1. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 1 PRESORT OPTIMIZATION Issue #11 WORK GROUP LEADERS Joe LubenowMarc McCrery Industry USPS

2. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 2 DESIRED OUTCOME Issue Statement: To study and recommend changes in presort software and sortation levels to improve the overall pattern of containerization by: 1) Reducing or eliminating residual mail, and 2) Reducing or eliminating inefficient use of containers. Desired results: Reduce operational costs for mailers and USPS - Improve consistency of mail delivery - Improve efficiency of drop shipping - Maintain/improve penetration of system when not in conflict with above

3. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 3 RECENT SIGNIFICANT ACCOMPLISHMENTS n 5-digit scheme for parcels (L606) n Initiatives to increase pallet and decreased sack utilization n Co-packaging of automation and presorted flats within the same STD or PER package n L006 Metro Scheme n Options to reduce letter trays n R2001 implementation issues n PAVE issues

4. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 4 CURRENT STATUS/INITIATIVES n 5-digit scheme for flats n List of 3-digit ZIPS without value n Allow certain Mixed mail on BMC pallets in order to reduce residual mail n Combining weeklies and monthlies -- labeling requirements n Improved prep requirements for “fletters” n Enhanced prep for BPM flats n Formalized prep requirements for flat-sized pieces in letter trays n Forum for discussion of Product Redesign and Mailing Industry Task Force issues/proposals

5. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 5 FUTURE GOALS n Full merging (CR/5D) of non-AFSM 100 compatible flats for dispatch to delivery units n Explore the required use of “OELs” in preparation of advanced package sorting equipment deployment n Allow carrier-route ID on non-carrier route flats n Increase the combining of letter mail trays from multiple mailings on pallets n Explore palletization for First-Class Mail n Jointly pursue flats prep enhancements with Product Redesign and Engineering

6. PRESORT OPTIMIZATION WORK GROUP November 6, 2002 6 OBSTACLES / TIMELINE n Optimization is an lofty goal and, to a certain degree, a moving target n Consequently, based on the importance of its mission and the value of its output, the work group has enjoyed a long life and will continue to have unquestionable value in the foreseeable future.