UPU Consultative Committee Global Addressing Summit Bern 23 April , 2010 L. A. Pintsov

1. New Technology Platform for Postal Applications UPU Consultative Committee Global Addressing Summit Bern 23 April , 2010 L. A. Pintsov Pitney Bowes Inc.

2. Outline • Problems facing postal and delivery sector • Smart Postal Network • New technology platform • Tools • Example • Implications • Q&A

3. Electronic Substitution/Diversion Postal Operator Market Liberalization and Postal Reform Operations driven Optimized for efficient delivery of a few traditional products (minimum cost given required service quality) Rigid cost structure, relatively high labor cost Rigid Infrastructure (expensive to change) Extensively regulated 3

4. How Posts should respond to competition? • Letter (“information”) mail • electronic diversion damage • private carriers and postal reform • Parcel (“object”) mail • increased competition and eroding margins for private carriers and Posts • Competing on cost/price and product basis • ”The Postal Service must design and deliver products that meet customer needs in a rapidly changing market. It must control costs to remain competitive.” USPS STP 2008 • Competing on the cost basis is conceptually straightforward but difficult to execute given stubborn business constraints (labor and network fixed cost) • Cutting cost does not and will not work against electronic diversion • Competing on the product basis is hard both conceptually and operationally, but it is the only real alternative to (slow?) decline 4

5. Smart Postal Network

6. Smart Postal Network (Information View)

7. Core Issue: Postal Products • We should automate postal product design, distribution and consumption using information technology • Fortunately, this can be done! • All known postal products (existing and planned) have a deep structure that can be computerized while preserving descriptions essential for human understanding and control • All postal products can be described as a collection of named attributes which have measurable values represented for computer processing using modern mark-up language ( XML)

8. Structure of Postal Products • Physical elements described by data attributes • Physical parameters (dimensions, volume, density, material characteristics) and content (restricted for certain services) • Network Parameters (geography of induction and delivery) • Priority &(where there are options)routing information • Timing and frequency of collection and delivery • Information about • Events that occurred during item processing • Other mail items linked to the item being served • Objects linked to the item being served (box, signatory, …) • Other items sent, received or replied to by sender or recipient • Rules • Conditions imposed on physical and informational elements(mail unit, mail unit content, mail unit attributes, money) • If (attribute X meets this condition) Then (do this) • Remedies for when service (product) could not be delivered as specified

9. Postal Product Access Requirements • Mail item make up • data, format and placement • Computerized data to accompany mail item(s) • examples: Statement of Mailing Submission, Mail Manifest • timing, messaging and protocol requirements • Grouping and containerization • Pricing and payment requirements • Rates and accounting rules • Offering requirements • Validity period

10. Smart Postal Network Product Design and Distribution

11. EPPML • Extensible Postal Product Model and Language • EPPML enables standardized definition of practically unlimited variety of postal products • Standardized by UPU (S54-1) and CEN (draft submitted) • A postal product expressed in EPPML: • Is an information object (suitable for computer processing) • Can be represented by elements organized as an extensible collection of measurable attributes • All postal products represented in EPPML have a common structure across all carriers/posts (defined by EPPML standard schema)

12. Postal Product Representation UPU S54-1 EPPML standard (XML schema) governs the structure of Product Definition (XML doc) <PostalProduct xsi:noNamespaceSchemaLocation=… ... <UniqueProductID>CD12-9123-FFE5-912E-... </UniqueProductID> ... <MailUnitAttributeConstraints> <AccessRequirements> <MailUnitPhysicalAttributes> <Weight>0-2</Weight> </MailUnitPhysicalAttributes> </AccessRequirements> </MailUnitAttributeConstraints> ... </PostalProduct>

13. Postal Product XML SchemaTop Level Outline

14. Postal product innovation with EPPML • Designing new product • Evaluating new product operational feasibility • access requirements • Evaluating new product economic feasibility • costing and pricing • Marketing and selling new product • distribution channel • enabling access to new products (meeting postal operational requirements) • Production (delivering new product) • mail creation (mailer) • mail processing and delivery (post)

15. Capturing customer’s needs and constraints Comm. owner Weight (Kg) 6 Delivery Time Tuesday Mailer’s Needs and Cons- traints (XML) Tracking Chicago Induction Every Day None Chicago <MailerNeeds xsi:noNamespaceSchemaLocation=… ... <MailerID>1234PB6789-... </MailerID> ... <MailUnitAttribute> <Weight>6</Weight> </MailUnitAttribute> ... </ MailerNeeds > Customer’s Operations Mailer Domain

16. Designing New Postal Products marketing Postal Product (XML) Postal Product (XML) Postal Product (XML) Confirmation of events Max. Transit Time Weight Range 2 d Induction 2 d 0-2 Kg Induction 0-30 Kg 10-100 Kg 2 d 5-7 d Induction First processing Delivery 0-2 Kg Induction 1 d <PostalProduct xsi:noNamespaceSchemaLocation=… ... <UniqueProductID>CD12-9123-FFE5-912E-... </UniqueProductID> ... <MailUnitAttributeConstraints> <AccessRequirements> <MailUnitPhysicalAttributes> <Weight>0-2</Weight> </MailUnitPhysicalAttributes> </AccessRequirements> </MailUnitAttributeConstraints> ... </PostalProduct> operations Carrier Domain

17. Post defines new postal products definitions of postal products Post / Carrier Data Center product (XML) Operations product (XML) product (XML)

18. Customer downloads new postal products descriptions product (XML) Mailer Domain Data Center product (XML) product (XML) product (XML) Post / Carrier Post / Carrier Post / Carrier Data Center product (XML) product (XML) Operations product (XML) product (XML) product (XML) product (XML)

19. Customer selects a new product satisfying customers’ business application requirements product (XML) Mailer Domain Data Center product (XML) product (XML) product (XML) Post / Carrier Data Center product (XML) product (XML) Operations product (XML) product (XML) product (XML) product (XML)

20. Customer's equipment automatically produces mail Items product (XML) Customer Domain Data Center product (XML) product (XML) product (XML) Post / Carrier Data Center Mail Creation Instructions product (XML) product (XML) Operations product (XML) product (XML) mail tray product (XML) product (XML)

21. EPPML tools 21

22. Mailer’s tool 22

23. EPPML Editor: Screen Shot 1

24. EPPML Editor: Screen Shot 2

25. Mutually Trusted Mail Product(MTM)

26. Requirements • Sender wishes to be assured that a given mail item has been delivered and received by the specified recipient at a required time and place • Sender wishes to keep the content of the item intact and secret (only sender and recipient are supposed to know the content and the content arrived as it has been sent) • Recipient wishes to be assured that mail item came from the right source (sender) and that it contains content that recipient ordered and expected • Recipient wishes to be able to redirect delivery of the item after it has been sent when certain conditions are met

27. 123456 Robert Dupont Rue d’Example 1000 Lausanne Mailer’ system Special Services Data Data Center Recipient Internet Item Office Printer Label printer Database (customers orders) Computer

28. 12345678901234 Robert Dupont Rue d’Example 1000 Lausanne Mail item label for the MTM product Tracking Number (Item Identifier) Evidence of Postage Paid Partial Ciphertext (Ciphertext1)

29. Database Record Content

30. Portable Wireless Scanning device (PWS) Scanning Camera Display Key Entry Pad

31. Internet Data Center Sender PWS Data Base Delivery Agent Recipient Mail Item Carrier Mail Item Mail Item

32. Attributes of MTM product <PostalProduct xsi:noNamespaceSchemaLocation=… ... <UniqueProductID>CD12-9123-FFE5-912E-... </UniqueProductID> ... <MailUnitAttributeConstraints> <AccessRequirements> <MailUnitPhysicalAttributes> <Weight>0-2</Weight> </MailUnitPhysicalAttributes> </AccessRequirements> </MailUnitAttributeConstraints> ... </PostalProduct> • Mail Item design • Sender-defined partial cipher text (Data content, Data format, Placement) • Item identifier (may be combined with a partial cipher text or printed separately (Data content, Data format, Placement ) • Senders Address is optional (security feature) • Product characteristics • transit time • geography of induction, geography of delivery • Access requirements • Partial Sender’s Database Record must be made accessible to PWS prior to delivery via wireless connection (sender, Carrier or third party data center) • Customer Directed Information (always includes information identifying delivery location, time stamp and identity of delivery agent) • Item Identifier • One Time Recipient Identification Code (OTRIC) • Failure to deliver due to incorrect OTRIC • Contingencies • Handling of undeliverable mail items (redirection) 32

33. Notes • There is a method of converting customers’ business application requirements into new postal product definition • Common features of new postal products are: • Customer-defined information communicated via physical (mail unit) and electronic channels • Carrier processes acting on customer-defined information (capturing, processing, storing and communicating) • Customers’ business applications must be integrated with carrier’s products 33

34. Implications for postal customers • User-friendly way of informing posts of customer’ needs • automatically translatable into EPPML description of a desired candidate product • Automated user-friendly access to postal products tailored to customer’ needs • customer’ computerized system can “translate” EPPML product descriptions into executable design of mail items automatically consistentwith carrier’ product access requirements • reduction or complete elimination of special expertise required for access to sophisticated new products (mail make up, machine readable marks, data services) • Operational cost reduction associated with reduced mail defects and costly exception processing • Integrating shipping/mail processes with business applications

35. Implications for Postal Marketing and Finance • New products – increased mail sophistication and volume – new sources of revenue and improved margins • Demand-driven postal products (Adaptive marketing ) • Responsive to senders and recipients communication needs and desires • new products - new revenue • New free and highly effective distribution channel for postal products • works for all market segments even for very small market segments with very specialized needs • Virtual Private Channel • lock in customers by providing private access to product details and pricing for selected customers • 1:1 marketing and value-based pricing (higher margins on postal products custom-tailored to senders and recipients needs) • branding • information privacy and security via secure authenticated communication channel and automation of contractual requirements • Improved interoperability with other carriers (when required)

36. Implications for Postal Operations • Operational cost savings due to reduction of mail items defects as a result of: • Fully automated computer-assisted mail item finishing • Mail make up and address quality • Mail packaging • Manifest • Operations planning, dynamic capacity management, network rationalization and process optimization will benefit from availability of up to date and timely computerizedinformation from senders and recipients • Operational constraints can be automatically analyzed and incorporated into product design

37. Summary • We introduced new EPPML-based technology platform that will be one of the key ingredients of the future Smart Postal Networks • New platform creates unprecedented opportunities in postal product innovation and postal sector revitalization • We developed software tools to leverage standardized postal product description language (EPPML) • By effectively integrating customers and carriers systems EPPML technology platform creates: • new automated distribution channel for postal products • mail provably consistent with postal products access requirements (reducing operational cost for customers and posts) • virtual private channel for branding, competitive product differentiation, privacy, consistency and legal contracts