Agenda 1. Overview 2. Sample Design and Methodology 3. Pilot Test Results

1. Webinar 6Expanded EXFCPresented byDelores KilletteVice President, Consumer AffairsandDavid WilliamsManager, Processing OperationsFriday, November 7, 2008

2. EXFC Expansion Agenda 1. Overview 2. Sample Design and Methodology 3. Pilot Test Results

3. EXFC Expansion Overview •  Changes to EXFC in FY 2009 •  Coverage expanded to 891 ZIP Codes* • Additional 428 ZIP Codes • Represents 99% of Single Piece First Class volume •  Reflect Modern Service Standards • Includes Four and Five Day Service Standard • Impacts Alaska, Honolulu and Caribbean • *ZIP Code list located on CKM website under Other Educational Material/Resources/Report Information http://blue.usps.gov/caweb/ckm/ckm_ttms_library.htm

4. EXFC Expansion Sample Design and Methodology •  Changes to EXFC in FY 2009 •  New kits introduced on October 4 • 21 kits; 3 flat kits, 2 postcard kits, 16 letter kits •  Key Characteristic Changes – • Additional Flat kit • Stamped percentage 38.2% to 53.3% • Metered volume decreased 61.8% to 46.7% • Handwritten percentages increased 19% to 23.7% • Kit descriptions located on CKM website under Other Educational Material/Resources/Report Information http://blue.usps.gov/caweb/ckm/ckm_ttms_library.htm

5. EXFC Expansion Sample Design and Methodology • Increased test mail volume • Increased overnight volume for PCs with increased coverage and origin-destination ZIP Code pairs • Additional two and three-five day destinating volume for all PCs

6. EXFC Expansion – Area Overview

7. EXFC Expansion – Pilot Results Description of Column Contents: • EXFC (463): The official FY08 Q4 results for the established 463 ZIP Codes (without any Expansion ZIP Code results) • New ZIP Codes (428): The results for mailpieces that originated and/or destinated in one of the new 428 ZIP Codes • All ZIP Codes (891): The pilot results of mailpieces that originated and destinated in any of the 891 ZIP Codes • Difference: The results of all 891 ZIP Codes minus the results of EXFC 463 Current EXFC versus Pilot Test Performance July 1, 2008 – September 30, 2008 Pilot Test results located on CKM website http://blue.usps.gov/caweb/ckm/ckm_ttms_report_exfc_pilot_menu.htm

8. EXFC Expansion – Pilot Results • All nine Areas experienced a score decline when measuring all 891 3-digit ZIP Codes • Southwest has largest change (-0.80) • Area Overnight Results from Q4 FY 08 PC data located at http://blue.usps.gov/caweb/ckm/ckm_ttms_report_exfc_pilot_menu.htm

9. New ZIP EXFC ZIP Difference All ZIP Codes Codes (All 891 - Area Codes (891) (463) EXFC 463) (428) Capital Metro 96.0 86.5 93.8 -1.2 Eastern 93.3 88.4 92.4 -0.9 Great Lakes 92.8 86.0 91.9 -0.9 94.6 92.6 New York Metro 94.1 -0.5 Northeast 93.0 90.9 92.8 -0.2 Pacific 96.2 93.1 95.5 -0.7 Southeast 94.7 89.7 93.8 -0.9 Southwest 94.3 87.5 92.1 -2.2 Western 95.0 88.9 92.6 -2.5 EXFC Expansion – Pilot Results • All nine Areas experienced a score decline when measuring all 891 3-digit ZIP Codes • Western has the largest potential change (-2.5) • Area Two Day Results from Q4 FY08 PC data located at http://blue.usps.gov/caweb/ckm/ckm_ttms_report_exfc_pilot_menu.htm

10. EXFC Expansion – Pilot ResultsThree-day Service Standard • All nine Areas experienced a score decline when measuring all 891 3-digit ZIP Codes • Western has the largest potential score change (-2.23) • Area Three-Day Results from Q4 FY08 PC data located at http://blue.usps.gov/caweb/ckm/ckm_ttms_report_exfc_pilot_menu.htm

11. EXFC Expansion Results • Final Zero Bundle Results •  23 verified zero bundles in core EXFC ZIP Codes of 28,263 bundles inducted •  23 verified zero bundles in pilot ZIP Codes out of 2,540 bundles inducted

12. EXFC Expansion • Customer Knowledge • Management Resources • Service Performance scores are located on the CKM website at http://blue.usps.gov/caweb/ckm/ckm_ttms_report_menu.htm • For questions on Transit Time Measurement System (TTMS) studies you may contact the TTMS team at ckmfeedback@usps.gov

13. EXFC Service Old EXFC Gap Total EXFC Expansion Standard ZIPs ZIPs Overnight 96.02% 93.20% 2.82 95.53% 2-Day 93.43% 90.07% 3.36 92.77% 3-5 Day 92.04% 85.42% 6.62 91.20% EXFC Expansion Impact of EXFC Expansion on October Destinating EXFC Performance Data Source: EDW/TTMS November 4, 2008

14. EXFC Total MHTS Service Old EXFC Expansion Gap (Old and Standard ZIPs ZIPs MHTS Measure Expanded ZIPs) Collection Overnight 98.80% 98.29% 0.51 98.69% 2-Day 96.04% 94.64% 1.40 95.71% Origin Processing Transport to Destination Destination Processing Transport to Delivery Unit Delivery Unit Processing Delivery 3-5 Day 94.43% 89.96% 4.47 93.78% EXFC Expansion MHTS Service Gap Between Old EXFC and Expansion EXFC – October 2008

15. EXFC Expansion

16. EXFC Expansion

17. EXFC Expansion

18. Destinating New Volume = 17.5% Destinating New Failures = 26.5% Percentage Point Gap = 9.0 EXFC Expansion Composite National O/N EXFC Expansion Impacts

19. Destinating New Volume = 19.7% Destinating New Failures = 27.1% Percentage Point Gap = 7.4 EXFC Expansion Composite National 2-Day EXFC Expansion Impacts

20. Destinating New Volume = 12.8% Destinating New Failures = 21.2% Percentage Point Gap = 8.4 EXFC Expansion Composite National 3-5Day EXFC Expansion Impacts

21. 6 Point Gap EXFC Expansion Destinating Overnight MHTS EXFC Expansion Impacts Data Source: MHTS/MIRS October 2008

22. 5 Point Gap EXFC Expansion Destinating 2-Day MHTS EXFC Expansion Impacts Data Source: MHTS/MIRS October 2008

23. 8 Point Gap EXFC Expansion Destinating 3-5 Day MHTS EXFC Expansion Impacts Data Source: MHTS/MIRS October 2008

24. DPS Looping Origin Missent Last Mile Failure Collection Delay No Read at Origin Destination Missent No Read at Destination Origin Processing Delay Origin Miscoded/Misread Dest. Miscoded/Misread Non-Standard Depth of Sort Received 1st DPS Pass/Not 2nd Late Inc. Secondary Processing Non-Standard Origin Processing EXFC Expansion EXFC Service Impact Pareto Chart - Overnight Letters Last Mile Failure Point Impact = 1.76 Points Data Source: IBM Root Cause Failure Analysis – Final Quarter IV FY 2008

25. 96.96% 0.08 98.80% 1.76 Collection EXFC Expansion MHTS Service Predictor Origin Processing Transport to Destination Destination Processing Transport to Delivery Unit Delivery Unit Processing Delivery

26. Collection MHTS Last Mile Predicted Actual Factor Service Factor * Service Service Difference Service Standard Overnight 0.06 98.80% 1.76 96.98% 96.52% 0.46 2 Day 0.06 96.04% 1.55 94.43% 94.21% 0.22 3-5 Day 0.05 94.43% 1.22 93.16% 92.89% 0.27 EXFC Expansion Old EXFC Impacts for Letters – October 2008 Data Source: * IBM Root Cause Failure Analysis – Final Quarter IV FY 2008 MHTS service from MIRS – October 2008

27. Collection MHTS Last Mile Predicted Actual Factor Service Factor * Service Service Difference Service Standard Overnight 0.18 98.29% 1.76 96.35% 93.71% 2.64 2 Day 0.07 94.64% 1.55 93.02% 90.71% 2.31 3-5 Day 0.06 89.96% 1.22 88.68% 86.02% 2.66 Estimated Collection MHTS Last Mile Predicted Actual Factor Service Factor Service Service Difference Service Standard Overnight 0.18 98.29% 3.94 94.17% 93.71% 0.46 2 Day 0.07 94.64% 3.64 90.93% 90.71% 0.22 3-5 Day 0.06 89.96% 3.61 86.29% 86.02% 0.27 EXFC Expansion EXFC Expansion Impacts for Letters – October 2008 Data Source: * IBM Root Cause Failure Analysis – Final Quarter IV FY 2008 MHTS service from MIRS – October 2008

28. Origin Processing Transport to Destination Destination Processing Transport to Delivery Unit Delivery Unit Processing Delivery Collection EXFC Expansion Last Mile Impacts • Get mail in DPS – automate volumes • Connect rejects / rework volumes from DPS • Reduce At Risk volumes - machine and operator quality • Dispatch trucks on time 0400 – 0900 • Connect hot case - timely customer service distribution

29. EXFC Expansion Expansion EXFC Impacts on Total EXFC Expansion MHTS Failures Data Source: MHTS/MIRS October 1 – 30, 2008

30. EXFC Expansion What If Overnight Flats were at 96.50% On-Time?October 2008 Data Source: EDW/TTMS November 5, 2008

31. Origin Missent Collection Delay Last Mile Failure No Read at Origin Destination Missent No Read at Destination Origin Processing Delay Dest. Miscoded/Misread Origin Miscoded/Misread Non-Standard Origin Processing Late Inc. Secondary Processing EXFC Expansion EXFC Service Impact Pareto Chart – Overnight Flats Last Mile Failure Point Impact = 3.22 Data Source: IBM Root Cause Failure Analysis – Final Quarter IV FY 2008

32. EXFC Expansion Key Actions • Collection box management process in place • Standardized mail flows in place for all mail • Operating plan and 24 hour clock adherence discipline for all mail • High levels of machine and operator method quality • Service responsive transportation • Timely customer service distribution

33. Questions? Service.Webinars@usps.govDo you have questions about any of the presentations?Do you have suggestions to make them more informative?Do you have ideas for new presentations?WE WANT TO HEAR FROM YOU!

34. Next Week Friday, November 14, 2008 at 11:00 a.m. ETFirst-Class Mail Measurementand Operational Impacts Presented by –Tom DaySenior Vice President, Intelligent Mail & Address QualityandDavid WilliamsManager, Processing OperationsHave a good weekend!