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Flats Update

Rosa Fulton

Executive Director, FSS

Krista Finazzo

Manager, Operational Requirements

MTAC – November 2010

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Flat Volume FY 2010 Update

Flat Strategy Activities Update

FSS Update

FSS Optional Mail Prep

Agenda

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Flat Volume Trend 2005 - 2010

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25

30

35

40

45

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2005 2006 2007 2008 2009 2010Flat Vol (Bil) 53.9 53.8 52.4 45.9 39.1 36.8

Billi

ons

FY 2005 –10 Flat volume decline 32%

17.1 billion fewer flats annually

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Flat Volume Percent by Class

FY 2010 Flat Voume by Class (Percent of Total)

First Class7%

Periodicals20%

Standard73%

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Flat Volume 2010 vs. 2009

First Class Periodicals Standard Total Flats

2009 2,824,589 7,791,356 28,468,478 39,084,423 2010 2,458,945 7,174,548 27,200,423 36,833,916

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

Vo

lum

e -Pi

eces

(000

)

Class

Flat Volume Comparison FY 2010 / FY 2009 (By Class & Total Volume)

FY 2010 Flat volume, 36.8 bil-5.8% decline compared to FY 2009

2.25 bil fewer flats

FY 2010 Flat volume, 36.8 bil-5.8% decline compared to FY 2009

2.25 bil fewer flats

-12.9%

-7.9%

-4.5%

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All Flats by Month Comparison

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY 2009 4,937,09 3,774,53 3,301,71 3,033,46 2,984,89 3,322,93 3,236,77 2,857,26 2,841,15 2,994,06 2,989,98 3,287,16

FY 2010 3,796,37 3,487,37 2,935,67 2,732,50 2,837,91 3,269,82 3,161,52 2,855,87 2,777,03 2,909,36 3,105,62 3,275,78

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Volu

me -

Piec

es (0

00)

Total Flat Volume Comparison - FY 2010 / FY 2009 - Monthly Trend

August – only month volume increased over SPLY by 3.9%

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Periodical by Month Comparison

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

FY 2009 789,327 600,417 705,786 641,260 638,434 681,395 695,173 613,416 652,946 607,121 608,679 603,490

FY 2010 675,612 562,912 621,467 553,270 606,644 659,409 631,577 580,049 616,742 563,171 562,941 596,961

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Vol

ume -

Piec

es (0

00)

Periodical Flat Volume Comparison - FY 2010 vs. FY 2009Monthly Trend

September month with least Periodical volume decline -1.1%

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Flat Strategy Update

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Flat Strategy Update

Automate piece & bundle distribution of all flat mail

Reduce Non-value added workImprove existing processes /

standardization

1. Sequence all flats for delivery• FSS zones / delivery units

2. CR-RT all flats for non-FSS zones• AFSM 100• Mailer work-share

3. Finalize all bundles requiring distribution

• APPS, APBS, SPBS

1. Reduce sacks2. Reduce bundle breakage3. Bypass bundle distribution 4. Automate flat mail preparation

1. Equipment utilization• AFSM 100• APPS

2. APPS 100% finalization3. Align flat distribution processes4. Reduce handlings unit/container

density5. Align “redirect” processes

Current Activities FSS phase 1 deploy 100

machines Upgrading 186 SPBS to APBS Reduce manual processing Ensure automated processing of

Periodicalso Eliminate Hot 2-C practices

Align PER CETs w/automated processing

Co-mailing Co-palletization Recognition improvement

programs

Current Activities Bundle integrity / reduce bundle

breakage Optimum bundle sizes to reduce

handlings & bypass bundle distribution

FSS optional mail preparation Origin entry containerization &

separation requirements

Current Activities Facility optimization Equipment consolidations Transportation optimization LSS projects to streamline

operations & increase productivities

Sort plan optimization Eliminate PER & STD flats on air

transportation

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FSS Update

MTAC – November 2010

Rosa Fulton

Executive Director, FSS

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FSS Deployment Plan

100 FSS / 47 Sites100 FSS / 47 Sites

1 2 3 4 5# FSS Color Key

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Sequencing flats• 23 operational machines

• 9 sites

Ready for sequencing• 52 machines

• 22 sites

Installations in progress• 4 machines

• 4 sites

FSS Deployment / Operations

100th FSS machine

• Installed – April 2011

• Operational – June 2011

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Sequencing Operations

FSS Sequencing Operations

Site # FSS

1. Dulles 42. Columbus 23. Kansas City 24. Phoenix 35. South Florida 46. New Jersey NDC 37. Mid Island 28. NW Boston 29. Curseen Morris 1

Over 7,000 carriers receiving sequenced flats in 210 delivery units

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2 9 16 23 30 6 13 20 27 4 11 18 25

S.FL #2

Start of FSS Operations Timeline - 2010

Mid-Island #1

Curseen #2

October November December

NJ NDC #1

Mid-Island #2

South FL #3

NJ NDC #2

NW Boston #1

South FL #4

Curseen #1

NW Boston #3

NJ NDC #4

NW Boston #2

NJ NDC #3

South FL #5

Mid-Island #3

FSS Live Operations – Next Sites

Deployment & Activation ongoing

• By the end of December 2010

9 operational FSS sites

28 FSS machines on-line

• 1/3 of FSS phase 1 machines on-line by end of January

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FSS Optional Mail Prep

MTAC – November 2010

Krista Finazzo

Manager, Operational Requirements

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FSS Optional Mail PreparationFSS Optional Mail Preparation

FSS Optional Mail Preparation Effective January 2, 2011 Mailers provided opportunity to align flat mail

preparation (bundles & pallets) with FSS sort-schemes & processing strategy

Objective Get flats to the front of FSS—bypass

upstream bundle distribution FSS flats available earlier in the end-to-end

flat distribution process

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FSS Optional Mail PreparationFSS Optional Mail Preparation

1. FSS sort-scheme bundle

Combines all 5-digit flat mailpieces for a sort-scheme into the bundle

2. FSS pallets

FSS scheme pallet

FSS facility pallet

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Pallet Description Bundle Make-up Mail Flow (1st handling)

Stand Alone Mail Prep (SAMP)

Bypasses all bundle distribution and ready for flat mail prep & FSS

processing

APPS / SPBS

Moves to the front of the queue for bundle distribution. FSS sort-scheme bundles are sorted into containers that match FSS sort schemes maximizing the flats

available for the early sequencing runs on FSS

APPS / SPBS

Bundles are sorted into containers that match FSS sort schemes,

AFSM 100 sort schemes and CR-RT containers for non-FSS zones

5-digit flats sequencing systems(FSS) scheme pallet

FSS Facility Pallet

SCF pallet

Bundles prepared for a single FSS sort scheme as shown in

L006

Bundles prepared for a single FSS sort-scheme as shown in

L006

Automation compatible bundles CR-RT, 5-D and SCF as shown in L005

FSS Optional Mail PreparationFSS Optional Mail Preparation

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SummarySummary

Mailers FSS optional flat preparation effective January 2, 2011

Planning & synchronization in progress

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