MTAC Briefing May 16, 2002

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MTAC BriefingMay 16, 2002
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Program

• Progression of Task Force
• Recommendation Activities
• Q A

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Task Force Progression
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Mailing Industry Task Force Co-Chairmen

• JOHN NOLAN
• Deputy Postmaster General

MICHAEL CRITELLI Chairman and Chief Executive
Officer
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Mailing Industry Task Force Steering Committee

• Charles Morgan, Company Leader Acxiom
• Gary M. Mulloy, Chairman CEO ADVO, Inc.
• Jonathan Linen, Vice Chairman American
  Express
• Nigel Morris, President COO Capital One
• Michael Sherman, President Fingerhut
• Hamilton Davison, President CEO Paramount
  Cards
• Thomas Siebel, Chairman CEO Siebel Systems,
  Inc.
• Dr. Jerry Swartz, Chairman Chief Scientist
  Symbol Technologies
• William L. Davis, Chairman, President CEO R.
  R. Donnelley Sons
• David Sable, President CEO Wunderman

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Economic Impact
California63 billion

• Wyoming372 million

New York65 billion

• 900 Billion Industry

• 8 of the GDP

• Workforce of 9 Million

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The Mail Moment
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Structure
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Seizing Opportunity

• 4,600 Reports Distributed
• 20,000 Hits on Webpage

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Broaden Participation
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Progress Report

• 27 Accomplishments

• 41 Planned Actions

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Preparation and Entry Optimization

• William L. Davis, Chief Executive Officer
• R.R. Donnelley
• John Rapp, Senior Vice President, Operations
• United States Postal Service

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Preparation and EntrySpecific Recommendations

• Facilitate preparation standardization
• Drive greater system efficiency across classes
  and sub-classes of mail
• Examine mail preparation, containerization, and
  entry requirements
• Implement MTACs shape based rate recommendations
• Evaluate entire value chain

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Preparation and EntryActivities

• Make Up Align standard packaging
  containerization with USPS processing
• Merge flats to carrier route
• Implement scheme-based entry
• Collect data regarding minimum-piece requirement
• Support co-containerization for destination entry

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Preparation and EntryActivities

• Containerization Introduce optimally designed
  containers
• Develop flat mail containers
• Set optimum container minimums
• Implement customer prepared three-digit
  containers only when they add value to USPS
  processing

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Preparation and EntryActivities

• Acceptance Points Align mail entry with networks
• NIA is long-term solution
• Explicitly define drop ship entry points
• Acceptance Process Optimize efficiencies
  between mailers USPS
• Adopt PostalOne!
• BOG Approved 54.1 million in funding for
  PostalOne! - May 6, 2002

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Network Optimization

• William L. Davis, Chief Executive Officer
• R.R. Donnelley
• John Rapp, Senior Vice President Operations
• United States Postal Service

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Network OptimizationSpecific Recommendations

• Optimize the USPS logistics network to reduce
  total system-wide costs
• Focus on presenting mail at the most efficient
  point in the most efficient manner to realize
  cost savings
• Adopt USPS network optimization effort (NIA) as
  part of Task Forces vision

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Network Optimization Strategic Goal
Network Optimization mandates shifting our focus
from optimizing the performance of a particular
product or lane to optimizing the performance of
the entire postal logistics network and value
chain.
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Network OptimizationNetwork Integration
Alignment (NIA) Objectives

• Reduce combined (USPS and Customers costs)
• Increase operational effectiveness and service
  responsiveness
• Improve consistency and predictability of service

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Network OptimizationActivities

• Test baseline model through summer
• Conduct mailer input workshops
• Evaluate network alternatives
• Explore workshare alternatives
• Report on model results and network strategy at
  Fall NPF

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• Improve Address Quality
• Charles Morgan, Company Leader
• Acxiom Corporation
• Charles Bravo, Sr. Vice President, Chief
  Technology Officer
• United States Postal Service

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Address Quality Specific Recommendation

• Require more frequent use of move update and
  address matching software
• Provide data on undeliverable mail to mailers

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Address Quality Progress to Date

• Develop Federal Register Notice which recommends
• Require list reprocessing for automation rate
  mail every 90 days
• Require ZIP4 directory updates monthly
• Use Move Update product within 90 days of mailing
• Extend Move Update requirements to more classes

Federal Register Notice to be released in May
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Address Quality Progress to Date

• National Change Of Address (NCOA)
• Data Test
• Validating accuracy of NCOA
• Involves 10 large mailers
• Take place April through July
• Report results at fall NPF

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Address Quality Progress to Date

• UAA Tracking and Analysis
• Bank One, Prudential
• First class campaign of 5 million pieces
• Zip4 coded, Move Updated
• Expect 5-10 return mail rate
• Findings
• Which shouldnt have been mailed?
• Which should have been delivered?

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Address Quality Activities

• Improve compliance with Address Change
  Service-prepared mail handling procedures
• Support phase II proof-of-concept testing of
  Address Element Correction process
• Redesign and update CASS Form 3553
• Secure USPS support for preprinting ACS codes on
  envelopes

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Intelligent Mail
Michael Critelli, Chairman and CEO Pitney
Bowes Charles Bravo, Sr. Vice President and
Chief Technology Officer Tom Day, Vice
President, Engineering United States Postal
Service
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Intelligent Mail Specific Recommendations

• Create a real time web-based service measurement
• Develop delivery predictability programs
• Upgrade existing recognition technology

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Intelligent Mail Activities

• Implemented Confirm
• Enabled all automated letter flat sorting
  equipment to read PLANET Code
• Expanded the use of Information-Based Indicia
  (IBI)
• Upgrading camera technology on letter sorting
  equipment

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Intelligent Mail Activities

• Begun testing parcel sorting machines equipped to
  read IBI and Delivery Confirmation codes
• Prepared the Confirm rate case
• Finalized common postal-and-industry Confirm
  reports
• Evaluating feasibility of adding IBI capability
  to flat-sorting machines

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Intelligent Mail Activities

• Complete a high level strategy for intelligent
  mail
• Work with USPS to determine contents
  symbologies and impact
• Promote gathering of samples, perform pilot tests
  and assist in validation of value
• Support USPS deployment of equipment
  intelligent mail program

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Intelligent Mail Activities

• Leverage collateral benefits
• Promote publishing ISO coding standards
• Determine linkage with address quality
• Explore ways to make mail more predictable
• Investigate means of expanding to personal use
• Ensure balance between value investment

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• Enhanced Payment Systems and Commercial Credit
  Options
• Gary Mulloy, Chairman and CEO
• ADVO
• Bob Pedersen, Vice President, Treasurer
• United States Postal Service

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Payment Systems Credit OptionsSpecific
Recommendations

• Provide business mailers with flexible payment
  terms
• Modernize and upgrade payment systems
• USPS offer one-source access and tracking of all
  financial transactions
• Explore at-home payment options

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Payment Systems Credit OptionsActivities

• USPS offer one source of access and tracking of
  all financial transactions

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Payment Systems Credit OptionsPostalOne!

• Industry NEEDS
• N National Permit Number
• E Establish / Modify Mailing Accounts
• E Electronic Enhanced Payment Flexibility
• D Detailed On-Line Reporting
• S Simplified Easy to Use Systems

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Payment Systems Credit OptionsActivities

• Conduct Proof of Concept Tests
• PIN-based debit card
• Expand CAPs availability for BRM
• Support the offering of credit terms by
  intermediaries

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Payment Systems Credit OptionsProof of Concept
Test

• PIN-Based Debit Card

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Payment Systems Credit OptionsProof of Concept
Test

• Expand CAPS Availabilityfor BRM

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Payment Systems Credit OptionsProof of Concept
Test

• Third Party Credit

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• Pricing Strategy
• Gary Mulloy, Chairman and CEO
• ADVO
• Steve Kearney, Vice President, Pricing and
  Classification
• United States Postal Service

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Pricing Strategy Specific Recommendation

• Adopt competitive pricing strategy
• Predictable price increases at or below inflation
• Streamline rate making process
• Examine customized pricing procedures
• Protect Citizens access to low cost First-Class
  Mail

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Pricing Strategy Activities

• Streamlined rate-setting
• Targeted Pricing
• Pricing Strategy

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Pricing Strategy Activities

• Support USPS/PRC conference
• Ratemaking Summit - May 28, 2002
• Design implement targeted pricing initiatives
• Evaluate pricing proposals in Transformation Plan

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• Consumer Gateway Services
• Dr. Jerry Swartz, Chairman and Chief Scientist
• Symbol Technologies
• Nick Barranca, Vice President, Product
  Development
• United States Postal Service

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Consumer Gateway Services Specific
Recommendations

• Create a merchandise returns service
• Increase convenience by providing 24/7 access
• Define consumers needs to support the mail
  moment
• Pilot a program using print to Web links

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Consumer Gateway ServicesActivities

• Increase convenience of returning merchandise by
  exploring
• Integration of barcodes on outgoing parcels and
  return labels
• Carrier pick-up program
• Flat rate packages

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Consumer Gateway ServicesActivities

• Expand consumer access 24 by 7, and at additional
  locations by
• Adding self-service technology / kiosks
• Analyzing results of Mail Item Retrieval System
  pilot
• Studying electronic cash at door - debit / credit

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Consumer Gateway ServicesActivities

• Enable web portal for print-to-web transaction
• Identify provider, either USPS or third party
• Study feasibility

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• Implement Industry Council
• Michael Critelli, Chairman and CEO
• Pitney Bowes Inc.
• David Sable, President and Chief Executive
  Officer
• Wunderman New York

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Implement Industry Council Specific
Recommendations

• Foster industry standards
• Develop targeted advertising and a marketing
  program
• Provide public policy leadership

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Implement Industry Council Activities

• Support an industry-wide Transformation Plan
  effort
• Develop and launch an advertising marketing
  program
• Enhance the coordinated government relations
  strategy
• Establish a CEO level council
• Provide standards development leadership

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Implement Industry Council Activities

• Establish CEO Council as legal entity
• Further develop marketing strategies
• Participate in special events
• Stimulate media coverage
• Pursue development of unified standards
• Expand participation acquire funding

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• Mailing Industry Task Force

ProductRedesign
Strong and Vital Industry
Mail Security
Transformation Plan
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All Available at www.usps.com