1. Product Redesign MTAC Update February 6, 2003

2. PRODUCT REDESIGN Bob O’Brien – Industry Co-Chair John DePiazza Joe Lubenow Clarence Banks Robert Lindsay Pierce Myers Anita Pursley Dennis MacHarg Val Scansaroli Steering Committee - Industry

3. PRODUCT REDESIGN First-Class - John DePiazza / Susan Campbell Periodicals - Val Scansaroli / Rick Arvonio Standard - Anita Pursley / Cheryl Beller BPM - Charley Howard / Sharon Daniel Parcels - Steve Zwieg / Jim Cochrane Addressing - Joe Lubenow / Wayne Orbke Workgroup Co-Chairs – Industry / USPS

4. Workgroups Steering Committee Met Tuesday 02/04 Redesign in the Context of: –CSRS Legislation –Omnibus Rate-Case: Timing & Phasing –NIA: Combined Cost; Mailer Response Joint Meeting of Workgroups –Wait For Clarification on Above Items –Send Out Summary of Where Workgroup Proposals Stand PRODUCT REDESIGN

5. Analyzed Data on Make-up “Before & After” –Results From Real Mailings Very Close to Results From Simulated Mailings –Still Need Additional Data on Real Mailings Collected Information on Extent of Use –Wide Variation –Some Use 17-piece Minimum for Most Mailings –Some Continue to Use 10-piece Minimum Optional 10-17 5-D Bundle Minimum in Standard PRODUCT REDESIGN

6. Factors Affecting Optimal 5-D Minimum Low Piece Weights –More 5-D bundles convert into one 3-D bundle Low-to-Moderate Mailing Density –25% or more of 5-D bundles <= 17 pieces Ability to Build 3-D Bundles Up to 20- pound Limits –If 3-D bundles limited to 3” high, get fewer 5-D bundles converting to one 3-D bundle PRODUCT REDESIGN

7. Need Your Help to Learn About Effects Make-up at 10-pieces & alternative minimum Would Like Before & After Data For –Number of 5-Digit & 3-Digit Bundles –Number of 5-Digit & 3-Digit Pieces –Piece Weight –Total Pieces and Bundles Constraints on Make-up other than 20 lbs. –Maximum Heights for Bundles in Sacks –Maximum Heights for Production Reasons PRODUCT REDESIGN

8. Mailer Suggestion: Allow DDU entry of Standard Parcels at DBMC or DSCF rates –Improve Service Consistency for Customers –Postal Service Cost Savings Implement With Customer Support Ruling –Allow DBMC Rate With No Minimum –Allow DSCF Rate With 10 pounds for a 5-Digit Customer Support Ruling Issued December 10th PRODUCT REDESIGN DDU Entry for Standard Parcels

9. For small volume mailings now origin- entered in sacks Additional incentives for bundles that are newly: –Co-palletized on ADC and SCF pallets and –Drop shipped to DADC or DSCF Settlement Accepted by PRC and Governors Applications Accepted February 10th Implementation on April 20th Co-palletization of Periodicals Flats Bundles PRODUCT REDESIGN

10. Low cost, no frills merchandise returns service – Capitalize on USPS operational savings Mailer or Consolidator Picks up Bulk Returns at DDU, DBMC, or “Origin” BMC – Allows providers to offer value added services – Credit returns – Redirect merchandise Assumptions Underlying Financial Analysis Being Validated –Probable Spring Filing PRODUCT REDESIGN Parcel Select™ Return Service