Corporate Automation Plan PHASE 2 February 4, 2004Washington D.C.

Slide 2 OVERVIEW History of CAP CAP Accomplishments to Date Comparison to the Original CAP CAP Phase 2 ■ Letters■ Trays ■ Flats■ Containers ■ Parcels■ Scanning/Tracking ■ Bundles■ Information Flow Automation Program Support Longer Term Plans Partnership With Industry Next Steps CORPORATE AUTOMATION PLAN

Slide 3 HISTORY OF THE CORPORATE AUTOMATION PLAN CORPORATE AUTOMATION PLAN  Letters  Flats  Parcels

Slide 4 ACCOMPLISHMENTS TO DATE Letter Automation CORPORATE AUTOMATION PLAN

Slide 5 ACCOMPLISHMENTS TO DATE (Letters) CORPORATE AUTOMATION PLAN Total Letters Barcoded Letters volume in billions (estimated)

Slide 6 ACCOMPLISHMENTS TO DATE (Letters) CORPORATE AUTOMATION PLAN DPS % of Total Incoming Secondary Volume 74.9%

Slide 7 Flats Automation 50+% non-Carrier Route Flats Sorted by Automation ACCOMPLISHMENTS TO DATE CORPORATE AUTOMATION PLAN

Slide 8 FY 2001FY 2002 end of year FY 2000 flats distributed per workhour Flats distribution productivity in the plants has doubled since the end of FY 2000 FY ACCOMPLISHMENTS TO DATE (Flats) CORPORATE AUTOMATION PLAN

Slide 9 Processing Centers Up-the-Distribution-Ladder FY2000FY2001FY2002FY % % of total flats distributed by type of operation CORPORATE AUTOMATION PLAN ACCOMPLISHMENTS TO DATE (Flats)

Slide 10 volume in billions A Decline in Manual Flats Distribution in Post Offices of 11.5 Billion FY 2001FY 2000FY 2002FY 2003 CORPORATE AUTOMATION PLAN ACCOMPLISHMENTS TO DATE (Flats)

Slide 11 $50.51 $40.51 $30.21 $26.56 Cost per Thousand Flats Distributed Has Decreased 47.4% workhours in millions CORPORATE AUTOMATION PLAN ACCOMPLISHMENTS TO DATE (Flats)

Slide 12 Parcel/Bundle Automation ACCOMPLISHMENTS TO DATE CORPORATE AUTOMATION PLAN

Slide 13 CAP PHASE 2 CAP PHASE 2 CONTENTS COMPARED TO ORIGINAL CAP

Slide 14 CAP PHASE 2 CONTENTS COMPARED TO ORIGINAL CAP CAP PHASE 2 Automate Letter Distribution Automate Flat Distribution Automate Parcel Sorting Automate Bundle Processing Automate Tray & Container Processing Longer Term Plans Delivery Automation Transportation Scanning and Tracking Original CAP Phase 2 YES

Slide 15 Continue Deploying Technological Advances Increase Remote Encoding Center Efficiency Expand Letter Mail Processing Technology’s Reach Reduce Manual Distribution and Casing LETTER AUTOMATION CAP PHASE 2

Slide 16 FLATS AUTOMATION CAP PHASE 2 Increase Flats Processing Performance Enhance Flats Image Processing Use Technology to Increase Flats Automation Reduce Manual Distribution and Casing

Slide 17 PARCEL AUTOMATION CAP PHASE 2 Deploy the APPS Machines Standardize Barcode Formats Increase Automated Parcel Volume Enhance BMC Operations

Slide 18 BUNDLE AUTOMATION CAP PHASE 2 Deploy the Automated Package Processing System Automate Bundle Processing Optional Endorsement Lines Pressure Sensitive Barcoded Labels Reduce Sack Usage

Slide 19 AUTOMATING TRAY TRACKING AND PROCESSING CAP PHASE 2 Automate Tray Receipt & Dispatch Automate Tray Processing Automate Tray Tracking

Slide 20 Automate Container Processing Automate Container Tracking CAP PHASE 2 AUTOMATING CONTAINER TRACKING AND PROCESSING Transportation Visibility Plan

Slide 21 AUTOMATING SCANNING/TRACKING PROCESSES CAP PHASE 2 Enhance Delivery Confirmation and CONFIRM Develop Innovative Tracking Systems

Slide 22 Incorporate Operational Data Into the Enterprise Data Warehouse (EDW) Increase Data Availability CAP PHASE 2 AUTOMATING INTERNAL DATA INFORMATION FLOW

Slide 23 CAP PHASE 2 The data warehouse is structured to support reporting across the organization. Predefined/Canned Reports Enterprise-wide reporting Single repository for enterprise wide data “Data Marts” or “Views” provide a customized method for navigating by functional area within the EDW Human Resources Finance Marketing Operations Corporate Level Reports Data Access Data Storage Data Access AUTOMATING INTERNAL DATA INFORMATION FLOW

Slide 24 Intelligent Mail and Address Quality Vision: An information-rich code for each mail type, which enables end-to-end visibility AUTOMATION PROGRAM SUPPORT CAP PHASE 2

Slide 25  Develop and Deploy Enabling Infrastructure  Uniquely Identify Mail  Enhance Address Quality Code Overview of Intelligent Mail Strategies AUTOMATION PROGRAM SUPPORT CAP PHASE 2

Slide 26 MERLIN AUTOMATION PROGRAM SUPPORT CAP PHASE 2  Presort/Mail Makeup  Walk Sequence Accuracy  Weight and Piece Count  Mailpiece Dimensions  Barcode Readability  Endorsements and Rate Markings  Tray Label Accuracy  Combined Mailings  Address and Barcode Accuracy  Meter Identification and Date Quality Accuracy

Slide 27 AUTOMATION PROGRAM SUPPORT CAP PHASE 2  Automates BMEU Acceptance Process  Makes BMEU Information Available Quicker

Slide 28 Delivery Automation LONGER TERM PLANS CAP PHASE 2 The Delivery Vision Today’s Operations DPP FSS

Slide 29 TIMELINE CAP PHASE 2 Today FULLY AUTOMATED OPERATIONS Mailer Input Improve Letter and Flat Image Processing Deploy APPS Extend PARS to Flats Increase REC Efficiency Research the Potential for Either DPP or FSS Mailer Input

Slide 30 PARTNERSHIP WITH INDUSTRY CAP PHASE 2 Mail Presort Requirements Will Change As Technology Evolves Working Together is Important Industry Participation Adds Value Helps to Keep Each Other Informed Facilitates Sharing of Ideas and Suggestions Keeps Rates Stable

Slide 31 WORK WITH THE MAILING INDUSTRY TO:  Ensure Lowest Combined Processing Costs  Pass Through Savings  Explore Innovative Processing Options  Match Products to Automated Equipment  Establish Lead Times For Changes CAP PHASE 2 PARTNERSHIP WITH INDUSTRY

Slide 32 CAP PHASE 2 Drive Down Costs Through Automation Maintain Stable Rates Improve Performance and Service PARTNERSHIP WITH INDUSTRY

Slide 33 MTAC & USPS Working Together Publication Watch Presort Optimization Planet Code Value Delivery Standards & Business Mail Measurement DDU Drop Shipment Service CAP PHASE 2 PARTNERSHIP WITH INDUSTRY Flats Container Development Parcel Processing Field Study Mail.dat & PostalOne! Flat-Size Mail Design Guidelines In-Home Delivery Instructions Periodical Co-Palletization Guidelines

Slide 34 MTAC & USPS Working Together Mail Irregularity Feedback Process Enhancing CONFIRM Flat Mail Preparation Optimization Parcel Delivery Performance Measurement Effectiveness PostalOne! Postage Payment and Statements CAP PHASE 2 PARTNERSHIP WITH INDUSTRY

Slide 35 CAP PHASE 2 NEXT STEPS Work With Our Customers to Increase Production, Processing and Delivery Efficiency Use Technology to Reduce Costs Leverage Technology to Keep Rates Stable Enhance the Flow of Mail Related Information Use Information to Manage the Business Better Increase the Market Value of Mail By Not Restricting Its Size or Shape Explore Ways to Realize Our Delivery Vision

Slide 36 IDENTIFY POTENTIAL IMPACTS CAP PHASE 2  11 Digit Barcode  Standardized Address Location  ID Tag  Presort (For Automated Zones)  Carrier Route Sorting  Make-up and Presentation  Entry Point PARTNERSHIP WITH INDUSTRY

Slide 37 Thank you.