Optimization 4. MTAC 96, 2005 – 2007  Develop Interface to AFSM 100 Auto-Induction Process 5. MTAC 101, 2006 - 2007 ● Address Location for Flats Sequencing System 6. MTAC 115, 2007 – 2009 ● Requirements for preparation and entry of flat mail in the Flats Sequencing System (FSS) environment. 7. MTAC 134, 2010 - TBD ● Implementing FSS Presort Parameters Joint USPS / Industry Workgroups

22. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 22 National Postal Forum ® David Mastervich Manager, Periodicals, Catalogs & Saturation United States Postal Service

23. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 23 National Postal Forum ®  Mixed Class Comailing  Optional FSS Pallet Preparation Agenda

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25. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 25 National Postal Forum ®  Overview  Benefits  Volumes  Open Items  Recommendations  Next Steps  Additional Information Mixed Class Comailing

26. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 26 National Postal Forum ® Mixed Class Comailing Overview  Pilot started January 2008  Current Participation ● Approved: 3 sites ● Pending: 6 sites  Est. FY2009 Volumes ● 130 M+ pieces  No Comailing postage rate ● Rates based on corresponding class and sort level  Service level is Standard service, not Periodicals  Periodicals publishers must be notified and provide written consent  Standard mailers do not need to be notified  Manual verifications; Mixed Class mail.dats not integrated into PostalOne!  Optional service offered to customers

27. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 27 National Postal Forum ® Postal Service  Creates Cost Savings Opportunities ● More mail on pallets that would ordinarily be in sacks. ● More mail entered at finer sort levels ● Moves Periodicals from MADC to 3/5 digit bundles  Gets closer to USPS processing strategy of “a flat is a flat.” Mailers  Reduces postage cost (USPS revenue) ● Increased presort level ● Drop shipped closer to destination  Less transit damage from reduced number of sacks Mixed Class Comailing Benefits

28. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 28 National Postal Forum ®  Pro-rated bundle and pallet charges for Periodicals mail  No ADC entry; allow NDC entry at ADC rates  Service Level is Standard ● Use eDoc to remove Periodicals from PER measurement  Mandatory use of OEL with human-readable “MIX COMAIL” language  Each piece is required to use Full Service ImB ● Issue: Mixed Class not integrated into PostalOne!, so these pieces won’t be able to benefit from all Full Service features. Mixed Class Comailing Requirements Critical

29. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 29 National Postal Forum ® Comail vs. Copal P / S PER STD P / S PER STD PER CoMail Pallets created onsite where bundles are Mixed Sometimes pure PER or STD bundles will exist CoPal Consolidator site Pallets created from bundles created offsite Always pure PER or STD bundles Comail Pallet CoPal Pallet Mixed Class Comailing

30. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 30 National Postal Forum ® Completed Steps 1.DMM language and Federal Register notice vetted through 186 internal review process 2.Mail Classification Schedule changes/comment period 3.IT Requirements ~85% complete Next Steps 1.Pricing Steering Committee review 2.Board of Governors review 3.File Federal Register Proposed Rule – 30 day comment period 4.File PRC notice – 10 day comment period?? 5.Make any changes to DMM language if necessary 6.Finalize IT requirements (work with 3 rd party vendors as well) 7.Communicate and Train field 8.Implement Mixed Class Comailing

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32. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 32 National Postal Forum ® Background – FSS Optional Flat Mail Prep  Used industry data to develop and model concepts for different components of flats mail preparation: ● Bundle preparation ● Containerization ● Presort parameters ● Destination entry

33. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 33 National Postal Forum ® MTAC 115 Industry Collaboration  MTAC 115 and IDEAlliance initiatives, teams further explored: ● Flat Mail Prep and Entry in an FSS Environment  Tested concepts on bundle preparation  Tested various container preparations  Modeled FSS schemes

34. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 34 National Postal Forum ®  FSS schemes: ● FSS sort plans mirror 5-digit and 5-digit scheme sort plans ● During test, Dulles had 49 FSS sort plans  19 sort plans with 1, 5-digit ZIP Code  20 sort plans with 2, 5-digit ZIP Codes  8 sort plans with 3, 5-digit ZIP Codes  2 sort plans with 4, 5-digit ZIP Codes  Test results: ● Periodicals had few FSS sort plan pallets ● Pallet counts remained same, or less for PER and STD mailings ● FSS scheme pallet (all sort plans at a site) has potential Presort Test Plan Results

35. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 35 National Postal Forum ® Test Concepts and Model Results  Pure FSS sort plan pallet can flow directly to the bundle prep operation and bypass APPS processing  Determined potential pallet levels: ● Pure FSS (single sort plan scheme) ● Pure FSS (multiple sort plan schemes) ● Combined FSS and non-FSS

36. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 36 National Postal Forum ® Defining Business Rules

37. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 37 National Postal Forum ® FSS Bundle & Pallet Parameters  Defined and developed parameters: ● Bundle  Optimal bundle height of 3”, 4”, 6”  Replaces CR piece minimum for packaging purposes ● Container  Content determined by FSS scheme & destination  FSS ZIP Codes ● Presort  Driven by FSS Label List and sort plan contents ● Entry  Destination entry, at minimum, should not change from today and may contract with optimized network

38. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 38 National Postal Forum ® Optional FSS Bundle Preparation  Combine all 5-digit flat mailpieces for a sort scheme into the bundle ● Carrier route and 5-digit ● Create bundles of uniform height: e.g. 3”, 4”, or 6” ● Place on appropriate pallet level

39. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 39 National Postal Forum ® Optional FSS Pallet Preparation  FSS Single Sort Plan Scheme Pallet ● Containing one or more ZIP Codes sorted on FSS at the same time ● Equivalent to 5-digit/5-digit scheme pallet Pallet sent directly to FSS preparation area for loading Automation Compatible Trays

40. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 40 National Postal Forum ® Optional FSS Pallet Preparation  FSS Multiple Sort Plan Schemes Pallet ● Contains mail for all FSS sort plans processed at the facility ● Equivalent to an SCF pallet ● May require separate FSS and non-FSS pallets at the facility Pallet sent to an APPS for bundle distribution Pallets can “go to the head of the line” for APPS processing

41. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 41 National Postal Forum ® Optional FSS Pallet Preparation  Combined FSS bundles and non-FSS bundles on the same pallet ● No separation of mail by automation machine type (FSS, AFSM 100, etc) ● Equivalent to a 3-digit or SCF pallet Pallet sent to an APPS for bundle distribution

42. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 42 National Postal Forum ® What’s Next  Activities in progress: ● Develop presort software parameters ● Publish presort business rules for software vendors to code ● Implement Optional FSS prep ● Communicate FSS label list schemes ● Leverage alternatives to increase bundle and pallet scheme density (e.g. comail, copal) ● Continue development efforts to automate bundle preparation

43. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 43 National Postal Forum ®  What’s required to earn a certificate?  Attend five workshops of the Flats Track for Periodicals, Catalogs and Printers  How do I get my certificate?  Register for your certificate on the National Postal Forum Website before July 31, 2010  www.npf.org  Answer the three true/false questions for each of the five sessions you attended  Certificates will be mailed upon certification Flats Track Certificate Program

44. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 44 National Postal Forum ® True or False: 1. The FSS rollout schedule has been unaffected by the recent economy? 2. The IMB holds promise for catalog customer service advancements? 3. The IMB is mainly for package fulfillment applications? Flats Track Certificate Program - Questions FALSE TRUE FALSE

45. Flats Track for Periodicals, Catalogs & Printers – NPF 2010 45 National Postal Forum ®