Business Mail Acceptance Update Mailer’s Technical Advisory Committee (MTAC) November 19, 2009 Pritha Mehra Frank Neri B

1. Business Mail Acceptance UpdateMailer’s Technical Advisory Committee(MTAC)November 19, 2009Pritha MehraFrank NeriBob Galaher

2. Agenda • SOX/Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

3. BMA SOX Key Financial Control Issues • Funds on Hand • Proper acceptance and verification of business mail • Timely and accurate reporting of revenue • Revenue Completeness/Assurance • Authorization for key overrides • Identification of and action on bypass mail • Management of Inactive accounts • Sites in Balance

4. Lean Mail Acceptance Process (LMAP) Benefits of LMAP • Improves Customer Experience • Improves Service Performance • Improves operational efficiency • Standardizes the acceptance and verification processes • Helps to eliminate bypass mail • Increases compliance of financial controls

5. Lean Mail Acceptance Process (LMAP) Implementation Strategy • Assemble LMAP team • Observe unit • Create Current State VSM and Flow Diagram • Implement Five Standard Processes • Metrics monitored to ensure sustainability

6. Lean Mail Acceptance Process (LMAP) Implemented Five Standard Processes • Postage Statement Bins • First-in, First-out (FIFO) a.k.a. Customer Presentation of Mail • Team Acceptance/Verification of Mail • Optimize BMEU Configuration • IOP Agreements

7. Optimize BMEU Configuration: Numbered Swim Lanes, Signage Staging Areas Lean Mail Acceptance Process (LMAP)

8. Lean Mail Acceptance Process (LMAP) Postage Statement Bins

9. SOX Remediation Approach Approach • Deploy LMAP Business Mail Entry Units • Validate Detached Mail Units Acceptance Procedures • Ensure Adequate Staffing • Perform Verification Procedures per DM-109 • Ensure Timely Recording of Revenue • DMU Acceptance Compliance Checklist • Drop-Ship Process Improvements

10. Lean Mail Acceptance Process (LMAP) Drop Shipment Enhancements • Plant-Verified Drop Shipment (PVDS) Improvement • Identify and implement solutions that will create standard PVDS procedures and protect revenue • Map out the current PVDS verification process • Develop solutions to improve the current process • Implement solutions Nationwide

11. Lean Mail Acceptance Process (LMAP) Drop Shipment Enhancements • Plant-Verified Drop Shipment (PVDS) Improvement • Process Changes • PS Form 8125 is the only document accepted from the driver • When defects arise, the SDO or MDO will become involved until resolution is achieved • Process Compliance • Require pallet count verification • Enforce scanning of 99M placard barcode • Only accept correct and completed PS Form 8125 • Consistent use of PS Form 8125 • Training and Documentation • Easy ‘Step by Step Guide’ to follow for drop shipment acceptance at destination • Update Pub 804 to include process changes and ‘Step by Step Guide’ • Develop drop shipment training course

12. Agenda • SOX/Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

13. March 2010 Streamlining Hard Copy Postage Statements • Starting March 15, 2010, the Postal Service will no longer fill out the USPS® section of a hard copy postage statement nor round-stamp the document. • After March 15, 2010, mailers are encouraged to go online to view their mailing activities and retrieve processed postage statements. This procedural change will speed and improve service and reduce the amount of paper generated. • Upon request, a customer may obtain a hard copy receipt of the postage statement or Statement of Mailing/ Weighing and Dispatch Certificate, PS Form 3607, after acceptance and verification are completed.

14. Agenda • SOX/Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

15. March 2010 Performance Based Verification • Statement of Ownership Reviews • Annual Periodicals Review • Manifest Mailings • Full-Service Mailings

16. Agenda • SOX/Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

17. March 2010 Move Update • Verifications performed at sites with MERLIN • Threshold effective January, 2010 • - Must be more than 5 pieces with COAs that were not updated • - Passing score requires 70% or more of the COAs must be updated • - First-Class Mail and Standard Mail assessed 7 cents for each piece • - Current appeal process applies

18. March 2010 Move Update for Combined Mailings • Assessment can be targeted to only clients with issues - if there are no more than 3 clients with issues in the mailing • Penalty will be re-calculated to be applied to only the clients with issues - Example: Mailing size is 1,000,000 for 10 clients, only 2 clients were found with Move Update issues - The 2 clients account for only 5,000 pieces in the mailing - Move Update penalty will be re-calculated based on only 5,000 pieces in this example

19. Agenda • Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

20. Full-Service IMD enables acceptance employees to ensure Full-Service mailings meet barcode, preparation and data requirements to qualify for Full-Service prices Two types of Scans Initial Verification Sampling Scans Container Release Scans Three types of mailing processes Staged - single mailing presented in its entirety with all electronic documentation (eDoc) (postage ready to pay) Continuous - single or multiple mailings produced over an entire day or multiple days, planned eDoc is submitted at the beginning of the mailing and postage statements are submitted at the end of the mailing or when the mailing is ready to drop ship Third party Co-palletized Full-Service Assessment Approach Full-Service Intelligent Mail Device (IMD) Acceptance Procedures

21. Full-Service IMD Sampling Scans will be conducted based on the mailers operation Staged - when mailing and documentation are completed Continuous - Pallet / Container Full-Service Mail Sample Sampling scans conducted in addition to the VRSR samples identified in the PBV model Sampling is conducted as mail is produced Sampling is conducted for each mail job, not postage statement Third-Party Co-palletization site Full-Service IMD Sampling Scan will be performed on Third-Party Co-palletized mailings even if a sampling was conducted at the “origin” verification unit No mailpiece level sampling scans will be conducted at Third-Party Co-palletization facilities Full-Service IMD Acceptance Procedures Full-Service IMD Sampling Scans

22. Agenda • Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

23. Full-Service IMD Sampling Scans Full-Service Assessment Approach Container Trays/Sacks Bundles Mailpieces In Trays or Sacks In Bundles On Container On Tray or Sack Pick 1 Container (from the sampled) Scan 3 Containers (or all if less than 3) Pick 1 Container (from the sampled) Pick 3 out of 5 Trays or Sacks (from the sampled) Pick 3 of 5 scanned trays/sacks Pick 3 of the 5 scanned bundles Scan 5 Trays/Sacks per Container Scan 5 Bundles per Container Scan 5 Bundles per Tray or Sack Scan 10 Mailpieces per tray/sack Scan 10 Mailpieces per bundle

24. Container Release scans Performed at Detached Mail Units (DMUs) For mailings on USPS Transportation for Origin Entry Performed for each dispatch Completed just prior to the mailer loading the vehicle and the acceptance employee sealing the vehicle Document the release date / time Continuous Mailing Operation A minimum of 2 containers are required to be scanned Staged Mailing Operation All containers are required to be scanned Full-Service Assessment Approach Full-Service IMD Container Release Scans

25. Agenda • SOX/Lean Mail Acceptance Process (LMAP) • March 2010 • Streamlining Postage Statements • Performance Based Verification (PBV) Updates • Move Update • Full-Service Assessment Approach • Sampling and Container Release Scanning • Error Assessments

26. Full-Service sampling is performed during initial review of mailing Focus on Content, Readability, Uniqueness Disposition of mailings is dependent upon the errors found and corrective action taken by the mailer Errors that can result in Loss of Full-Service discounts and benefits Electronic Documentation (eDoc) not submitted for Full-Service mailing Missing, Incorrect or Unreadable Container Placard Missing, Incorrect (missing IMtb), or Unreadable Handling Unit Labels Unreadable IMb on Mailpiece Full-Service Assessment Approach Error Assessment:Disposition of Mailings when Errors are Detected

27. Question and Answer Session