Corporate Flats Strategy MTAC November 7, 2002. Slide 2 Presentation Overview Background Near Term...

Corporate Flats Strategy

MTAC November 7, 2002

Presentation Overview Background

Near Term Actions (FY 2003 and 2004)

Longer Term Planning (FY 2005 and beyond)

– Delivery Vision

Summary

Importance of Flats

FY 01 Revenue From Flats: $16.1 Billion

Periodicals: Mailbox Anchor ThatGenerates Other Revenue Streams

Standard Mail Revenue isSecond Only to First-Class Mail

Flats Rates Rising Faster Than Inflation

USPS Committed to Flats

Grow Customer’s BusinessIncrease Capital InvestmentMaintain Affordability

Improve Processes


Introduced at the September 2000 Postal Forum


Distributed in July 2001

Introduced the DeliveryVision

Focused on Improvements in the Near Term

Overviewed the Longer Term Plans

Drive Down Costs Through

Automation

Improve Processing Performance

and Service

Create a Win-Win for Customers and the Postal Service


Completed AFSM 100 Deployment

Started FSM 1000 Modifications

Explored Mail Preparation Alternatives

– Logs

– Flats Feeder Assist Device

– Fiberboard Trays

– Pallet Movers

Last Year’s Progress

Manage the Base

Substitute Capital for Labor

Increase Customer Involvement

Near Term Actions

Improve Operational Performance

– Up-the-Distribution-Ladder

– Increase Productivity

Reduce Mail Preparation Costs

– Standardize Opening Units

Standardize Flats Distribution

Capture Savings

Manage the Base

Summary

QTR 1 FY 2001

QTR 4 FY 2002

FY 2001 FY 2002end of year FY 2000

piece handlings per workhour

Qtrs. 1 to 4 Qtrs. 1 to 4

Take Advantage of Latest Technology– Automatic Tray Handling System

– Flats Feeder Assist Device

– The AFSM 100 Feeder Modification

– Pallet Movers

– UFSM 1000

– ID Code Sort Move More Mail to Our Processing

Centers to Achieve Greater Depth of Sort (i.e., from the 5-digit level to carrier route)

Substitute Capital for Labor

Structure Rate Incentives to Support Operations Objectives

Match Make-up to Processing Requirements

Increase Barcoded Flat Volumes Improve Address & Barcode

Readability

Increase Customer Involvement

Where We Were

4 Mail Streams:– Automated– Mechanized– FSM 1000– Manual

Significant Piece Handling Costs

Increasing Mail Prep Costs

Increased Rates

From 4 Mail Streams to 2– Automated– Manual

Maximize 11 Digit Barcoded Volume

Minimize (eliminate) Small Bundles

Standardize– Physical Characteristics– Address Placement– Make-up and Presentation

Where We Want To Go

Then to 1: DPP

MTAC & USPS Working TogetherMTAC & USPS Working TogetherOptimizing Readability

Conducting Mail Characteristics Study

Developing Alternative Flats Packaging

Developing Mail Preparation Alternatives

Reducing Bundle Breakage

Developing Irregularity Reporting

How Do We Get There?

Address Block Location

Destination Address Format

Barcode Placement

Adhesive Labels

Extraneous Information

MTAC Workgroups

Optimizing ReadabilityOptimizing Readability

Optimizing Readability

Developed Voluntary Guidelines for Flat Mail

MTAC Workgroups

Mail Characteristics StudyMail Characteristics Study

Determining the Spectrum of Mail the AFSM Can Successfully Process

Basic size dimensions remain the same

Increase the maximum weight to 20 oz

MTAC Workgroups

Identify Cost Effective Bundle Packaging for Mailers and USPS

Balance Cost of Material With Package Integrity

Alternative Flats PackagingAlternative Flats Packaging

MTAC Workgroups

Working with Mailers through MTAC Mutually Acceptable Preparation and Handling Methods

Drive Down Combined Cost

Mail Preparation AlternativesMail Preparation Alternatives

MTAC Workgroups

Flats Feeder Assist Device allows operator to handle heavy loads

MTAC Workgroups

Mail Preparation AlternativesMail Preparation Alternatives

Controlled Testing of Various Packaging Materials

Reducing Bundle BreakageReducing Bundle Breakage

Solution– Shrink wrap– Double band– Palletize– Weight – 20 pound max– Height – 6 inch max

MTAC Workgroups

Long Term Plan: NO SACKS

Develop a Mechanism to Report Preparation Irregularities to Mailers and Mail Owners In a Timely Manner to Prevent Recurrence

Irregularity ReportingIrregularity Reporting

MTAC Workgroups

Evaluate Delivery Point Packaging

Prioritize Key Decision Points

Identify Potential Customer Impacts

Longer Term Plans

Implement the Delivery Vision

Minimize In-Office Costs

Maximize Street Efficiency

OPTION 1: Delivery Point PackagingDevelop a machine that will use a one-pass system to sequence both letters and flats in delivery order.

OPTION 2: Flats Sequencing SystemDevelop a machine that will use a two-pass system to sequence flats in delivery order.

Evaluate Delivery Sequencing Options

NEAR TERMFY 2003 & FY 2004

MID TERMFY 2005

to

FY 2006

Sector/Segment Firms

Direct to Street

DPS LettersDirect to Street

Walk Sequence/ Marriage MailingsDirect to Street

Residue Letters & All FlatsCased

Current Operations

This time period will be used for

planning purposes.

The Postal Service’s Delivery Vision

Option 1: Delivery Point Packaging

Start Research & Development for

DPP

LONG TERMFY 2007

Letters(DPS Not Required)

Flats(5 Digit Presort,

No Carrier Route)

Walk Sequence/ Marriage Mailings(Entered at DPP

Location)

One Bundle100% Letters &

FlatsDirect to Street


Direct to Street




Current Operations


MID TERMFY 2005

to

FY 2006

Operational Planning


DPP


Option 1: Delivery Point Packaging


OPTION 2: Flats Sequencing SystemDevelop a machine that will use a two-pass system to sequence flats in delivery order.



Direct to Street




Current Operations


MID TERMFY 2005

This time period will be used for

planning purposes.


FSS


Option 2: Flats Sequencing System


Direct to Street




Current Operations

FSS FlatsDirect to Street

Residue Letters & Flats

Walk Sequence/ Marriage Mailings

Cased



LONG TERMFY 2006

Operational Planning


FSS


Option 2: Flats Sequencing System

MID TERMFY 2005

Fund Research and Development

Examine Competitive Prototypes

Evaluate Impact on Plant & Delivery Operations

Prioritize Key Decision Points

11 Digit Barcode Standardized Piece Design ID Tag Presort (For Automated Zones)

– Carrier Route Sorting Make-up and Presentation Entry Point

Identify Potential Customer Impacts

DPP FSS

REQ REQ

? REQ

YES YES

? ?

CHG CHG

CHG CHG

Implement the Delivery Vision

Minimize In-Office Costs

– Sequencing Letters and Flats

Maximize Street Efficiency

– Sequence Letters and Flats Together

– One Delivery Point Package (DPP)

Summary

Near Term (FYs 2003 & 2004):

Increase Equipment Utilization

Reduce Mail Preparation Costs

Manage the Base

Involve Customers

Summary

Longer Term (FY 2005 & beyond):

Refine the Delivery Vision

Evaluate DPP & FSS Options

Develop DPP & FSS Technologies

Involve Customers

Corporate Flats Strategy MTAC November 7, 2002. Slide 2 Presentation Overview Background Near Term...

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