august 20, 2015. 2 gla area focus group – 8/20/15

GREAT LAKES AREA MAILING INDUSTRY AREA

FOCUS GROUP

OPERATIONS UPDATE

AUGUST 20, 2015

KELLY SIGMONVP, RETAIL & CUSTOMER SERVICE

OPERATIONS

August 20, 2015August 20, 2015

AGENDA

SERVICE PERFORMANCE

MAIL TRANSPORT EQUIPMENT

FALL MAILING SEASON READINESS

Q/A

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

TECHNOLOGY & INNOVATION

RETAIL AND CUSTOMER SERVICE UPDATE

GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

SERVICE PERFORMANCE DIAGNOSTICSFROM REACTIVE TO PROACTIVE

SERVICE MEASUREMENTMEETING SERVICE EXPECTATION

PREDICTABILITY

VISIBILITY

DRIVING EFFICIENCY THROUGH MEASUREMENT & DIAGNOSTICS

YEAR TO DATE SERVICE PERFORMANCE

3

FY 2015 Service ChallengeFY 2015 Service Challenge

21 Named Winter Storms

RecordSnowfalls

FlightsGrounded / Delayed 23.1M

Missed Deliveries

FY15 Q1/Q2 — Weather Impacts

4

FY 2015 Service ChallengeFY 2015 Service Challenge

Operating Window Change (OWC) implementation began in all processing facilities320

Significant changes to:

TransportationSchedules

Machine Schedules

EmployeeSchedules

Customer Supplier Agreements

CSA

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First-Class CompositeFirst-Class Composite

Q4TD/YTD: SPFC thru July 31,2015, Presort July 24,2015

96.00

FCM Composite UCL/LCL Target

YTD

89.06

Q4TD

91.24Actual

77.00

87.00

97.00

85.00

90.00

95.00

100.00

10/3/2014

10/10/2014

10/17/2014

10/24/2014

10/31/2014

11/7/2014

11/14/2014

11/21/2014

11/28/2014

12/5/2014

12/12/2014

12/19/2014

12/26/2014

1/2/2015

1/9/2015

1/16/2015

1/23/2015

1/30/2015

2/6/2015

2/13/2015

2/20/2015

2/27/2015

3/6/2015

3/13/2015

3/20/2015

3/27/2015

4/3/2015

4/10/2015

4/17/2015

4/24/2015

5/1/2015

5/8/2015

5/15/2015

5/22/2015

5/29/2015

6/5/2015

6/12/2015

6/19/2015

6/26/2015

7/3/2015

7/10/2015

7/17/2015

7/24/2015

. . H . . . H . H . . . H H . . H . . . H . . . . . . . . . . . . . H . . . . H . . .

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Standard Mail CompositeStandard Mail Composite

Q4TD/YTD thru July 24, 2015

91.00

Standard Composite UCL/LCL Target

YTD

89.15

Q4TD

92.36Actual

77.00

87.00

97.00

85.00

90.00

95.00

100.00

10/3/2014

10/10/2014

10/17/2014

10/24/2014

10/31/2014

11/7/2014

11/14/2014

11/21/2014

11/28/2014

12/5/2014

12/12/2014

12/19/2014

12/26/2014

1/2/2015

1/9/2015

1/16/2015

1/23/2015

1/30/2015

2/6/2015

2/13/2015

2/20/2015

2/27/2015

3/6/2015

3/13/2015

3/20/2015

3/27/2015

4/3/2015

4/10/2015

4/17/2015

4/24/2015

5/1/2015

5/8/2015

5/15/2015

5/22/2015

5/29/2015

6/5/2015

6/12/2015

6/19/2015

6/26/2015

7/3/2015

7/10/2015

7/17/2015

7/24/2015

. . H . . . H . H . . . H H . . H . . . H . . . . . . . . . . . . . H . . . . H . . .

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PeriodicalsPeriodicals

91.00

Periodicals UCL/LCL Target

YTD

82.91

Q4TD

84.78Actual

Q4TD/YTD thru July 24, 2015

73.00

83.00

93.00

85.00

90.00

95.00

100.00

10/3/2014

10/10/2014

10/17/2014

10/24/2014

10/31/2014

11/7/2014

11/14/2014

11/21/2014

11/28/2014

12/5/2014

12/12/2014

12/19/2014

12/26/2014

1/2/2015

1/9/2015

1/16/2015

1/23/2015

1/30/2015

2/6/2015

2/13/2015

2/20/2015

2/27/2015

3/6/2015

3/13/2015

3/20/2015

3/27/2015

4/3/2015

4/10/2015

4/17/2015

4/24/2015

5/1/2015

5/8/2015

5/15/2015

5/22/2015

5/29/2015

6/5/2015

6/12/2015

6/19/2015

6/26/2015

7/3/2015

7/10/2015

7/17/2015

7/24/2015

. . H . . . H . H . . . H H . . H . . . H . . . . . . . . . . . . . H . . . . H . . .

8

FY 16 FALL MAILING SEASON READINESS

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

New for Fall 2015New for Fall 2015

124 automated package and bundle sorters expanded since last Fall mailing season 5,488 additional separations added to the fleet

An average of 44 per machine

21 Small Package/Bundle Sorter Systems Expanded access to the network

FAST Appointments extended

Activated 187 Hubs

New data analysis tools and reports (SPD) Mobile Delivery Device deployment complete Sept. 2015 Lean Mail Processing implemented in every plant Lean Mail Delivery – phase 1 implemented in every unit Leverage Local Operations Centers

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EquipmentEquipment

MAIL TRANSPORT EQUIPMENT

USPS spent $96M in New Buys for FY 2015

Plastic Pallets, Plastic Trays, Plastic Flat Tubs and Sleeves

Quarter 4 purchases still being received through September

MTE Inventory is available to meet Fall Mailing Season demand 4.1 Million EMM Trays & Sleeves

2.5 Million MM Trays & Sleeves

1.7 Million Half-Trays & Sleeves

2.0 Million Pallets

2.9 Million Flat Tubs

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LEVERAGING TECHNOLOGY & INNOVATION TO GROW

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

Consumer Expectations are Changing

Consumers are connected, informed and expect:

One-stop-shop experiences

Personalized service

Identity Protection

When expectations are not met, consumers share their experience.

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Physical to DigitalMail Promotions

Faster Shipping.More Visibility.

Simpler Returns.

MyUSPSmy.usps.com

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WHAT WE ARE DOING…

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

Mail Remains RelevantMail Remains Relevant

We created our own catalog…We created our own catalog…

Mail + Mobilean Optimum Connection

Use mail as jumping-off point for mobile commerce• QR codes used by 1 in 5 smartphone users:

– USPS drove initial adoption of QR Codes with first Mobile Barcode promotion• 400% increase in QR Code scans by consumers from 2011-12

• Mobile device key to linking channels

Best practices• Link to mobile optimized and/or

personalized site

Optimizing Direct MailOptimizing Direct Mail

2015 Promotional Calendar2015 Promotional Calendar

We’re Also Adapting to Changing Delivery Expectations….

Sunday Delivery- New Sunday locations

• Denver, Minneapolis, Detroit Aug-Nov 2015

- 3,300 additional ZIP Codes mapped for expansion

- Averaging 1.2M parcels on Sunday

Ship From Store (Next Day)- 16 customers with over 7,400 stores served

- Onboarding 2 new customers with over 3,000 stores

Same-Day (Metro Post)- More than 132,000 deliveries year to date

Opening New Customized Delivery Markets- Grocery Delivery

• 6,000 deliveries with over 27,000 totes per week

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• My USPS. Com is platform USPS will use to give the consumer more control over package

• Site allows consumer to:

- Notified of delivery status

- Control delivery such as package intercept

- Direct the carrier where to leave a package (with a neighbor in back etc.)

Providing Consumers Control of Delivery

My USPS: Package Notification

RETAIL AND CUSTOMER SERVICE UPDATE

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

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Retail Update

Increase revenue

Achieve Operational Effectiveness

Improve the customer experience

• Leveraging retail network across physical and digital channels

• Delivering a brand experience through a transformative customer-centric retail environment

Focus Goals

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Investments in retail employees, processes, and infrastructure at high-traffic Post Offices improves the overall retail customer experience

Increased Employee Trainingo Conducting brand image, customer perception,

and communications training to improve customer service

Investments in Infrastructureo Performing deferred maintenance work to strengthen

retail infrastructure and address customer-facing issues

Standardized Customer Experienceo Establishing tiered certifications to create a

consistent, customer-centric experience

Lean Retailo Applying lean principles to counter line, inner and

outer lobby, and back office

Customer Experience Investment Areas

Premier OfficesPremier Offices

26

Additional Self-Service Kiosks Self-Service Expansion (SEP) emphasized using lobby

assistants and self service to improve customer experience During expansion, customer adoption increased

Mobile TechnologyMobile point of sale (mPOS) devices rolled out at 2,869 sites to decrease customer wait-time and enable clerks to: Greet customers in front of the retail counter line Direct customers to the technology that best serves their needs Quickly complete simple transactions away from the window

Integrated Retail Software Retail Systems Software (RSS), deployed to 10,000 Post Offices, links technology platforms to: Empower flexibility with evolving consumer needs Create an integrated retail technology experience Deploy an intuitive interface to improve ease of training and service

Key Investment Areas

Retail TechnologyRetail technology investments

Investments in self-service & mobile technologieshelp improve the retail customer experience

Self-Service Retail Kiosk (e.g., Brown Bag Restaurant)

Going forward, we can make greater use of emerging technologies to enhance the customer experience

In-person verification (e.g., airport check-in) using mobile device

Smart device connectivity (e.g., NFC and Bluetooth printer stations)

Mobile payments (e.g., Apply Pay, iWatch)

Retail technology investments

Retail Technology

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Lean Delivery – F4 Operations

o Applying lean principles to distribution operations

Optimizing the use of Delivery Unit Distribution Ops Technologyo Modifying equipment to allow more operational

flexibility

o Standardizing use of the equipment

Optimization of F4 operations to promote office efficiencies

o Focus on Distribution up-times

o Taking advantage of OWC to improve operational efficiency

Deliver Unit Distribution OperationsPremier Offices

Post Office Investment Areas

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CLOSING COMMENTS

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15

Committed to Service Excellence

SUMMARY

Our Commitment

Industry Engagement

Effective Use of Data and Diagnostic Tools

Going ForwardGoing Forward

Prepared for a Successful Fall Mailing Season

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We are Committed to Service Excellence

Commitment

Engage Industry

Stabilize OWC

COMMITMENT TO

SERVICE EXCELLENCE

Use Data and Diagnostic Tools

Educate and Empower Employees

Drive Efficiency

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GLA Area Focus Group – 8/20/15GLA Area Focus Group – 8/20/15