MTACNovember 2, 2005

Strategic Transformation Plan 2006-2010

2002 TRANSFORMATION

Service the best it’s been for all classes

CSM high for 16 straight quarters

Creativity in products and pricing

6th straight year of TFP increases

+5.5M delivery points, 465M fewer workhours

$5 billion savings target ahead of plan

Employee safety and engagement up

Decline in First-Class single-piece

2M new delivery points each year

Standard Mail growing, contribution is less

Competition all around

Workforce issues – benefits, flexibility

Turnover

Wildcards

BUT . . .

STRATEGIC TRANSFORMATION PLAN, 2006-2010

USPS “blueprint”

How we intend to respond to strategic challenges

Updated annually

STRATEGIC TRANSFORMATION PLAN, 2006-2010

Stay focused on basics

STAKEHOLDERS:

Improve service

Reduce redundancy

Employee development

Better workplace

Add value to core products

Be more convenient, more responsive, easier to use

Generate

Revenue

Reduce Costs

Achieve Results with a Customer-Focused,Performance-Based

Culture

Improve Service

STRATEGIC GOALS

Best value Best run

Best place to work

Increase Revenue Cover single-piece FCM decline with growth in other

segments of FCM and other products

Reduce Costs $1B out each year with standardization and customer

partnerships. Work differently, not just harder

Achieve Results with a Customer-Focused, Performance-Based Culture

Accelerate focus on the customer and performance

Improve Service Service is good, but will be even better

STRATEGIC GOALS

Create more customer value with products and services

Customize and simplify pricing

Enhance access and ease of use

Aggressive sales, promotions, and outreach

INCREASE REVENUE

Standardization

Invest in equipment and technology

Customer partnerships

Rationalize facility / transportation networks

Optimize business practices

REDUCE COSTS

Engage employees

Develop and manage talent

Market-based compensation

Make complement more flexible

ACHIEVE RESULTS WITH A CUSTOMER-FOCUSED, PERFORMANCE-BASED CULTURE

Timely end-to-end service for all classes of mail

High quality at all customer access points

Maintain privacy, security, and trust

IMPROVE SERVICE

Revenue

CostsService

Results

Better customer value for the

dollar

Fewer handlings

More mail to intended

recipients more quickly

Better meet customer

needs

INTEGRATION

Cut UAA by 50 %Improve

Address Quality

Revenue

CostsService

Add value

Risk based verification

Track and anticipate delivery

Resources aligned with

workload

Results

Barcodes on All Mail

INTEGRATION

Increase Visibility

1. 25% of air transportation to ground

2. 95% DPS, reduce carrier office time by one hour

3. Annual commercial price adjustments

4. Simplify processes and product offerings

5. Expand Service measurements Seamless mail acceptance

6. Cut misdelivery complaints by 50% annually

7. Continue safety gains with VPP/ERRP

8. Seamless mail acceptance

9. Differentiate First-Class Mail

SELECT TARGETS

Reduce another $5 billion in tandem with aggressive measures to grow the business

Advances in service, productivity, and employee engagement

Tight focus on core products to ensure universal, affordable services continue

COMMITMENTS

Best value . . . in the marketplace

Best run . . . communications and delivery service

Best place . . . to work