Flat Symposium Summary

1
Flat Symposium Summary

• May 17, 2007

2
Anita Bizzotto

• Identify key issues for FSS.
• Customer involvement critical.
• Affordability Service.
• Understand industry concerns.

3
Goals

• Pat Donahoe That everyone understand the
  direction for flat mail and were all working
  together. We need to improve service and reduce
  cost.
• Do you no harm.
• Lowest combined cost.

4
Goals

• Rosa Fulton USPS to have a clear understanding
  of the every issue surrounding the flat strategy
  and what industry issues need to be resolved.
• Get your mail out of the coffin.

5
Goals

• Joe Schick Get answers to the big questions,
  get a better understanding of FSS, and make sure
  that we ask all questions before going forward.
• Dennis Farley Emphasize the importance of
  Periodicals and the need to maintain or improve
  service. Dont move backward, move forward.

6
Goals

• Joyce McGarvey Educate the industry about
  whats going to happen. Make the USPS aware of
  concerns and issues. Get agreement on future
  direction for flats.
• Tim Gable Know what were facing and direct it
  so that it doesnt harm the direct mail industry.

7
USPS Goals for Flats

• Drive down costs through automation
• Enable future growth
• Improve processing performance service
• End-to-end visibility
• Create lowest combined cost system.

8
Everyone Should Know

• A lot of things have gone right.
• Indy test
• Rosas Communication
• MTAC Work Groups
• UFSM 1000 reader
• Barcode height decision

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Concerns/Questions

• Size of barcode
• Migration of flats to letters.
• Upside down address.
• Can mailers opt-out of FSS?
• Captain Midnight Barcode Decoder
• Standardization requirements for all classes
• Barcode requirements for small mailers
• Concerned about the length of the barcode.
• Different barcode specs for flats and letters.

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Concerns / Questions

• Be sure that dividing mail into two streams (auto
  and non-auto) doesnt create more cost.
• Bindery challenges for perfect pallets new
  strapping equipment (more cost).
• Number of schemes on a FSS pallet.
• Double presorts
• What happens to mailers that are too small to get
  on a pallet.

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Concerns / Questions

• Minimize unintended consequences pay attention
  to Dulles test.
• Whats the future of presort? FSS/Non-FSS
• Timing of FSS zones versus mailpiece production.
  Labeling list timing is critical.
• Need to know the location of equipment (FSS and
  AAPS).
• Need to learn from AAPS rollout eliminate
  stumbles.

12
Concerns / Questions

• Driving up bundle rates at the printers smaller
  bundles.
• 20 ounce limit should be raised, particularly for
  co-mailed copies.
• When will presort rules be developed?
• Need new pallet level for FSS machine.
• What happens to firm bundles in FSS? (Stay as
  firm bundles and not run on FSS Dave)

13
Concerns / Questions

• Co-mail and co-pal Periodicals and Standard Flats
  (Sharons working on rules.)
• What will be the standard size for bundles?
• Will the USPS be able to standardize the FSS
  process throughout multiple facilities?
• Will FSS result in fewer drop ship locations?
• Will fewer drop ship locations result in reduced
  drop ship discounts?

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Concerns / Questions

• Slip sheeting a multi-scheme pallet.
• Focus on the environmental impact.
• What happens to co-mail in an FSS environment?
• What will catalog volume be next year as a result
  of the rate case? How will that impact FSS?
• Will in-home dates change with FSS?

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Concerns / Questions

• Mail visibility
• Will FSS result in more pallets and more trucks
  resulting in more cost?
• Staging inbound and outbound mail.
• Will FSS alter the timeliness of ESPN (the
  magazine) aka, the mailbox anchor?
• Critical Entry times should not become earlier in
  FSS
• FSS should not add costs.

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Concerns / Questions

• NNA members are just fine with the new rate
  structure and FSS.
• Concerned about multiple deadlines combined with
  less competitive rates.
• Keeping the same delivery dates in FSS/non-FSS
  zones.
• Cost of hauling to FSS facilities.
• Exemption for newspapers and HD shoppers.

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Concerns / Questions

• DOT Hours of Service for truck drivers.
• Redirections.
• Dock congestion.
• FAST Hope that USPS uses data.
• Challenge for USPS to optimize networks and
  facilities under FSS.
• FSS needs all mail prior to the first pass.
• If the USPS doesnt find the right CET, they
  wont get enough volume for the FSS machines.

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Concerns / Questions

• Will risk based verification hurt mailers?
• What are the plans for Network Redesign (NIA
  started in 2002)?
• Editorial closes, printing, and binding times
  might need to be changed to meet new critical
  entry times (CET).
• USPS should have a common access website.

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Concerns / Questions

• Consistency of delivery is critical for
  catalogers, so its important for the industry to
  be in synch with FSS deployment.
• How will the USPS stage and prioritize the mail
  for FSS?
• Will mail be redirected to another facility or
  manual processing during heavy volume periods?
• When will we need to implement new addressing
  standardization requirements?

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Concerns / Questions

• How will FSS machines process high volume mail
  and still meet the current delivery performance?
• Does it make sense to take some products directly
  to the DDU (saturation newspapers)?
• Will the USPS use the FAST data to provide
  feedback to the mailer that the FSS machine is
  overbooked and their mail will be deferred?
• Will the performance of mail in the verification
  process affect the rate?

21
Concerns / Questions

• What will happen with the redeployment of UFSM
  1000s and AFSM 100s and when will the industry
  know where they are going?
• USPS should lay out as many process flows as
  possible prior to the rollout of FSS.
• New law will provide the USPS with an opportunity
  to make more rapid adjustments to the incentives.

22
Concerns / Questions

• Machinable flats with 5-digit or lower presort
  should see lower costs.
• Will Carrier Route mail be cheaper or more
  expensive?
• Diversion of time sensitive flats could lead to
  manual processing and higher costs.
• Impact of diversion to manual processing will be
  more severe than today.

23
Concerns / Questions

• Will the new CET be noon of the day prior to
  delivery?
• Carrier route bundles being processed on FSS will
  increase bundle prep costs.
• Avoiding bundle prep costs will help.
• FSS will cause new rate categories and new cost
  studies will be needed to define how mail is
  handled.

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Concerns / Questions

• If mail is prepared for FSS, it will cost much
  more if it is manually processed.
• Timing of the switch to FSS prep is critical.
• A parallel rate structure may be necessary.
• What happens to First Class flats? How will they
  be handled?
• Carrier Route rates should decline because they
  will trade one manual sort to two automated sorts
  (same trend as letter mail)

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Concerns / Questions

• Pricing can be done differently under the new law
  and the time to look at it is now. Dont use the
  old paradigm. The market should drive the rates.
• If Carrier Route rates do not decline under FSS,
  then why are we doing this?
• Re-look at classifications.
• Dont price products like the last case where
  future automation drives current prices.

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Action Items

• Increase customer applied barcodes.
• Improve address barcode quality.
• Standard address placement (tray becomes a case).
• Clarify mail prep requirements.
• Clarify entry points entry times.
• Resolve address orientation (right side up).

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Action Items

• Resolve First Class Address location.
• Push down the ACS costs for flats from 0.25 -
  0.05 (letter rate).
• Can barcode be consistently be produced at
  .125in?
• Resolve Barcode clear space requirement.
• Need hardware to decode barcode on the shop floor.

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Action Items

• Resolve cover wrap address orientation. USPS
  prefers right reading address and some mailers
  cant do it come up with a compromise solution.
• Find the optimal point where printing and reading
  the barcode can be done with high degree of
  success.
• Reduce the clear space around the barcode.

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Action Items

• Evaluate automating the bundle sorting and
  opening for FSS.
• Develop 5 digit scheme pallets to bypass AAPS.
• Communication through Fed. Register, road shows,
  webcasts, PCC meetings, BSN.
• Need to develop presort rules.
• Work out rules and rate issues for co-mail and
  co-pal for Periodicals and Standard flats

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Action Items

• Analyze Dulles Phoenix zones to see how FSS
  mail prep would look within next month.
• Evaluate the rate structure for drop shipping to
  ensure that drop shipping to fewer locations
  doesnt cause higher costs because of lost
  dropship discounts.
• USPS should assimilate more information about
  demand.

31
Action Items

• USPS will evaluate technology to eliminate the
  need for slip sheets.
• Migrate to Performance Based Verification/increase
  feedback from BMA.
• USPS will test scanning top pieces of mail for
  visibility.
• Rosa will share the deployment schedule with the
  industry.

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Closing

• Provided a great deal of information.
• Resolved a number of questions / open issues
• Generated a number of questions / concerns.
• Identified a number of action items.