National Postal Forum Flats Symposium 2008 Bill Galligan

® ® National Postal Forum Flats Symposium 2008 Bill Galligan Senior Vice President, Operations USPS National Postal Forum 2008

® National Postal Forum

® National Postal Forum USPS Salary & Benefits: $54 Billion Mail Processing 22% Support 0. 9% Other Functions 9% Delivery 43% Customer Service 16% Maintenance 6% Vehicle Services 2. 4% Source: 2007 Annual Report

® National Postal Forum q Managing Delivery Costs Incremental Cost Improvements Over the Last 10 Years q Delivery Will Continue to be Largest Cost Center q Continued Delivery Point Growth q Address Infrastructure Burden

® National Postal Forum What is Delivery Point Sequencing? Technology Places Mail Pieces into Exact Order of Delivery

® National Postal Forum Letter Mail Technology (City) – DPS Trend 87% Cased Letters DPS Letters • USPS Has Sequenced Letters Since 1993 • Resulting in Over $5 Billion Annual Savings

® National Postal Forum Replicate Letter Mail Success for Flats

® National Postal Forum Flat Volume Trend

® National Postal Forum Annual Flat Volume 52 Billion Flats FY 2007 (RPW) First-Class Mail 8% Periodicals 17% Standard Mail 75%

® National Postal Forum Flats End-to-End Strategy q Streamline and Simplify Mail Make-up q Reduce Number of Entry Points q Induct the Mail Where Processed q Bypass Sack / Bundle Distribution q Automate Mail Preparation q Automate Sequencing of Flats for Delivery q Leverage the Use of Data

® Mailer Changes National Postal Forum 1. “The Address” 2. Mail Entry 3. • Entry Points • Critical Entry Times Mail Prep in FSS Environment

® National Postal Forum FSS Benefits q Substitute Technology for Manual Labor q Manage Delivery Growth q Reduction in Future Delivery Vehicles q Reduction in Facility (Delivery Unit) Space Needs q Improve Processing Performance and Service q End-to-End Visibility q Create Lowest-Combined-Cost System