1. Pacific Area Customer Focus Dean J. Granholm Area Vice President Valley San Diego Sierra Coastal San Francisco Bay Santa Ana Los Angeles Honolulu Sacramento

2. 2 Compliance - PAFS / CSI - Intervals Workload Value - DPS % - Manual Reductions Efficiency - Equipment Performance - % to Std & SEI Required Hours - Budget vs. Affordable - Earned and Opportunity Complement - Affordable - ORNA Overtime - Smart Control - Only when Earned Operations Managers Operations Managers Collaborative Leadership Team Collaborative Leadership Team Operating Plan - 24-Hour Clock - MAP (MAQ/PAQ) - Arrival - Volume - Quality - F4 Op Plan - F2 Op Plan Mail Condition - Threshold - Holiday Plan Strategic Focus

3. Pacific Area “Providing Premier Customer Service” Valley San Diego Sierra Coastal San Francisco Bay Santa Ana Los Angeles Honolulu Sacramento Honolulu

4. Reliable Service – End to End Measurement 4 Product Visibility from Scanning Acceptance to Delivery Enroute Originating / Destinating (OEN/ DEN) Arrival at Unit (AAU) Delivery Confirmation Work in Process – Measuring Mail Flow On-Hand Mail Inventory First In – First Out (FIFO) Measures Mail Transport Equipment Container Tracking

5. 5 Customer Service / Delivery Customer Point of View Sunday Delivery Dynamic Routings Expanding Retail Reach VPO’s Drop Off Points Alternate Access Virtual Operating Plan (VOP) Voice of the Process Plant Clearance by Operations Inventory Continuous Improvement Reliable Service – End to End Measurement – Cont

6. ® Customer value  Essential to compete  Offers transparency and predictability  Foundation for shipping  Track all volume  More data to support customer service Business value  Provide information about reliability  Manage networks and logistics  Correct problems  Identify pinch points Delivering Scanning Excellence Visibility touches every part of our business

7. 7 Delivery Unit Efficiency Technology Solution

8. 8 Features:  Performance dashboard  Street mapping  Carrier performance/alerts  Mail volume scanning  Voice activated routes  Route analysis  Delivery monitoring  Delivery analysis platform  Mobile business system access  Overtime management  Contacts  Help Future-State Interactive Delivery Platform that will transform USPS delivery operations. Designed for Supervisors, the platform will provide real-time access to business systems, increase communication with carriers, enhance street management and drive productivity. Technology Solution

9. 9 Dynamic Routing

10. 10  Total Dynamic Routing Lends Itself To Hub Delivery  More Territory (crossing ZIPS)  Less Volume Density (Sunday Express Mail)  Sunday Delivery of Manifest Packages  Static Route Concept Lends Itself to:  Consistent Volume  Condensed Territory  Saturday Package Delivery in 5 Day Environment  Scheduling Restrictions  Schedules Needing to be Posted Ahead of Time Dynamic Routing

11. 11 Carriers used smart phone technology to sequence packages in delivery order. Barcode on each package was scanned using Smart phone. The carrier immediately received a verbal announcement of the sequence number for the package; and a visual reference as shown to the left. “This was package # 86 in the sequence (green with black border around the 86) Package 111 (also green) was the package scanned and sequenced prior to #86.” Sequencing

12. Pacific Area Tools Virtual Operating Plan (VOP) Run Plan Generator (RPG) Mail Arrival Quality (MAQ) - Plant Arrival Quality (PAQ) Collection Visibility System (CVS) Confidence Model 12

13. Lean Mail Processing Work Floor Standardization Valley San Diego Sierra Coastal San Francisco Bay Santa Ana Los Angeles Honolulu Sacramento

14. 14 Senior Leadership Meeting – March 26 & 27, 2014 How Do We Get There? By identifying root causes of problems we can improve it at the source instead of treating ongoing issues that result from those causes. Tools for continuous improvement are: Lean Lean reduces the non-value add (searching, waiting… ) steps in a process (detect areas of opportunity and identify remedy options) Six Sigma Six Sigma drives the quality of the process by using statistical tools to identify the variations in our processes (detect areas of opportunity) Lean Six Sigma Lean Six Sigma drives quality, speed and cost simultaneously in the process These tools and techniques will transform mail processing operations in order to provide premier Service to our Customers. Through Continuous Improvement we fix the cause, not the symptoms

15. ® 15 LMP Project Roadmap A Current State Value Stream Map was created for a comprehensive view of end-to-end processes within mail processing The project will leverage lessons learned from other P&DCs and identify other improvement opportunities within our plant Mail Flow, Staging, and Inventory Management Signage and Visual Management Machine Utilization and Material Handling Manual Operations LMP Implementation (Umbrella Project) THS VAP Calculations MSWYB Set Up Reduction Working toward the “Blue Standard” Current State Value Stream Map LMP Project IntroductionsLMP Project Approach

16. 16 Senior Leadership Meeting – March 26 & 27, 2014 Standardization Focus Flats Letters High Speed Tray Sorter APPS Dock Mail Transport Equipment (MTE) Operations Impacted 5 S Signage & Visual Management Kanban First In First Out (FIFO) Stating MTE Staging Communications Lean Tools Utilized Reduction in cycle time BPI Increase Increase in operational throughput Increase on pieces finalized percentage Increase in MTE reuse percentage Metrics Captured Transportation Maintenance Delivery Ongoing Continuous Improvement at All Postal Mail Processing Facilities

17. 17 Senior Leadership Meeting – March 26 & 27, 2014 Certification Compliance 38 Certification line items to complete

18. 18 Senior Leadership Meeting – March 26 & 27, 2014 Completed Mail Processing Sites & District  Phase 1 – Pilot  San Bernardino P&DC (San Diego)  Phase II – Senior Plants  Margret L. Sellers P&DC ( San Diego)  Santa Ana P&DC (Santa Ana)  Santa Clarita ( Sierra Coastal)  Sacramento (Sacramento)  San Francisco (San Francisco)  Honolulu P&DC (Honolulu)  Oakland P&DC (Bay Valley)  Phase III – Subordinate Plants  San Jose (Bay Valley) Valley San Diego Sierra Coastal San Francisco Bay Santa Ana Los Angeles Honolulu Sacramento Pacific Area Certification Status

19. QUESTIONS