Executive Summary Highlights from

                        Mailers’ Technical Advisory Committee (MTAC)


                                                May 7 – 8, 2003


The Postmaster General’s Mailers’ Technical Advisory Committee met at Postal Service Headquarters in Washington, D.C. on May 7-8, 2003. Important aspects of Postal Service operations were discussed, especially related to the Transformation Plan and the future of mail pieces with a single barcode that will contain much more information in much less space.


Postal Service Invites Industry Comments on Corporate Flats Strategy


Skip McGill, Manager of Strategic Operations Planning, announced release of the latest update of the USPS Corporate Flats Strategy, a plan to increase the automation of flat mail, which constitutes almost 30% of all mail volume. As automation of letter mail over the last decade has revolutionized speed and accuracy of sortation, and reduced costs for the Postal Service and industry, flats automation is expected to deliver similar benefits to both. The Corporate Flats Strategy document can be viewed on the MTAC homepage at http://ribbs.usps.gov/mtac.htm. Industry is invited to comment on the plan by e-mail addressed to flatstrategyfeedback@usps.gov.


Soft Economy Impacts Financial Results


Richard J. Strasser, Jr., Chief Financial Officer and Executive Vice-President for the Postal Service reported that, at the end of the eighth accounting period (September 7, 2002 thru April 18, 2003), net income is $1.9 billion, slightly higher than projected in spite of a slower than expected growth in volume for this period and a sluggish economy. The positive net income could decline during the summer months due to a seasonal drop in volume and anticipated cost of living increases. He also indicated that while volumes have shown a slight decline for the past two years, total mail volume for the first eight accounting periods of this year have posted a marginal increase over last year.


Expense results are positive as productivity and work hour reductions are good news. Expenses are $1.2 billion under plan for the first eight accounting periods this year. Total factor productivity and output per work hour continues to improve, and this year will be the fourth consecutive year of increased productivity. Workhours to date are 38 million less than last year and the number of career positions have been reduced by almost 15,000 since the beginning of the year. Over 60,000 career employee positions have been eliminated through attrition since the end of fiscal year 1999.


The recent Civil Service Retirement System CSRS) legislation, which was passed in a relatively short period of a few months, will result in savings estimated at $3.47 billion for the first year of 2003. By July 2003 OPM will have to calculate total savings expected. Ralph Moden, Senior Vice President, Government Relations, explained the intricacies involved in calculating the savings. The savings must be used to reduce debt for two years (FY 2003 and FY 2004) and during FY 2005 will be treated as operating expenses to keep rates unchanged. The legislation requires that the Postal Service submit a report to Congress on planned uses of funds beginning in 2006.


Weapons of Mass Disruption – Lessons Learned


The Postal Inspection Service is charged with the protection of Postal Service employees, the entire infrastructure of the Postal Service, and of the mails from origin, through all mail handling and processing, until the mail is safely placed in the possession of the addressee. The anthrax attack in the early spring of 2002 represented the first terrorist attack on the Postal Service in its history. Five died, including two Postal Service employees. That event was followed by a series of pipe bombings in the Midwest – six were injured, again including Postal Service employees.


These events and others (a carjacking in Miami that involved an employee and the stressful episode involving the D.C. sniper), caused the Postal Inspection Service to become more visible to the entire mailing community. The Comprehensive Emergency Mailing Preparedness Plan was developed, the Mail Security Task Force was formed, the Mail Center Security Guide was published, and substantial effort was made to inform the mailing community about security matters related to sending and receiving mail.


The lessons that emerged from the experience are summed up in three words – communications, coordination and cooperation. It has become clear that, with threats involving terrorism and homeland security, it is important to develop effective relationships with other law enforcement agencies, customers and commercial mailers, and the members of the Postal Service community.


Intelligent Mail – The OneCode Vision


The most challenging and potentially revolutionary program being pursued by the Postal Service is the Intelligent Mail concept, a program based on a single barcode for each type of mail that uniquely identifies the mail piece and links to the information required to send mail to the proper addressee and track that mail from the time it enters the Postal Service delivery system until it is received by the individual who is supposed to receive the mail piece. The identifying barcode combined with data in a database will enable the Postal Service to measure performance, record address changes, track the progress of the mail at every point in the delivery process, and provide detailed reports to mailers based on a variety of parameters.


Four aspects of the Intelligent Mail program were addressed at the spring MTAC meeting – the USPS Mail Technology Study, address quality, the new address management program (NCOALINK) and a new MTAC Work Group formed to enhance CONFIRM, the program which has laid the groundwork for further Intelligent Mail initiatives.


The Mail Technology Study


The Mail Technology Study will develop the basis for a strategy to implement the OneCode vision by establishing a baseline of mail industry processes and technologies related to printing and barcoding. Every size, shape and class of mail will be studied. The Study will also include site visits to major mailers to look at whether their current processes would be able to print the new barcodes on mail pieces and aggregate unit loads (bundles, trays, pallets, etc.). The industry that provides software and technology to mailers will be consulted. From all the information gathered, the Postal Service will develop a preliminary Intelligent Mail Strategy that will be the basis for a future implementation plan. For more information, contact Jeff Freeman, Manager of Mail Technology Strategy (Jeffrey.L.Freeman@usps.gov)


Forwarding mail to customers who move from one address to another is a major and costly part of the job. Almost 40 million address changes are received annually, requiring the forwarding of over 2 billion pieces of mail. Mailers receive address correction notices on 162 million mail pieces. That effort currently requires a lot of manual processing. Intelligent Mail’s OneCode vision would convert much of that manual processing to a near real-time automated process.




Intelligent Mail and Address Quality (IMAQ)


The Intelligent Mail and Address Quality (IMAQ) program’s first offering, is in its early stages of launch. A small pilot test, with two major mailers who currently use CONFIRM and Address Correction Service (ACS), will assess the effect of imbedding the ACS information in the Planet Code. Elimination of the ACS alpha-numeric code reduces the errors inherent in that kind of optical character recognition (OCR) scan, increases scan rate (since OCR scans are slower than barcode scans) and frees up space on the mail piece. The purpose of the pilot test is to prove the concept would work and would be cost effective, not to initiate a specific technology change that would then be implemented on a large scale.


NCOALink


In the near future, authorized licensees of the National Change-of-Address (NCOA) system will be able to obtain change-of-address information using a breakthrough technology, named NCOALink (the Postal Service has applied for a patent). The technology makes it virtually impossible for any unauthorized user to obtain address information, regardless of how they try to access the NCOALink data.


In a nutshell, the customer’s new address is “coded” into segments and stored in eight physically separate tables in the system. If an authorized licensee enters an accurate representation of the customer’s name and old address, NCOALink will return information from the coded segments that allow the new address to be reconstructed. If an unauthorized user attempts to retrieve information from the NCOALink tables without first presenting a valid name and old address, all they will get is a series of values that will have no meaning and will not represent valid change-of-address information.


To validate the security of the NCOALink data, the Postal Service engaged two independent organizations, one commercial and one academic, and tasked them to break the security system and retrieve a valid new address for any customer. Both organizations agreed that it was “essentially impossible” for the NCOALink data to be used to obtain change-of-address information from customers without first having the customer’s name and old address. Furthermore, both organizations agreed that using the NCOALink data, the potential that a customer address could be changed incorrectly was “virtually nil”.


Because of the enhanced security available with the NCOALink data, a wider dissemination of customer change-of-address data is possible. A pilot test is currently underway, after which NCOALink will be ready for implementation.



MTAC Work Group #80 – Enhancing CONFIRM


Work Group Industry Chair Martin Bernstein announced the formation of a new work group to address enhancements to CONFIRM. The system is up and running and a number of major mailers rely on the information it produces. As with any new program, there will be problems that arise, applications that require change, and opportunities for enhancements. To that end, the work group has formed five work teams to address the following aspects of CONFIRM:

 

                        Scan performance

                        Reports

                        Pre-shipment notification

                        Training

                        Future enhancements


MTAC members are invited to participate in the work group.


MTAC Work Groups


Standard Implementation Guidelines for Periodical Co-Palletization (WG # 79)


The work group completed its work, meeting mainly by teleconference and communicating by e-mail. With diverse representation from the industry, the objective was to develop a standard implementation guide that would encourage conversion of sacked mail to pallets. The work group developed guidelines for processing eligible pallets with regard to application, payment of postage, mail preparation, acceptance and verification. The efficiency of the process was improved by the guidelines, and two new discounts were introduced to support the co-palletization scheme, one a significant full cent for pallets entered at the destination SCF.

 

In-Home Delivery Instructions for Standard Mail (WG # 78)


The work group recognized the need for a standard process to handle a mailer’s request for delivery after and/or before a specified date, conditions that often apply to a retailer’s advertisement for a special sale or offer. This is a voluntary service that applies only to non-automated Standard Mail. Current instructions in the DMM (two options) are somewhat cumbersome, so the work group developed a recommendation that mailers use a standard wording, format and placement of the request in the address area of the mail piece. The mailer would print clear instructions for disposition of the mail if it arrives at the DDU after the requested in-home date (IHD) and either before or after the event date. Those instructions would be printed on a specified page of the mail piece, which would be identified in the request printed near the address. The work group invited comments from mailers (via a survey form available from the MTAC website http://ribbs.usps.gov/mtac.htm or enter key word “mtac” on usps.com), in anticipation of finalizing the recommendation to the Postal Service. Implementation is planned for the fall, 2003.


Flats Container Development (WG # 71)


Supported by a pilot test ongoing at a facility in Ft. Myers, Florida, the work group is involved in developing recommendations that would result in a mailer’s ability to palletize trays. Although there are sorting issues to resolve (e.g, various presort schemes to ascertain best cost savings for mailers), the primary effort is now in the engineering aspects of developing sturdy (preferably collapsible) trays and optimizing the materials handling equipment that assists the machine operator in moving the flats to the sorter.


Service Assessment for DDU Drop Shipment (WG # 61)


This work group is near the end of its charter, having developed internal service commitments for delivery of parcels by BMC and SCF (2-day), and DDU (1-day). The work group also identified certain concerns about how many parcels were included in the performance calculation (total parcels or only those scanned). Next steps include monitoring and gathering feedback. MTAC will then consider establishing a new work group to focus on service quality measurement issues, barcode quality, more detailed service indicators (to track attempted delivery, for example), and development of a data sharing process.


Design Guidelines for Flat-Size Mail (WG # 77)


This work group is concerned about problems of machinability, jams, damage to mail pieces, and sortation problems related to the physical design of the mail piece. Since much of the mail is marketing materials (catalogs, magazines, etc.), the issues include preserving publisher creativity, construction (cover weight, special cover folds, binding and placement of addresses), and cost containment (which includes the fact that, for economy, some publishers are turning to lighter weight papers to reduce postage and manufacturing costs). The objective is to develop recommendations for design and construction that will solve the problems but not add to mailing regulations and requirements.


Mail.dat and Postal One! – Network Operations (WG # 74)


This work group, focused on making practical use of the data available through Mail.dat and Postal One!, will continue to consider enhancements to the start-the-clock process and explore the emerging opportunities available through collaboration related to transportation and infrastructure.


Parcel Processing Field Study (WG # 73)

This work group’s relatively narrow focus has been to determine the effect of irregular wrapping of parcels, mainly polywrap, from mailers who insert various sized contents in uniform polybags. When contents are significantly smaller than the polybag, the excess plastic material is called “selvage”. Early site visits by the work group showed that selvage does not cause product damage, but it can cause jamming, particularly as the amount of selvage increases. To pin down the effects of selvage, tests will be conducted at the Cincinnati BMC using various sized packages with varying amounts of selvage. The test will look at both machinability and any scanning problems that might be the result of selvage.


Delivery Standards and Business Mail Measurement (WG # 60)


This work group conducted a study to determine the feasibility of developing performance standards and measures of First-Class business mail. Thirteen mailings, provided by five mailers at six locations, revealed that the current CONFIRM program cannot completely track business First-Class Mail. Because of its broader charter, this issue will be taken up by the new Work Group # 80, Enhancing Confirm.



Mail Irregularity Feedback (WG # 55)


The work group’s objective was to develop a plan for a web-based process to identify issues that adversely affect mail delivery, inform the appropriate mailers, and provide reports and other input to resolve the issues. Early pilot tests resulted in improved data collection, better data entry forms and a more efficient interface between the BSN and the BMEUs. Those improvements, including all the web-based forms, are being tested at several sites. The next step is to refine the business plan, including the capability to identify the mail preparer and mail owner, work out a fair mechanism for informing them of issues, and developing a scheme to identify urgency and magnitude of problems to make sure we apply effort to the real problems. Finally, in the future, the program must integrate with the intelligent mail process. The timeline calls for possible software changes in June based on the current pilot test, expansion to a larger test, and then implementation in the fall.


Presort Optimization (WG# 11)


The longest standing work group, the Presort Optimization Work Group has successfully addressed a great number of presort issues with the goal of reducing costs for both mailers and the Postal Service, reducing residual mail and improving the efficiency of container use. It has been particularly concerned with aligning the presort regulations and requirements with the actual capabilities of the various Postal Service facilities. The work group is ending its tenure to make way for a new work group, Work Group # 81, Flat Mail Preparation Optimization. The new work group will have a similar focus, with particular attention to aligning the presort process to the capabilities of the new flats sorting technology and matching the rates for flats with the related processing costs.






Follow-up to Certain MTAC Questions (for which answers were promised):



·   Regarding the status of Capital One’s Negotiated Service Agreement (NSA) the office of Stephen Kearney, Vice President, Pricing and Classification, has provided the following: “The litigation phase of the Capital One case is over. Currently we are awaiting the response of the Postal Rate Commission (PRC) and expect to receive that in the next few weeks (by the end of May). We are optimistic we will receive some sort of positive outcome, but we will not know anything until we receive the recommended decision. The PRC could accept, accept with modifications, or reject our NSA proposal.”


·   In response to the question asked of Chief Postal Inspector Lee Heath regarding irradiation of government mail, U S Mail is still being irradiated which causes a two day delay from the process from start to finish. The mail is irradiated for all government mail for zip codes in 202- 205 areas.


·   As for the industry providing input to MTAC Work Group # 78 for In-Home Delivery Instructions for Standard Mail, this survey is now available on the MTAC website at http://ribbs.usps.gov/mtac.htm (or enter key word “mtac” on usps.com). Responses are requested from interested mailers by June 2.



·   In answer to the inquiry of when the release date will be for the 2002 Household Diary Study it will be June 30, 2003.