® Service Measurement & Reporting Format MTAC November 7, 2007.

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Service Measurement

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Reporting Format

MTACNovember 7, 2007

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Required Service Measurement

EXFC System Overview and Expansion Plan

Hybrid External Measurement Approach Leveraging Internal Data Systems

Periodicals Challenge

Report Format

Wrap-up

Agenda

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Required Service Measurement

First Class (Single-Piece and Pre-sort)PeriodicalsStandardSingle-Piece Parcel PostLibrary RateMedia MailBound Printed MatterSpecial Services Single Piece International

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Valid “Start-the-Clock”

Valid “Stop-the-Clock”

Established Standard for comparison

Fundamental Requirements for Service Measurement:

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External Performance Measurement Methodology

AcceptanceOutgoing

ProcessingIncoming

ProcessingDelivery

USPS Mail Processing

Quality Assurance

StatisticalDesign

Test MailFabrication

Test MailInduction

Test MailReceipt

DataAnalysis

Reporting

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Current EXFC Design:

463 3-Digit ZIP Code areas tested representing about 74% of total single-piece FC volume

Sample size is approximately 2.7 million pieces per yearRepresents wide variety of characteristics designed to represent total FCM Panel of approximately 600 senders (droppers) and 13,000 receivers used Mail entered in randomly selected collection boxes and mail chutes and

received by households and small businesses

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Quarterly Testing in All 3-Digit ZIP Code Areas

Continued coverage of key characteristics

Continued focus on high quality

Highly responsive receiver panel, currently report 96% of the mail sent to them

Quality processes throughout the measurement system to prevent errors when possible and to identify and remove erroneous data

Expand EXFC to all 3-Digit ZIP Code Areas

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Measurement of the Other Products Products entered in bulk or received in bulk present unique challenges for

measurement

Creating test pieces and emulating the mailing process is not viable because of nature of the product and cost

Requires significant cooperation of mailers to seed pieces into mailingsRequires tracking of single pieces of mail from start to finish

IBM/USPS experience working with measurement of these products includes:

Pre-sorted First-Class Mail in original EXFC design (1990-1991) and Business Mail Measurement Feasibility Assessment as part of MTAC Workgroup #83 (2004)

Remittance Mail in the NPPC study (1992-1994) and Remittance Mail System pilot (1998-1999)

Standard Mail in the EX3C study (1993-1996) and ADVANCE Quality Check System (1999-2005)

Periodicals in the EX2C study (1993-1996) with limited measurement in AQCS

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Performance Measurement Strategy

Leveraging internal systems for performance measurement has key advantages

Greater representation of mail characteristics

Allows for richer diagnostics

Provides opportunities for reducing the cost of measurement

External resources optimally support internal measurement by:

Assessing the viability of existing internal systems and developing / validating the business rules to be applied in measurement

Filling in gaps where internal measures are not feasible

Verifying the accuracy of internal measures / providing independent validation

Measuring portions of products’ mail flow volumes not captured in internal systems

Identifying performance issues and areas for improvement

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Hybrid Measurement Approach Combine the benefits of external measurement and internal systems to produce

externally validated service performance measures

External measurement focuses on validating internal data and on measuring the portion not visible in internal system

AcceptanceOutgoing

ProcessingIncoming

ProcessingDelivery

Visible with Intelligent Mail

Use random sample of live mail with IMBs to calculate service performance results from acceptance to final incoming processing. Use live (non-test) mail received by EXFC receiver panel equipped with barcode reader devices to capture delivery of a sample of mail with IMBs to estimate the delivery adjustment factor for each product and sub-class.

External

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Hybrid Measurement Approach

Benefits:

Reduces measurement costs (to USPS and mailers) because it does not require fabrication of additional mail or special seeding of mailings

Mailers not required to provide special manifest information for the seeded pieces

Allows for measurement of the end-to-end process from acceptance through delivery, even if mail falls out of automation or is not scanned

Rich source of data necessary for diagnostics to identify service issues

Key Dependencies:

Wide-spread adoption of IMB (as planned)

Submission of electronic manifests to describe each mailpiece and the nesting logic

Implementation of acceptance processes, such as FAST and Seamless Acceptance, to start the clock accurately

Final processing scanning processes at delivery units for mail in containers

Data systems to collect and manage the volume of IM data

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Background Intelligent Mail Barcode (IMB) Volume showing continued growth

Approximately 3% of current scans on automation are IMBs In first year of use, over 1 billion scans of the IMB 186 medium to large volume customers and data consolidators using IMB

Growth of IMB Usage

IMB Scan Data

54,3

02,6

76

80,3

71,9

40

57,9

86,6

57

60,8

37,4

37

68,5

53,5

48 1

33,7

67,7

99

150,9

09,5

85

98,6

22,0

56

177,4

83,8

09

73,9

74,5

16

80,1

43,3

90

253,3

00,4

23

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

07/28/07-08/03/07

08/04/07-08/10/07

08/11/07-08/17/07

08/18/07-08/24/07

08/25/07-08/31/07

09/01/07-09/07/07

09/08/07-09/14/07

09/15/07-09/21/07

09/22/07-09/28/07

09/29/07-10/05/07

10/06/07-10/12/07

10/13/07-10/19/07

Nu

mb

er

Of

Scan

s

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Service Measurement Approaches Use Existing External Measurement

First Class (Single-Piece) - EXFC Single Piece International – IMMS

External measurement approach Supplements mail scans from internal Intelligent Mail® system

with externally collected data First Class (Pre-sort) Periodicals Standard

Internal End-to-End Measurement Package Services

New Internal Measurement Systems Special Services

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POSTAL SERVICE MEASUREMENT APPROACH AT FULL ROLLOUT

Single-Piece Presort

Letters Flats Parcels Letters Flats Parcels

First-Class Mail

EXFC EXFCStop: Delivery Confirmation delivery scan

Stop: External reporting

EXFC as proxy

Stop: Delivery Confirmation delivery scan

Periodicals N/A N/A N/AStop: External

reporting

Stop: External reporting

N/A

Standard Mail N/A N/A N/AStop: External

reporting Stop: External reporting

Stop: Delivery Confirmation delivery scan

Package Services

N/A N/AStop: Delivery Confirmation delivery scan

N/AStop: Delivery Confirmation delivery scan

Single-Piece First-Class International

IMMS IMMS N/A N/A N/A N/A

Measurement Approach at Full Roll Out

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Delivery Confirmation, Signature Confirmation, Certified Mail, Registered Mail, electronic Return Receipt, and COD – measure the time between when delivery information was collected and when it was made available to the customer

CONFIRM and Address Correction – use IMB to measure the time between the time scan information was collected and when it was made available to the customer

Post Office Box Service – will use scanning technology to ensure timely availability of mail by the posted “uptime”

Special Services

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Insurance Claims Processing – Measure time between “start-the-clock”; all information available for claims processing and “stop-the-clock” the date the adjudicator pays, denies or closes the claim

Address List Services – will use an external customer survey to measure satisfaction with the timeliness of receipt

Special Services (continued)

Single-piece Outbound International

Will utilize International Mail Measurement System (IMMS)

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Measurement of Periodicals Presents More Challenges

External measurement requires participation of mailersThe cost per piece (subscription) is significantly higher than most

Standard and First-Class MailThe nature of typical subscriptions makes adding/dropping seeds to

a mailing more cumbersome than for Standard Mail Testing may become obvious at delivery if Monitors receive a high

volume of periodicals

Measurement via IMB has not yet been piloted

The USPS has asked IBM to assess the feasibility of using data from Red Tag and/or the DelTrak systems for measurement starting in 2008

Longer term solution using the hybrid measurement approach employing IMBs for acceptance through final processing and external receivers for last mile offers the most promise for a representative system-wide periodicals performance measure

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Report Format

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First-Class Mail - Quarterly Similar reports will be created for Standard Mail and Package Services

Standard Mail will include separate measurements for Destination Entered and End-to-End mail Packages Services reports will include a combined measure for Bound Printed Matter, Library

Mail, Media Mail and Parcel Post

Overnight Two-Day Three-Day / Four-Day

District % On-Time % On-Time % On-Time

CAP METRO AREA XX % XX % XX %

Baltimore District XX % XX % XX %

Capital District XX % XX % XX %

South Carolina District XX % XX % XX %

Greensboro District XX % XX % XX %

Mid-Carolinas District XX % XX % XX %

No. Virginia District XX % XX % XX %

Richmond District XX % XX % XX %

Quarterly Service Performance for Presort First-Class Mail

Overnight Two-Day Three-Day / Four-Day

District % On-Time % On-Time % On-Time

CAP METRO AREA XX % XX % XX %

Baltimore District XX % XX % XX %

Capital District XX % XX % XX %

South Carolina District XX % XX % XX %

Greensboro District XX % XX % XX %

Mid-Carolinas District XX % XX % XX %

No. Virginia District XX % XX % XX %

Richmond District XX % XX % XX %

Quarterly Service Performance for Presort First-Class Mail

Overnight Two-Day Three-Day / Four-Day

DistrictWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-daysWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-daysWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-days

CAP METRO AREA XX % XX % XX % XX % XX % XX % XX % XX % XX %

Baltimore District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Capital District XX % XX % XX % XX % XX % XX % XX % XX % XX %

South Carolina District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Greensboro District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Mid-Carolinas District XX % XX % XX % XX % XX % XX % XX % XX % XX %

No. Virginia District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Richmond District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Quarterly Service Performance for Presort First-Class MailMail Variance

Overnight Two-Day Three-Day / Four-Day

DistrictWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-daysWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-daysWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-days

CAP METRO AREA XX % XX % XX % XX % XX % XX % XX % XX % XX %

Baltimore District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Capital District XX % XX % XX % XX % XX % XX % XX % XX % XX %

South Carolina District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Greensboro District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Mid-Carolinas District XX % XX % XX % XX % XX % XX % XX % XX % XX %

No. Virginia District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Richmond District XX % XX % XX % XX % XX % XX % XX % XX % XX %

Quarterly Service Performance for Presort First-Class MailMail Variance

On-Time Performance

Mail Variance

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First-Class Mail - Annual Similar to Standard Mail, Periodicals, and Package Services

Mail Class Goal%

On Time

First-Class Mail

Single-Piece Overnight XX % XX %

Single-Piece Two-Day XX % XX %

Single-Piece Three-Day / Four-Day XX % XX %

Presort Overnight XX % XX %

Presort Two-Day XX % XX %

Presort Three-Day / Four-Day XX % XX %

Annual Compliance Report

Mail Class Goal%

On Time

First-Class Mail

Single-Piece Overnight XX % XX %

Single-Piece Two-Day XX % XX %

Single-Piece Three-Day / Four-Day XX % XX %

Presort Overnight XX % XX %

Presort Two-Day XX % XX %

Presort Three-Day / Four-Day XX % XX %

Annual Compliance Report

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Periodicals - Quarterly Aggregated at the area level due to lower overall volumes and projected

adoption rates

AreaWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-days

Northeast Area XX % XX % XX %

New York Metro Area XX % XX % XX %

Eastern Area XX % XX % XX %

Capital Metro Area XX % XX % XX %

Southeast Area XX % XX % XX %

Great Lakes Area XX % XX % XX %

Western Area XX % XX % XX %

Southwest Area XX % XX % XX %

Pacific Area XX % XX % XX %

NATI ONAL XX % XX % XX %

Quarterly Service Performance for PeriodicalsMail Variance

AreaWithin

+ 1-dayWithin

+ 2-daysWithin

+ 3-days

Northeast Area XX % XX % XX %

New York Metro Area XX % XX % XX %

Eastern Area XX % XX % XX %

Capital Metro Area XX % XX % XX %

Southeast Area XX % XX % XX %

Great Lakes Area XX % XX % XX %

Western Area XX % XX % XX %

Southwest Area XX % XX % XX %

Pacific Area XX % XX % XX %

NATI ONAL XX % XX % XX %

Quarterly Service Performance for PeriodicalsMail Variance

On-Time Performance

Mail Variance

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Questions

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Answers