Cathy Moon FSS Team Leader

2. Agenda

4. CET Matrix

5. Periodicals Processing Policy Operations field Periodicals processing policy�key drivers: Improve service Improve processing efficiently Reduce the gap on cost coverage Process Periodicals on automated equipment Standardize operations and expectations Monitor key metrics, track performance and compliance Updated written policy & field implementation / training tools Field implementation began July 1, 2011

6. Periodicals Processing Policy Key components of Periodicals Processing policy Aligns processing expectations (efficiency) with service standards All Periodicals will be clearly placarded upon arrival to depict processing and/or delivery commitments to meet operating plan and service Mail arriving after CET will be processed if it can be done efficiently on automated equipment within the current operating & transportation plan All Hot 2-C practices / signs will be eliminated No prioritization based on publication title Flat mail classes will be merged on destination sorts (CR-RT & sequencing) where ever capacity exists

8. Automating Piece / Bundle Distribution Sequence flats for delivery Flats sequencing phase 1 Beyond phase 1 Move flat mail up-the-ladder AFSM 100 efficiencies � non FSS zones Reduce manual processing Finalize bundles requiring distribution APPS, APBS & SPBS

9. Sequencing Operations 99 FSS Installed 46 FSS Sites On Line 99 Machines Operational FSS Phase 1 Operations Phase 1 FSS is virtually completed. The final machine will be activated in late July. Phase 1 FSS is virtually completed. The final machine will be activated in late July.

10. FSS Phase 2 USPS committed to sequencing flats beyond phase 1 Pilot phase 2 technology Attributes & functionality considerations Respond to flat volume changes Begin proof-of-concept August 2011

11. FSS Phase 2 Desired Attributes / Functionality Significantly Less Floor space Volume Dependent vs. Delivery Point Dependent Lower Cost

12. CR-RT flats for non-FSS zones AFSM 100 efficiency Merge classes at destination sorts Reduce manual flat processing Originating FCM cancellations Periodicals processing policy Eliminate Hot 2C practices Process mail efficiently on automation Move Flats Up-the-Ladder

13. Reduce Non-Value Added Work Reduce non-value added work Reduce sacks Reduce bundle breakage Bypass bundle distribution Automate flat mail prep Explore technology solutions

14. Equipment utilization Facility optimization & equipment consolidations Lean Six Sigma projects to streamline operations & increase productivities Container density and transportation utilization Sort plan optimization Flat mail on the right network (surface / air) Process Improvements & Standardization

15. AFSM100 Enhancements Technology advancements Doubles detection Doubles reduction Flats Forwarding Bring Letter PARS capability to Flats

17. FSS Optional Mail Prep FSS scheme bundles Make bundles to match FSS sort-schemes (sort programs) FSS scheme pallets Make pallets of FSS scheme bundles to match a single FSS sort program FSS facility pallets Make pallets of bundles for multiple FSS sort programs in the same building The FSS optional mail prep was made available on January 2, 2011. Mailers who choose to utilize the FSS optional mail prep make-up combine all the ZIP Codes we include in a single FSS sort program into a one bundle � FSS scheme bundle. Mailers may also make a pallet of these FSS scheme bundles that are for a single FSS sort program and label it as an FSS scheme pallet. They may also create an FSS facility pallet containing FSS scheme bundles for multiple FSS sort programs. SO, what are we seeing so far for the FSS Optional Prep? The FSS optional mail prep was made available on January 2, 2011. Mailers who choose to utilize the FSS optional mail prep make-up combine all the ZIP Codes we include in a single FSS sort program into a one bundle � FSS scheme bundle. Mailers may also make a pallet of these FSS scheme bundles that are for a single FSS sort program and label it as an FSS scheme pallet. They may also create an FSS facility pallet containing FSS scheme bundles for multiple FSS sort programs. SO, what are we seeing so far for the FSS Optional Prep?

18. FSS Optional Mail Prep January � June 2011 Very limited mailer participation PostalOne! June Release System issues reconciled Continue to monitor and evaluate Label list L006 August update will be comprehensive We actually have not received many of the FSS pallets so far. We know that there were a few obstacles to participation. PostalOne update released June 26th corrected the system issues. August 1st update for label list L006 will include all active FSS ZIP codes, even when the sort program contains only one zone. Also listed will be all ZIP codes which are planned, but not yet activated. They will be listed individually until they are activated and combined with other zones in a sort program. We actually have not received many of the FSS pallets so far. We know that there were a few obstacles to participation. PostalOne update released June 26th corrected the system issues. August 1st update for label list L006 will include all active FSS ZIP codes, even when the sort program contains only one zone. Also listed will be all ZIP codes which are planned, but not yet activated. They will be listed individually until they are activated and combined with other zones in a sort program.

20. FSS Entry Specifications Timing New Standardized Periodicals CET Location FSS Site vs. SCF Increase / Decrease Consolidations decrease drops FSS sites may increase drops We understand that you have questions about when and where you will make drop shipments and whether or not your trucks will be making more stops than they do today. We have a finalized standardized answer on the timing of the CETs for Periodicals based on whether or not the mail will be processed on FSS or not and whether or not it will need a bundle sort. The locations for drops are still being worked. We are in the process of forming an MTAC Task Team to work through the best locations for drops. One issue centers around whether to drop at the FSS site, the SCF site, or both. The answer is not simple because our sites vary in the equipment set available. As an example, Columbus has only the FSS equipment, so only the FSS scheme pallets or a pallet for a single 5-digit zone could be dropped there. All other pallets would have to go to the SCF/APPS distribution site. Where we consolidate facilities, such as when the Sterling L&DC was merged into the Dulles P&DC / FSS site, we will eliminate drop points. However, the Task Team will be determining the best approach, which could include drops at both the FSS site and the SCF/APPS distribution site in some cities. We understand that you have questions about when and where you will make drop shipments and whether or not your trucks will be making more stops than they do today. We have a finalized standardized answer on the timing of the CETs for Periodicals based on whether or not the mail will be processed on FSS or not and whether or not it will need a bundle sort. The locations for drops are still being worked. We are in the process of forming an MTAC Task Team to work through the best locations for drops. One issue centers around whether to drop at the FSS site, the SCF site, or both. The answer is not simple because our sites vary in the equipment set available. As an example, Columbus has only the FSS equipment, so only the FSS scheme pallets or a pallet for a single 5-digit zone could be dropped there. All other pallets would have to go to the SCF/APPS distribution site. Where we consolidate facilities, such as when the Sterling L&DC was merged into the Dulles P&DC / FSS site, we will eliminate drop points. However, the Task Team will be determining the best approach, which could include drops at both the FSS site and the SCF/APPS distribution site in some cities.

21. FAST FAST not aligned with mixed Periodicals loads 24/7 System enhancements � January 2012 Temporary instructions distributed � (schedule as 100% PER and note in comments) Some FSS locations not designated for Periodicals entry MTAC Task Team Working with the POAC subgroup we identified that the earlier CETs would create an issue with your trucks arriving with Periodicals much earlier than was previously necessary. For efficiency you sometimes need to bring a mixed load containing Periodicals, but you were prohibited from dropping a mixed load outside of the appointment window. You needed the flexibility to bring these mixed Periodicals loads 24/7. We heard you and made that possible, but it will take a little while for our FAST system to catch up with this change. In the interim, you will schedule the appointment as 100% Periodicals, but note in the comments section the actual make up of the load. Some of our FSS sites are not currently designated in FAST to receive Periodicals. Once the Task Team determines the best drop points, some sites may need to be added in FAST. Working with the POAC subgroup we identified that the earlier CETs would create an issue with your trucks arriving with Periodicals much earlier than was previously necessary. For efficiency you sometimes need to bring a mixed load containing Periodicals, but you were prohibited from dropping a mixed load outside of the appointment window. You needed the flexibility to bring these mixed Periodicals loads 24/7. We heard you and made that possible, but it will take a little while for our FAST system to catch up with this change. In the interim, you will schedule the appointment as 100% Periodicals, but note in the comments section the actual make up of the load. Some of our FSS sites are not currently designated in FAST to receive Periodicals. Once the Task Team determines the best drop points, some sites may need to be added in FAST.

23. MTEOR Status Cross-functional process in place to prioritize all technology related projects MTEOR exception request pending MTEOR Update