1. ® Letter Automation History Bill Galligan Senior Vice President, Operations MTAC Meeting January 31, 2008

2. Agenda – Letter Automation History  Four Decades of Change  DPS Today  Next Steps

3. 1960s – 1970s - Mechanization MPLSM Mark II facer cancellers ZIP Code Presort mandatory for 2 nd & 3 rd class mail Central Forwarding System (CFS) Discounts for presorted 2-C Discounts for presorted & CR-RT 3 rd class mail 1963 19781967 1979 ZIP Code Discounts offered for pre-sorted FCM 1963 1960 1976 1970 934 MPLSM deployed CFS Mark II facer canceller

4. 1980s – Mechanization & Early Automation AMS organization instituted SLOCR Phase 1 (applied 5- digit barcode) BCS Phase I MLOCRs (applied 9-digit barcode) MPBCS Mark II converted to Micro-marks Micro-mark Alhambra Mod ACS CFS II CASS (optional) Corporate Automation Plan Pre-barcode discounts Carrier in-office time exceeds ½ workday 1982 19811987 ZIP + 4 Code instituted Work-share discounts for FCM - presort & ZIP + 4 Barcodes 1983 1988 CR-RT discounts for FCM CLASS 1989 M-36 Cancellers 1984 1986 SLOCR Phase II (applied 5- digit barcode) SLOCR Multi-line conversion (applied 9-digit barcode) BCS Phase II NCOA BCS SLOCR MLOCR

5. 1990s – Automation & Barcode Sorting 1992 199119931995 1990 Office of Automation Integration 199419961998 19971999 MLOCR/ISS (applied 11- digit barcode) WABCR DBCS Delivery point barcode RBCS 2 pilot sites MASS certification 1 st tabbing requirements RBCS 25 sites / 17 contactor RECs MPBCS / OSS AFCS Sector segment CASS (required) AFCS / ISS Delivery point sequencing AMS II RBCS Phase 2 RECs converted to USPS Reclassification: bundles to trays CR-RT only in non-DPS zones RBCS 120 plants / 55 RECs DPS for High-rise CSBCSs Recognition programs RCR HWAI HIP RIP Decommission MPLSMs REC consolidations Move Update Fast Forward Remote Encoding Center Delivery Barcode Sorter (DBCS) Advance Facer Canceller System (AFCS)

6. 2000s Automation & Standardization 2002 200120032005 200420062008 20072009 DIOSS DBCS-EC Planet codes Confirm MERLIN WFOV PARS Last MPLSM decommissioned Move Update for standard mail REC decommissioning (8 RECs remain) DQI – Phase II (high-rise & handwritten encode improvements) Intelligent Mail Barcode CASS Cycle M SuiteLink CASS / MASS Cycle L DPV LACS Link eUARS Eliminated CR-RT 2000 DQI – improve encode rates DSMART BDS NCOA Link ID code sort MERLINDelivery Input/Output Subsystem (DIOSS)Biohazard Detection System (BDS) PARS Phase II MLOCR Replacement

7. DPS Trend 85.99% Cased Letters DPS Letters FY 2007 USPS Sequenced 130 Billion Letters Resulting in Over $5 Billion Annual Savings

8. DPS Today & Impacts DPS Letters 86% Non-DPS Letters 14% Key Impacts of Non-DPS 1. Operational Processes 2. Technology Capabilities 3. Mail Piece Characteristics

9. Next Steps DPS Letters 86% Non-DPS Letters 14% Technology DQI Phase II High-rise Handwritten AFCS 200 Mail Piece Characteristics Letter Size Booklets & Folded Self Mailers Federal Register Notice of Intent: February 2008 Automation & Machineable Letter Standards Federal Registers FY 2008 Value Stream Mapping Define, Measure, Analyze, Improve, Control (DMAIC) Operational Industrial Engineers Standardization / Continuous Improvement

10. Conclusion