Status of Network Distribution Center NDC Activations

1
Status of Network Distribution Center (NDC)
Activations

• July 09, 2009

2
Agenda

• Overview of Network Reengineering
• Status of Phase 1 Activation
• Accelerated Phase 2-4 Schedule
• Customer Impacts
• Summary

3
Overview Network Reengineering

• Transformation of Bulk Mail Centers (BMC) to
  Network Distribution Centers (NDC)
• Enhanced mail preparation
• Consolidate package distribution
• Combine BMC Surface Transfer Center (STC)
  containerization and dispatch plans
• Leverage multiple trailer loading and dispatching
  techniques

Transformation
BMC
NDC
4
NDC Responsibilities

• 11 - Tier 1 NDC (Springfield, Philadelphia,
  Washington, Atlanta, Detroit, Cincinnati,
  Chicago, St. Louis, St. Paul, Kansas City, San
  Francisco)
• Distribution of local (turnaround) and
  destination Standard Mail, Periodicals, and
  Package Services
• 6 - Tier 2 NDC (New Jersey, Greensboro,
  Jacksonville, Dallas, Seattle, Los Angeles)
• Tier 1 responsibilities
• Distribution of outgoing Standard Mail,
  Periodicals, and Package Services to the network
• Including, MXD States Outgoing single piece sort
• STC containerization dispatch operations
  outgoing / incoming Priority, First Class,
  Periodicals, Standard Mail
• 4 - Tier 3 NDC (Pittsburgh, Memphis, Des Moines,
  Denver)
• Tier 1 and Tier 2 responsibilities
• Consolidation points for less than truck load
  volumes from Tier 2 sites

5
Tiers 1, 2, and 3

• Directional dispatch for 4 NDCs (noted by )
• Reduces backtracking
• Improves service
• Highlighted indicates Phase I sites
• ASFs will be Tier 1 NDC for package processing

6
Impacts

• Operational Impacts
• NDCs operate like PDCs
• Live loads and unloads at all NDCs
• Operating plan changes required to coincide with
  STC containerization dispatch plan
• NDC sort to ADCs, AADCs and NDCs
• Transportation Impacts
• Streamline network
• Increase utilization of assets
• Improve transit time

7
Status of NDC Phase I Activation

• Activation began on May 18 in New Jersey,
  Philadelphia, and Springfield NDCs
• Phase I was originally scheduled to be completed
  8/07
• Accelerated completion date 7/17
• Redesign is yielding anticipated benefits
• Package Service Performance is up 20.0
• Successful integration of STC NDC
  transportation
• Beginning to eliminate transportation and reduce
  workhours

8
Origin Package Service Improvement from NJ NDC
9
Accelerated Phase 2 4 Schedule

• Network fully activated by 11/14

10
Customer Impacts

• Improved Service
• No expansion to the number of entry points
• No required changes to FAST or Critical Entry
  Times (CETs)
• Minimal changes to origin induction preparation

11
Mail Preparation

• Separation requirements
• Local NDC service area
• Network NDC split(s)
• Multiple splits required for directional dispatch
  sites
• Integration of Origin mail preparation
• USPS Retail and BMEU separation enabled through
  the use of Retail Distribution Codes
• Establish customer supplier agreements (CSA) to
  mirror required make-up during implementation

12
Summary

• Objective Create a flexible distribution and
  logistics network to reduce cost and improve the
  consistency of service
• Manage cost consolidation of outgoing
  operations (match workhours to workload)
• Improve service reduce cycle time by
  eliminating some destinating BMC handlings and
  shared product transportation
• Need your help origin separations to move mail
  on right network as quickly as possible
• Change is needed to keep the network viable for
  years to come