1 Postal Operations John Rapp Senior Vice President, Operations.

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Postal Operations

John Rapp

Senior Vice President, Operations

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Fall Mailing Season

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Fall Mailing Season

Excellent

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Area Mail Processing (AMP)

•Studies Ongoing

•No Decisions Made

• Included in Network Redesign

Network Integration and Alignment

February 2002

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• Vision: Create a flexible logistics network that reduces total costs, increases overall operational effectiveness, and enhances differentiation through superior customer services

• Objectives:

• Reduce combined (USPS & customers’) costs

• Eliminate service failures and inefficiencies

• Maximize surface transportation cube utilization

• Three Tiers:

• Node Optimization

(NIA)

EventManagement

• Route Plans & Schedules• Routing Decision Rules

• Dispatch & Routing Execution (SAMS)• Track & Trace Visibility (SASS)

Strategic

Tactical

Operational

In Conjunction

with NIA

Tier 1

Tier 2

Tier 3

Network Integration and Alignment (NIA)

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•Node Optimization

(NIA)

EventManagement

• Route Plans & Schedules• Routing Decision Rules

• Dispatch & Routing Execution (SAMS)• Track & Trace Visibility (SASS)

Strategic

Tactical

Operational

In Conjunction

with NIA

Tier 1

Tier 2

Tier 3

Network Integration and Alignment (NIA)

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NIA Addresses Several Challenges

• Fixed infrastructure inhibits Our Ability to Adapt to Changing Business Requirements

• Disproportionate Increase in Transportation Costs over Last Decade

• Evolution of the Distribution Network Resulted in Non-Standard Operating Procedures

• Differing & Inconsistent Preparation and Entry Exist Between Classes & Subclasses of Mail

• Differing & Inconsistent Service Standards Exist

• Lack of an Integrated IT Solution

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•Existing Service Standards Cannot be Compromised

•Network Designed to Lower Total System Cost (USPS and Customers)

•Cost Savings Are Trackable, Measurable, and Capturable

•Labor Impacts Addressed Proactively

• An Integrated IT Solution is Critical to Our Success

•Logistics Network Capable of Rapid Response to Changes in Customers’ Requirements

Assumptions

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Overall Approach for NIA

1. Establish Baseline 2. Define/Analyze Alternatives

3. Develop Implementation Plan

Change Management: Develop new long-term processes,establish skills and requirements.

Select Modeling Tool/ModelBaseline LogisticsNetwork

Develop and Select Scenarios/

Alternatives

Identify Resource Requirements for

Projects

STEP 1

STEP 7

STEP 6 Analyze

Network & Deployment Alternatives /

Scenarios

STEP 9

RefineLogistics Network

Strategy

STEP 12

Develop Phase II Implementation

Plan

STEP 13

Gain Mgmt Approval for NIA

Opportunity Assessment

STEP 0

Data Collection & Document As-Is

STEP 5

Develop Business Case

STEP 11

Validate Network Concept

STEP 10

Mobilize Team and Project

Start-Up

STEP 2

Design Conceptual Model

STEP 4

ConfirmBusinessStrategy

STEP 3

Develop Model

STEP 8

Mailers’ input

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CentralizationCentralization

Centralization Decentralization

One facility

Hundreds offacilities (today)

Fewer plantsTransportationHubs

ConsolidationCenters

Outsourcing (Considered after the model produces results)Outsourcing (Considered after the model produces results)

Outsourcing No Outsourcing

Everything is outsourced

No outsourcing

Shared Transportation

Outsource laborin a USPS plant

Outsource functionsto customer’s plants

Business RequirementsBusiness Requirements

Change Don’t Change

Completely redefinemail classes and other services

No changesAlter service standardsto improve service performance

AdditionalDropship

Sell processing ortransportation services

DifferentiationDifferentiation

Differentiateby Shape

Don’t Differentiateby Shape

Separate Facilityfor each shape

All shapes insame facility

Letters and Flats in one type of plantParcels & Outsides in another

Differentiateby Mail Class

Don’t Differentiateby Mail Class

Separate Facilityfor each mail class

All mail classes in the same facility

Separate facilities for Preferredand Standard mail

Separate facilities for Expedited, FCM, and Standard

Examples of Scenarios to Be Analyzed

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One facility







No outsourcing








AdditionalDropship















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One facility







No outsourcing








AdditionalDropship















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Integration

• Information Platform

• Industry Task Force Recommendations

•Product Redesign

•Equipment Deployment

•Facility Consolidation (AMP)

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• A More Cost Effective and Service Responsive Network

• Lower Costs System-Wide (USPS & Private Sector)

• Additional Opportunities to Partner With Customers and Consolidators

• Will integrate Various IT Solutions with NIA’s Logistics Optimization and Simulation Tools

– Postal One! & SASS

• Increased Network Flexibility to Manage in an Uncertain Future

What Does NIA Mean to You?

1 Postal Operations John Rapp Senior Vice President, Operations.

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