1. MTAC Workgroup 115 Flat Mail Prep & Entry in FSS Environment November 18, 2009

2. MTAC 115 – November 18, 2009 2  FSS Update  USPS / IDEAlliance Think Tank II  MTAC 115 in Review  FSS Mail Prep - Next Steps Agenda

3. ® FSS Update Rosa Fulton Executive Director, FSS

4. MTAC 115 – November 18, 2009 4 Flat Volume by Class FY 2009 RPW -15.3% -7.4% Flat volume decline FY 2009 -13.8% 6.3 bil pieces Flat volume decline FY 2009 -13.8% 6.3 bil pieces

5. MTAC 115 – November 18, 2009 5 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

6. MTAC 115 – November 18, 2009 6  Sequencing Operations ● Dulles – 4 FSS ● Columbus – 2 FSS ● Kansas City – 2 FSS ● Phoenix – 3 FSS Operations & Installations  Installation of 14 FSS in progress

7. MTAC 115 – November 18, 2009 7 FSS Operations – Ramp-up Status FSS Site # FSS On-line # Delivery Units On-line # Zones On-line Dulles P&DC 43952 Columbus FSS Annex 22436 Kansas City P&DC 21844 Phoenix (West Valley) L&DC 3827 Totals 1189159

8. MTAC 115 – November 18, 2009 8 Installations – 14 FSS, 9 Sites Area FSS Location Install Start % Complete Install CM CURSEEN-MORRIS DC P&DC 12-Sep-0990% NE NEW JERSEY NDC 12-Sep-0995% NE MID-ISLAND NY P&DC 26-Sep-0965% NE NEW JERSEY NDC 26-Sep-0955% NE NW BOSTON MA P&DC 10-Oct-0945% SE ORLANDO FL L&DC 10-Oct-0920% PA VAN NUYS CA FSS ANNEX 24-Oct-0910% SE SOUTH FLORIDA L&DC 24-Oct-0910% EA TRENTON NJ P&DC 7-Nov-095% SE SOUTH FLORIDA L&DC 7-Nov-095% GL INDIANAPOLIS IN MPA 21-Nov-09 NE MID-ISLAND NY P&DC 21-Nov-09 NE NW BOSTON MA P&DC 5-Dec-09 SE ORLANDO FL L&DC 5-Dec-09 Install schedule of next 25 FSS in progress

9. MTAC 115 – November 18, 2009 9 FSS Redirection – New Deployment Plan  19 FSS planned for redirection ● Deploy fewer FSS in 10 sites  Two sites removed from original plan  12 new FSS sites  42 FSS sites versus 32

10. MTAC 115 – November 18, 2009 10 Phase 1A (Redirect Sites) Space Planning FSS Site# FSS Linthicum MD IMF1 Charlotte NC L&DC1 Rochester NYL&DC2 Philadelphia PA NDC1 Philadelphia PA P&DC2 Mid Island NY P&DC1* Westchester NY P&DC1 Stamford CT P&DC1 North Metro GA P&DC2 Atlanta GA L&DC2 North Houston TX P&DC1 Minneapolis / Eagan P&DC2 San Diego P&DC2 * Mid-Island receiving 4 th FSS

11. ® USPS / IDEAlliance Think-Tank II Susan Hawes Operational Requirements

12. MTAC 115 – November 18, 2009 12  WG 115 collaborated with IDEAlliance, again! ● Met September 2, 2009 ● Focus: Presort software programs and data files ● Participants this time included production and systems/software representatives  Provided context for Think-Tank II Participants ● Reviewed workgroup recommendations  Auto-ready pallet  Non-compensated bundles  Bundle heights 3”, 4”, or 6” Think-Tank II Meeting

13. MTAC 115 – November 18, 2009 13 Modeling Exercise  What would FSS pallets look like today? ● Volume and thickness of flats has changed since earlier modeling of bundles and pallets in 2007 ● Pallet prep the same as 5-D/5-D schemes today  Test Plan included real “address lists” for destinating Dulles FSS site ● Using specific ZIP Codes processed on FSS ● Using real mailpiece characteristics and volumes

14. MTAC 115 – November 18, 2009 14  Test plan included: ● Bundle and pallet counts ● Current presort rules for comparison ● ‘Artificial’ Labeling List data to use when identifying FSS schemes ● Presort software that used LL to make up bundles and pallets ● Specified bundle heights for each presort processing  Testing process was to: ● Run presort for all 3-digits (201, 220-223, 226 and 227) ● Roll up data for non-FSS 5-digits using today’s rules ● Prepare individual FSS sort plan pallets (1-4 5D ZIPs per sort plan) ● Prepare multi FSS pallets based on each site Presort FSS Test Plan

15. MTAC 115 – November 18, 2009 15  FSS schemes: ● FSS sort plans mirror 5-digit and 5-digit scheme sort plans ● Dulles currently has 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 for PER and STD mailings ● FSS scheme pallet (all sort plans at a site) has potential Test Plan Results

16. MTAC 115 – November 18, 2009 16 Test Plan Results Test #Bundle height# BundlesPallet Presort# PalletsWeight Standard Mail 1 209,694 1,6071,331 2 207,543 1,6021,329 33 1,217FSS19675 43 870FSS Scheme51,819 34 916FSS19675 44 656FSS Scheme51,819 36 614FSS19675 46 441FSS Scheme51,819 Periodicals Mail 1 105,460 4431,310 2 105,375 4421,311 33 -FSS0 43 142FSS Scheme1781 34 -FSS0 44 70FSS Scheme1797 36 -FSS0 46 68FSS Scheme1666

17. ® MTAC 115 in Review Krista Finazzo Postal Co-Chair Joe Schick Industry Co-Chair

18. MTAC 115 – November 18, 2009 18 Workgroup Focus – Issue Statement  Deployment Phase1 FSS ● FSS program will impact:  Flats preparation  How mail is presented and scheduled for entry  Continuous process - mail owner to USPS ● Interdependencies of inputs and outputs through entire process, concept to delivery  Will drive standards/requirements for prep & entry  Will play a major role in determining efficiency of processing on FSS

19. MTAC 115 – November 18, 2009 19 Desired Results “Identify areas of impact to the USPS and customers associated with preparation and entry of flats in an FSS environment including the lowest combined cost model.”

20. MTAC 115 – November 18, 2009 20 Workgroup Action Items  Workgroup 96 handed off four items to MTAC WG 115: ● Bundle preparation ● Containerization ● Presort Parameters ● Destination entry

21. MTAC 115 – November 18, 2009 21 Workgroup Activities  Developed a prototype system “Automated Flats Processor” (AFP) to improve: ● Productivity of bundle processing ● Equipment space required to process daily volume ● Capability to accept multi-zone pallets ● Flats auto processing – induction to piece sorting

22. MTAC 115 – November 18, 2009 22 Workgroup Activities  AFP key functions are: ● Auto Depalletize Bundles – automatically unloads bundles from pallets ● Distribute Bundles based on sort plans with OEL readability – convey & prep bundles for processing ● Process Bundles – cut and remove bundle strapping and load bundles into ACTs ● Make Dollies – produce sort plan based dollies ● Dispatch Dollies – full ACTs, produced for specific sort plans, released for induct into flats sorting equipment

23. MTAC 115 – November 18, 2009 23 Workgroup Activities  Bundle / Container testing: ● Built on auto-ready pallet concept ● Evaluated – uniform bundle heights, compensation of bundles, containerization, and bundle securing methods ● Determined counter-stacked bundles of uniform height travel well through transportation / distribution system  Bundle securing methods tested: ● Two cross-straps around length and girth ● Shrinkwrap “bellyband” with a single-strap as alternative to strap only

24. MTAC 115 – November 18, 2009 24 Workgroup Activities  Discovered auto-ready pallet prep will allow bundles to flow directly to the bundle prep operation and bypass APPS processing  Evaluated potential pallet levels: ● Pure FSS (single scheme) ● Pure FSS (multiple schemes) ● Combined FSS and non-FSS

25. MTAC 115 – November 18, 2009 25 Workgroup Activities  Assessed impact of volume reduction ● Volume reduction has required more ZIP Codes and FSS sites than original plan ● Some original sites receiving fewer machines ● Volume reduction makes preparation of FSS single- scheme pallets more difficult  Considered single preparation solution ● Lowest end-to-end cost achieved with one bundle preparation method  Prep compatible with FSS and AFSM process

26. MTAC 115 – November 18, 2009 26 Status of Action Items  Bundle ● Optimal bundle height of 3”, 4”, 6” ● Secured using two cross-straps  Container ● Non-compensated bundles on compensated pallet ● Content determined by FSS scheme & destination  Presort ● Driven by FSS Label List and sort plan contents  Entry ● Destination entry, at minimum, should not change and may contract with optimized network

27. MTAC 115 – November 18, 2009 27

28. ® FSS Mail Preparation Next Steps Krista Finazzo Manager, Operational Requirements Rosa Fulton Executive Director, FSS

29. MTAC 115 – November 18, 2009 29 FSS Flat Mail Prep – Next Steps  Propose new MTAC workgroup ● Workgroup: “Implementing FSS Presort Parameters” ● Align under the “Optimization of Mail Preparation & Entry” focus area  Charter of new workgroup: ● Develop and implement presort parameters to support defined (optional) FSS prep ● Identify timing of software updates related to FSS deployment ● Communicate timing & FSS Label List

30. MTAC 115 – November 18, 2009 30 In closing