Delivery Operations

Joint Area Vice Presidents; Managers, Operations Support; Area Marketing Managers MeetingSeptember 11, 2008

2009 F-2 Challenge2009 F-2 Challenge

Total SavingsTotal Savings $1,000 $1,000 26.2 26.2

FUNCTION 2 CLOSING THE GAP STRATEGIESFUNCTION 2 CLOSING THE GAP STRATEGIES

Workhours Dollars (millions)

Function 2B 21.5 $855

Rural Mail Count Annualization $115 3.7

Rural DPS at 85% $30 1.0

Function 2A 4.7 $145

Maintain Hours per Rt $300 8.1Continuous Improvement

Reduce Route Structure $530 12.7Fall / Spring Adjustments

Collection Standardization $25 0.7Reduce Dedicated Coll Rts

2009 F-2 Budget2009 F-2 Budget

Strategies/Tactics – Qtr 1 FY 2009Strategies/Tactics – Qtr 1 FY 2009

Strategy / TacticsStrategy / Tactics

Result - Maintain Current Hours per Route Performance in Qtr 1 - $300 millionResult - Maintain Current Hours per Route Performance in Qtr 1 - $300 million

Drive Major Delivery Efficiency ComponentsDrive Major Delivery Efficiency Components

Continuous ImprovementContinuous Improvement

FY 2009 CDPOM Productivity ExpectationsFY 2009 CDPOM Productivity Expectations

% Standard at Demonstrated Performance% Standard at Demonstrated Performance

% Adjusted Street Base at 98%% Adjusted Street Base at 98%

DPS at 90%DPS at 90%

Fall Mailing Season (Sep thru Nov) OpportunityFall Mailing Season (Sep thru Nov) Opportunity

December (Christmas) OpportunityDecember (Christmas) Opportunity

Eliminate Two Costly ParadigmsEliminate Two Costly Paradigms

Standardized, Proactive Scheduling/Staffing Tool has Helped to Drive Continuous Improvement In Delivery Efficiency

Standardized, Proactive Scheduling/Staffing Tool has Helped to Drive Continuous Improvement In Delivery Efficiency

CDPOM Productivity Expectations:CDPOM Productivity Expectations:

FY 2007 Qtr 3 . . .Office

Street

DPS %

100% Standard

100% Street Base

85%


Street

DPS %

97% Standard

100% Street Base

89%


Street

DPS %

90% Standard

98% Street Base

90%


Street

DPS %

97% Standard

98% Street Base

89%


90% Standard – Current Nat’l Demonstrated Performance in DOIS90% Standard – Current Nat’l Demonstrated Performance in DOIS

Aligns CDPOM with DOIS Daily ProjectionsAligns CDPOM with DOIS Daily Projections

98% Adjusted Street Base – 5 Areas Achieving in Qtr 4 98% Adjusted Street Base – 5 Areas Achieving in Qtr 4

90% DPS – FY 2009 Budget Target90% DPS – FY 2009 Budget Target4 of 9 Areas Currently Achieving4 of 9 Areas Currently Achieving


Street

DPS %

90% Standard

98% Street Base

90%

Area Distribution BasedOn Current ExpectationsArea Distribution BasedOn Current Expectations

Area Distribution BasedOn Revised ExpectationsArea Distribution Based

On Revised Expectations

National

PivotOpportunity %

Achieved

PivotOpportunity %

Achieved

Week 48 Gap179K Workhours

Week 48 Gap179K Workhours

Week 48 CDPOM Efficiency at FY 2009 Performance ExpectationsWeek 48 CDPOM Efficiency at FY 2009 Performance Expectations

Week 48 Gap96K WorkhoursWeek 48 Gap

96K Workhours

Week 48 CDPOM Efficiency at Current Performance ExpectationsWeek 48 CDPOM Efficiency at Current Performance Expectations


400,000

500,000

600,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

700,000

800,000

30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 02 03 04 05 06 07 08 09 10

Cas

ed V

olu

me

(000

)

May June July August September October November

Avg May-Aug957,285,386

1,140,294,866

Avg Sep - Nov

Avg May-Aug848,028,815

976,834,805

Avg Sep - Nov

Avg May-Aug

697,219,161

750,334,448

Avg Sep - Nov

Eliminate Costly ParadigmsEliminate Costly Paradigms

FY 2006-07 FY 2007-08 FY 2008-09

Fall Mailing Season Impact on Average Cased VolumesFall Mailing Season Impact on Average Cased Volumes

Summer Fall

2006 - 2007Summer Fall




2008 – 2009Summer Fall

2008 – 2009**

* Projected

Average Weekly Rate of Change – May-Aug vs Sep-Nov Average Weekly Rate of Change – May-Aug vs Sep-Nov

* Projected

IMPACT OF FALL MAILING SEASON IMPACT OF FALL MAILING SEASON

20

40

60

80

100

120

140

160

180

200

Cas

ed V

olu

me

(mil

lio

ns

)

*2008-2009

8%

53 M

Average DailyImpact Per Rt

6 Min


6 Min

2007-2008

15%

129 M


16 Min


16 Min

2006-2007

19%

183 M


22 Min


22 Min

Rate of Change

Amount of Change

Result: Maintain Current Route Coverage in Qtr 1Result: Maintain Current Route Coverage in Qtr 1

Hours per RouteHours per Route

Tactic: Maintain Current Route Coverage in Qtr 1 (LDC 23/27)Tactic: Maintain Current Route Coverage in Qtr 1 (LDC 23/27)

Hours per RouteHours per Route

Tactic: Manage to Actual Workload During DecemberTactic: Manage to Actual Workload During December


Tactic: Manage to Actual Workload During Dec (LDC 23/27)Tactic: Manage to Actual Workload During Dec (LDC 23/27)


Savings SummarySavings Summary

QTR 1 OPPORTUNITY – MAINTAIN CURRENT HRS per RTQTR 1 OPPORTUNITY – MAINTAIN CURRENT HRS per RT

DELIVERY ROUTES OCT-NOV 4,858,251 $179,755,299

LDC 23/27 OCT-NOV 224,632 $8,311,369

DELIVERY ROUTES DECEMBER 2,543,895 $94,124,130

LDC 23/27 DECEMBER 504,406 $18,663,014

TOTAL SAVINGS POTENTIAL TOTAL SAVINGS POTENTIAL 8,131,1848,131,184 $300,853,812$300,853,812

WORKHOUR SAVINGS

DOLLARS SAVINGSQtr 1, FY 2009Qtr 1, FY 2009

2009 Rt Structure 2009 Rt Structure

2009 Rt Structure 2009 Rt Structure

Plan Supported Routes – FY 2008 vs FY 2009Plan Supported Routes – FY 2008 vs FY 2009

* Assumes that Routes are Eliminated Day 1, FY 2009* Assumes that Routes are Eliminated Day 1, FY 2009

Strategies/Tactics - FY 2009 Route StructureStrategies/Tactics - FY 2009 Route Structure


Aggressive Spring Route Inspection / MRAsAggressive Spring Route Inspection / MRAs

Casers and Deliverers ConceptCasers and Deliverers Concept

Conduct Fall Route Inspections / Minor Rt AdjustmentsConduct Fall Route Inspections / Minor Rt Adjustments

MRA Where Current Rt Inspection Data Exists – Using CORMRA Where Current Rt Inspection Data Exists – Using COR

Full RCI Focus on Inner City Low Volume UnitsFull RCI Focus on Inner City Low Volume Units

Continuous Vacant/Opportunity Route ReviewsContinuous Vacant/Opportunity Route Reviews

Negotiated MinorsNegotiated Minors

Execute the Strategy:Execute the Strategy:

District Manager Route Reduction TargetsDistrict Manager Route Reduction Targets

Fall ReadinessFall Readiness

Fall Targeted Route Inspection Tracking Report

DM TargetsDM Targets

FALL RT ADJUSTMENT SAVINGS POTENTIAL AT 1 ROUTE IN 20+ ROUTE UNITSFALL RT ADJUSTMENT SAVINGS POTENTIAL AT 1 ROUTE IN 20+ ROUTE UNITS

ESTABLISH DISTRICT MANAGER ROUTE REDUCTION TARGETSESTABLISH DISTRICT MANAGER ROUTE REDUCTION TARGETS

QTR 1 QTR 2 QTR 3 QTR 4

2009 Rt Adjustments2009 Rt Adjustments

CAPTURE SAVINGSCAPTURE SAVINGS

Fall Adjustments

CONDUCTCONDUCT

2009 Route Adjustment Timeline

OCTOCT NOVNOV DECDEC JANJAN FEBFEB MARMAR APRAPR MAYMAY JUNJUN JULJUL AUGAUG SEPSEP

Fall 2009 Savings Potential Based on 3,750 DM Target

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY 2009

0 0 0 750 720 780 780 780 750 750 780 780 6.8 millFall

Strategies/Tactics - FY 2009 Route StructureStrategies/Tactics - FY 2009 Route Structure


Spring Route Inspection / MRAsSpring Route Inspection / MRAs

Traditional Processes – Execute the StrategyTraditional Processes – Execute the StrategyMRA Where Current Rt Inspection Data Exists – Using CORMRA Where Current Rt Inspection Data Exists – Using COR

Targeted Full Route Count & InspectionsTargeted Full Route Count & Inspections

Continuous Vacant/Opportunity Route ReviewsContinuous Vacant/Opportunity Route Reviews

Negotiated MinorsNegotiated Minors

AggressiveAggressive

Potential Article 19 Eliminating the Requirement for:Current Route Inspection DataSame Carrier on Route

Potential Article 19 Eliminating the Requirement for:Current Route Inspection DataSame Carrier on Route

Allows Across the Board Minor Adjustments for VolumeReductions Plus COR UsageAllows Across the Board Minor Adjustments for VolumeReductions Plus COR Usage

Pursue Nat’l Union Negotiations (from a position of strength)Pursue Nat’l Union Negotiations (from a position of strength)

QTR 1 QTR 2 QTR 3 QTR 4


Spring Adjustments

CAPTURE SAVINGSCAPTURE SAVINGSCONDUCTCONDUCT

CAPTURE SAVINGSCAPTURE SAVINGS

Fall Adjustments

CONDUCTCONDUCT

2009 Route Adjustment Timeline

OCTOCT NOVNOV DECDEC JANJAN FEBFEB MARMAR APRAPR MAYMAY JUNJUN JULJUL AUGAUG SEPSEP

Spring 2009 Savings Potential Based on 6,300 Required Target

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY 2009

0 0 0 750 720 780 780 780 750 750 780 780 6.8 millFall

0 0 0 0 0 0 0 0 1,446 1,446 1,504 1,504 5.9 millSpring

0 0 0 750 720 780 780 780 2,196 2,196 2,284 2,284 12.7 millTotal

Casers / DeliverersCasers / Deliverers

Distribution of Cased Workload by UnitAverage Daily Cased Volume - May 2008

181

1,3411,417

1,554

2,474

2,782

0

500

1,000

1,500

2,000

2,500

3,000

2 Feet orLess

2-3 Feet 3-4 Feet 4-5 Feet 5-6 Feet 6 Feet orMore

Avg Cased Volume per Route

# U

nit

s

Recorded Volumes Discounted by 20% to Account for Inflation


Significant Number (16%) of Units Average Less Than 3ft Cased Volume a Day (Based on May 2008)

Average FOT costs have increased to 39.33 minutes nationally

Current Annualized Cost of FOT - $1.2 billion

Carriers expand office time to justify leaving time

Result - Inefficient route structure and vehicle utilization

Current SituationCurrent Situation

Low, incremental volumes cause waiting time impacts felton every route


Many inner city, low volume units earn more in Fixed Office Time than the value of their cased workload

Example:

30 route office casing an average of 2.5 ft of mail daily and achieving 100% Standard

Value ofCased Workload

Value ofFixed Office Time

20.0 hours 19.7 hours

Total Earned Daily Office Time 39.7 hours

Due to :(a) Expansion of office time

(b) Carrier waiting time / mail flow Issues

Actual % Standard performance degradesto avg of 150% standard in low volume units

Total Actual Daily Office Time 60.0 hours

Result: Traditional 2 hours in the office and 6 on the street!Result: Traditional 2 hours in the office and 6 on the street!

Current SituationCurrent Situation


Suggested Unit Criteria for ImplementationSuggested Unit Criteria for Implementation

3 Feet or Less Cased Volume per Route

Current Vacant Routes or Potential Vacant Routes

Current Street Times Greater than 6:30

Poor Percent to Standard

Consistent Mail Flow from Processing

Mail Arrival (to meet 3 hour casing window, 9:30 AM leave time)


SAMPLE CANDIDATE OFFICESSAMPLE CANDIDATE OFFICES


Evaluate Routes and make Adjustments by RemovingCasing / Office Duties from as Many Routes as PossibleCreating Separate Caser and Deliverer Assignments

Solution – Decouple Office / Street DutiesSolution – Decouple Office / Street Duties

Street Routes – 100% Street Delivery

Caser Routes– Office and Street Delivery

Proposed StrategyProposed Strategy

Existing RC&I or Minor Adjustment Process

141.19 requires reasonably current data and same carrier

Local agreed upon process


Solution – Decouple Office / Street DutiesSolution – Decouple Office / Street Duties

Proposed Strategy – Creation of 100% Street RoutesProposed Strategy – Creation of 100% Street Routes

Add street time to the route approximately equal to amount of office time removed (as near to 8 hours as possible)

Carrier collects mail prepared and staged for street delivery, collects accountables, clocks to the street, loads vehicle and proceeds to the first delivery point

Expectation that carrier street time will be about 7:40 hours for deliverers

Remove all office time except clocking in, sign for keys, accountables, obtain scanner, receive instruction/service talks, vehicle safety check.


Suggested ImplementationSuggested Implementation

Perform a Route Inspection on the Unit

Using Unit Office Time determine the number of casers required (Total office time / 2:45)

Determine the Street Time value for the Unit

Determine the Office Time value for the Unit

Determine the Street Time required to make the Casers 8 hours (Total street time - Casers * 4:30)

With Remaining Street Time determine how many Deliverers are needed (Remaining street time / 7:40)

Create New Assignments in COR


Benefits Over Current Traditional Rt StructureBenefits Over Current Traditional Rt Structure

Reduction of required unit level Fixed Office Time

Reduction of idle waiting time due to low incremental volumes on multiple trips

Less contention over the value of the workload with individual carriers

More consistent delivery times

GPS/GISGPS/GIS

Delivery Point Coverage Daily ReportDelivery Point Coverage Daily Report

Street Management ToolsStreet Management Tools

8:00-

7:30-

7:00-

6:30-

6:00-

5:30-

5:00-

4:30-

4:00-

3:30

3:00-

2:30

2:00-

1:30

1:00-

0:30

0:00-

Cu

rre

nt

Ave

rag

e R

ou

te

Today’s Average RouteToday’s Average Route

8.2%8.2%

20.0%20.0%

71.8%71.8%

Street BaseStreet Base

(National)

8:00-

7:30-

7:00-

6:30-

6:00-

5:30-

5:00-

4:30-

4:00-

3:30

3:00-

2:30

2:00-

1:30

1:00-

0:30

0:00-

Cu

rre

nt

Ave

rag

e R

ou

te

Today’s Average RouteToday’s Average Route

8.2%8.2%

20.0%20.0%

71.8%71.8%

Street BaseStreet Base

(National)

Global Positioning System/Global Information SystemGlobal Positioning System/Global Information System

Currently installed in 500 vehicles with passive GPS/GIS system in Chicago Requires no interaction with carrier

GPS makes it possible to easily locate and account for USPS delivery vehicles

Simply records information Miles traveled Deviations from route Idle time

With engine on and with engine off

Number of stops and park points Deviation from route structure (hop and stop vs. park and loop) Provides breadcrumb trail of vehicle activity


Cost Breakdown: Unit cost = $252 ea 500 $126,000

Installation = $50 ea 500 $25,000

Training $2,000

Monthly Service $22.95 ea 500 $11,475

Total Annual Cost $138,000

Cost Breakdown: Unit cost = $252 ea 500 $126,000

Installation = $50 ea 500 $25,000

Training $2,000

Monthly Service $22.95 ea 500 $11,475

Total Annual Cost $138,000

Annual CostAnnual Cost

Breakeven Point - 1.4 minutes per route per day!Breakeven Point - 1.4 minutes per route per day!


COST OF CURRENT SYSTEM UTILIZED IN CHICAGOCOST OF CURRENT SYSTEM UTILIZED IN CHICAGO

Objective:Identify Estimated Daily Delivery Point Coverage through

Automation Equipment

Compare Against a Route’s Base Delivery Coverage

Generate a Daily Report for AM Supervisor to Review and Consider When Determining Street Expectations

Next Steps:Currently Completing Initial Coding Requirements

Pilot Site Testing to Begin Over the Next Several Weeks

National Deployment Qtr 2 FY09

Daily Delivery Coverage Daily Delivery Coverage


Daily Delivery Point Coverage Report Daily Delivery Point Coverage Report


0 – 65% Coverage 65 – 85% Coverage > Than 85% Coverage

Daily Delivery Point Coverage Report Daily Delivery Point Coverage Report


Area Rollup

* Non Validated Data

SummarySummary

We Face an Unprecedented Budget Challenge in FY 2009with 6,300 Unfunded Routes on Day 1We Face an Unprecedented Budget Challenge in FY 2009with 6,300 Unfunded Routes on Day 1

Every Day we Wait in Reducing Routes Adds to the 2009 ReductionRequirement. Execute the Strategy with:Every Day we Wait in Reducing Routes Adds to the 2009 ReductionRequirement. Execute the Strategy with:

Aggressive Fall/Spring Inspection/MRA PlansAggressive Fall/Spring Inspection/MRA Plans

Accountability – District Manager Route Reduction TargetsAccountability – District Manager Route Reduction Targets

While We Won’t Realize Substantial Savings from RouteReductions in Qtr 1, we Have a Huge Opportunity inMaintaining our Current Hours per Route Through December

While We Won’t Realize Substantial Savings from RouteReductions in Qtr 1, we Have a Huge Opportunity inMaintaining our Current Hours per Route Through December

Eliminate the Paradigms and Manage to Actual WorkloadEliminate the Paradigms and Manage to Actual WorkloadFall Mailing Season OpportunityFall Mailing Season Opportunity

Christmas OpportunityChristmas Opportunity

To the Extent we are Unsuccessful in Reducing the # Routes Needed to Achieve Budget, We Will Need to Close the Gap By:To the Extent we are Unsuccessful in Reducing the # Routes Needed to Achieve Budget, We Will Need to Close the Gap By:

Continued and Deeper Levels of Pivoting Through:Continued and Deeper Levels of Pivoting Through:Effective Use of Scheduling / Staffing ToolsEffective Use of Scheduling / Staffing Tools

Achievement of Continuous Improvement TargetsAchievement of Continuous Improvement Targets

Delivery Operations

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