**Minutes of the**

**Mailers\' Technical Advisory Committee**

**October 4, 2000**

**U. S. Postal Service Headquarters**

#### Benjamin Franklin Room

**Washington, D.C.**

**Welcome**

Postal Vice Chair Jay Freitas called the meeting to order, welcomed
members and guests and introduced new members Barbara Izzo (National
Retail Federation) and John Launer (National Association of Perishable
Shippers). He announced that the Sales Department had been relocated to
Rosslyn, Virginia and that there were meeting facilities available for
MTAC working groups and committees. Finally, Industry Chair Joe Schick
announced the dates of 2001 MTAC meetings: January 31/February 1, April
25-26, August 1-2 and

November 7-8. He also announced that annual dues had been increased to
\$750.

**Financial Review**

**Richard Strasser, Acting Chief Financial Officer**

Mr. Strasser began his presentation with an historical perspective,
noting that mail volume approximately doubles every 20 years. Prior to
reorganization in 1970, the number of employees also doubled every 20
years. Since that time, mail volume has continued to increase from 85
billion to over 200 billion pieces, but the number of employees has only
slightly increased from about 726,000 to 785,000, mainly because of
aggressive and successful management strategies to produce more
efficient operations including transfer of labor in return for discounts
(presort, drop ship), the integration of automation, and continuous
network upgrades.

Turning to current operating results, independent audit scores for
service remain high, at 94%. Volume growth should be 2.6%, similar to
1999, below the approximate 4% levels of 1998. Growth is also evidenced
by the addition of 1.7 million new deliveries which equates to 3,400 new
carrier routes, 4,800 new letter carriers and 80 new delivery
facilities.

Current year results were adversely affected by unexpected increases in
Workmen's Comp payments (\$200 million over plan), additional fuel costs
of \$275 million and higher COLA expense amounting to \$50 million. On
the positive side, work years decreased by .7%, the first significant
decrease since the early nineties. Total factor productivity was up 2.1%
and labor productivity was also up 2.1%.

Revenue in AP13 was disappointingly very slightly below SPLY. Revenues
were down in First Class (-.6%) and the single-piece First Class (which
accounts for about \$22 billion in revenue) was down 4.6%. Priority was
also down 1.3%. Revenues were higher than SPLY in Periodicals (up 3%)
and Standard A (1.3% ), lower than plan and lower than earlier
increases. Volumes were below plan in all categories and SPLY results
were -- First Class up 1.3%, Priority up 3%, Periodicals down .6% and
Standard A up 4.6%.

Mr. Strasser stated that pre-audit indications are for a loss of \$100
million to \$150 million for fiscal year 2000. Projections for the next
year, because of anticipated relatively flat volume and increased cost
of work hour and fuel costs, are for a slight net operating loss.

During discussion, Mr. Strasser confirmed that more effective fuel
purchasing procedures were being implemented, as well as in other areas
such as mail transport equipment, travel requirements, etc. Concerning
the anticipated net loss in 2001, he explained that the mix of the mail
volume, the upcoming labor negotiations and the short-term drop in
volume related to the anticipated January rate increase could adversely
affect the bottom line.

**Fall Operations**

**Nick Barranca, VP, Operations**

Nick Barranca began with a four-year comparison of the fall volumes,
showing that current volume is ahead of last year, and volumes were
generally ahead of plan during the last half of the fiscal year.
Operations goal for reducing delays is to beat the 1999 record, the best
operating record for the last few years.

As usual, operations will be closely monitoring DSAS, with a commitment
to accept every appointment delivery when it arrives on time. There is
still concern about no-shows (currently about 21% of appointments),
cancellations (10%) and arriving without appointment (about 5%). Also
monitored daily are operations at BMCs, Delivery Units, including
communications with the BSNs, account managers, area managers of
operations support. The Inspection Service continues to provide support
through observation at various units, with a weekly report of conditions
which require corrective action within a week.

Entry guidelines are available to mailers and the DSAS now includes a
facilities conditions report on selected facilities where there may be a
need to amend entry procedures (usually by delivering mail a day or so
earlier than the guidelines suggest).

Communications has been improved with meetings involving both managers
of operations support and mailers, as well as session with mailers at
the Postal Forum, meetings with printers, MTAC, and individual
customers. Feedback from these meetings was communicated to the
appropriate operations units. Operations is also continuing to cooperate
with the BSNs to resolve problems.

Mr. Barranca stated that the mail transport equipment operations has
dramatically improved, with all MTE Service Centers up and running,
major purchases of MTE and a very low level of customer complaints. The
Advanced Flats Sorting Machine 100 is being rapidly deployed. It has
much higher throughput, and remote keying on-site. Standard operating
procedures are being tested and refined.

The fall plan went into effect in mid-August, peak mail is expected

October 21-27, and certain procedures are included in the plan
(maintaining low inventories, daily yard checks, close attention to
delays, increased awareness of end of the week volume peaks in drop ship
and more use of the BSNs and customer support teams). Standard B
Guidelines have been revised and

re-issued. The PMPCs should function as before with Emery as the
subcontractor, but there are contingency plans if volume exceeds
capacity in any area. Finally, the Postal Service is suggesting the use
of Priority Mail after December 9^th^ and Express Mail after December
18^th^.

**Address & Zip+4**

**Peter Moore**

Peter Moore reported that the Postal Service has indicated a revised
drop ship product will be coming in early 2001.

**Line of Travel Working Group**

Noel Wickham reported that the question of the 5% walk sequence
tolerance issue has not been resolved. The MTAC request is to look at
the effect of small bundles (e.g., bundles with as few a 6 pieces in
which one in error would disqualify the mailing). The Postal Service has
agreed to look at the issue to consider as solution. The issue of
reverse sort is simply not acceptable since a future plan to effect
combining of mail would not be possible with reverse sort.

**Address Change System Enhancements/Corrections**

James Schemmel reported that a recent meeting suggested that, because
the current ACS procedures are not being consistently applied at the
delivery unit level, that ACS mail should be forwarded to the CFS site.
There fewer people can be trained and monitored to properly process the
mail. The Postal Service agreed to a test in two zip codes in the
Bellmar, New Jersey CFS site. The test will be in three stages -- an
observation phase to determine current procedures, a phase during which
the procedures would be changed to re-route mail to the CFS site, and
the final stage a measurement stage to determine effectiveness of the
change.

Although he meeting was scheduled too early to review any of the test
results, it was a rewarding meeting in that the work group was able to
inspect the CFS process, determine that some mail is difficult to
process because of poor choice of fonts and lack of separations in the
ACS keyline. Finally, there was discussion about the need for so many
nixie codes. One recommendation was for three codes -- one for address
(no such number, etc.), person (moved, died, married) and postal problem
(internal USPS process).

(Brief recess)

**Periodicals**

**Jack Widener**

Mr. Widener suggested that periodical publishers become involved in the
Line of Travel issue, including the printers.

**Periodical Service**

Joyce McGarvy reported that the three-year-old work group was close to
being closed down. The Work Group was divided into three subgroups --
IS, processing and mail make-up -- and those groups are scheduled to
prepare final reports on issues that may remain and should be
re-assigned to other work groups.

**Irregularity Feedback**

Ms. McGarvy noted that the USPS was required to report mail preparation
irregularities to appropriate industry participants. Two meetings have
been held to review the current process and suggest improvements. The
concern that emerged was that there is no clear owner in the Postal
Service for the process, which is estimated to be a \$50 million problem
annually. Therefore, the work group considers this a high priority
problem.

**Publication Watch**

Ms. McGarvy briefly reviewed history of the work group and the process
by which the electronic pubwatch system was finally developed and
installed. She introduced Glen Counoyer, who previewed ePUBWATCH system
under development.

**Electronic PubWatch-Advance**

## Glen Counoyer

Mr. Cuonoyer stated that ePUBWATCH was a partnership between the mailers
and the USPS IS, marketing and delivery groups. The web-based system
will allow mailers to record customer complaints in a major database,
request an ePUBWATCH surveillance, receive timely feedback and address
systemic problems, which allows mailers to provide information that may
help the Postal Service make overall improvements in the publications
delivery system.

The web site will contain a Publisher's page for use by mailers, and
Administrative and Delivery Unit pages for USPS use. The mailer may
choose to enter a complaint or request a track and can then follow the
track(s) requested on a separate status page.

ePUBWATCH covers 7,500 delivery units and more than 11,500 5-digit zip
codes, which represents about 80 percent of the destinating mail volume.
The limitation is the lack of computers in the remaining delivery units.
However, complaints may be entered at all sites.

The web site and server site is nearly complete, which will be followed
by certification that the disabled are able use the web site (a federal
requirement). The pilot test should begin in November in Chicago and
Long Island with national deployment scheduled for February 2001. The
URL for the web site, which should be available for preview by the end
of October, is *epubwatch.usps.com* and mailers may obtain a login ID
and password at NCSC Memphis

(800-458-3181).

During discussion, there was a reservation expressed about the
requirement that mailers provide a Social Security number, a requirement
that some members felt might not be appropriate.

Mr. Counoyer provided a brief update on Advance. The program, in its
third year, tracked over 3 billion pieces of mail.

**USPS 5-Year Strategic Plan**

**Kent Smith**

Mr. Smith reminded the MTAC members that the strategic plan is a
requirement of the Government Performance and Results Act, which is
published in the public record. Therefore, it is a general approach the
future. The process of the plan is to establish mission and vision for
the next five years based on the changing business environment,
including the development of goals and strategies in consultation with
all interested stakeholders.

The Five - Year Strategic Plan of the Postal Service, covering

FY 2001-2005, is a public document prepared in response to the
requirements of the Government Performance and Results Act. The Plan
provides a review of the mission of the Postal Service and outlines the
challenges facing the Postal Service over the next five years.

The first challenge is the competitviveness and affordability of postal
services. The Plan provides a summary of the strategies (\"Blueprint for
Progress\")the Postal Service will implement to reduce costs by \$3 to
\$4 billion, to achieve \"breakthrough productivity\", and to generate
more revenue. The Postal Service will continue to use a variety of
indicators to measure affordability, subject to the overall requirement
to break-even over time and to achieve the mission of universal delivery
as currently defined. The Chief Operating Officer, Jack Potter, is
leading this initiative.

The second challenge is the ability of the postal service to become more
flexible in responding to changing markets and the needs of its
customers. This involves developing new ways of doing things -
essentially \"transforming\" the Postal Service. There are internal and
external changes which are necessary if the Postal Service is to remain
viable in a dynamic, competitive markets. Allen Kane has been tasked to
address this complex issue.

The third challenge is to adapt and use new technology to improve core
processes, add value to core services, and to offer relevant new
services in order to generate sufficient new revenue to replace revenues
expected to be lost to technological substitution, and changes in
business processes or customer behavior. Deputy Postmaster General and
Chief Marketing Officer John Nolan is managing USPS efforts in this
area.

The Plan outlines the choices facing the Postal Service and the mailing
industry, and invites interested stakeholders to continue to discuss
these issues with the Postal Service.

Mr. Smith invited the MTAC members to participate in the planning
process by submitting comments on the current Strategic Plan.

**Standard A**

**Dan Minnick**

###  **Payment at Destination Entry**

Alan Kline reported that the work group had determined that there were
neither regulatory nor legislative impediments to changing the current
process. The work group agreed on five benefits to making that change --
improved customer satisfaction, greater customer participation in USPS
initiatives (Postal One, centralized payments, RFID), ability to capture
better information about mailings, ability to implement activity-based
accounting, and aligning responsibility with acceptance.

A meeting is scheduled with the IP and operations finance
representatives to discuss whether the change is possible and what would
be involved. If a solution is possible, there is a need for a
responsible Postal Service group to take responsibility for the change.

During discussion, Mr. Kline explained that plant-verified drop
shipments are verified and postage is charged at the plant. The mail is
returned to the mailer who transports it to the destination entry point.
Mailers would like to pay the postage at the destination entry point.
Mailers would benefit from the interest on the float and the end of a
requirement to pay for insurance during transport.

**Mail.dat**

Dan Minnick updated members on the status of Mail.dat 00-1 spec which
would be issued within a week. Implementation transition begins on

November 15 to be completed by January. The new spec is more robust and
efficient.

**Postal One**

Dan Minnick reported that the work group communicated an interest in
playing a more strategic role in the future of Postal One. The USPS
reported several milestones -- the viewer will be available within 30
days for all 70 sites participating; postage payment should be available
within 90 days; and in January the Board is expected to approve a \$70
million budget for the next phase (about an 18-24 month period).

During discussion, Mr. Minnick stated that the re-write of the permit
system would not be part of that funded phase.

Mr. Freitas presented a token of appreciation to Mr. Minnick for his
outstanding service on the Steering Committee.

**Announcements**

Mr. Schick announced that the regular business meeting would be held
immediately following the session. At 4:30, the meeting was recessed
until the following day at 8:00 a.m.

**Minutes of the**

**Mailers\' Technical Advisory Committee**

**October 5, 2000**

**U. S. Postal Service Headquarters**

**Benjamin Franklin Room**

**Washington, D.C.**

**Opening/Welcome**

Industry Chair Joe Lubenow called the meeting session to order. He
introduced Postal Vice Chair Ann Wright, who referred the members to the
Memo to Mailers, which included an excellent article describing MTAC,
entitled "What is MTAC Anyway and How DO You Pronounce It?"

**International Mail Rates and Products Restructure**

**Bob Michelson**

Mr. Michelson stated that the proposed international rates were
published on September 26 in the Federal Register for public comment.
The long term goals are to simplify product offerings, provide more
consistent service and encourage the use of international customized
mailing agreements (ICMs), which are similar to negotiated service
agreements.

Summarized in the Federal Register are the objectives; moving from a
content-based system to a speed-based system, coverage of increased
foreign delivery costs, make distinctions between retail and commercial
products, increase rates by 5.8% and implement by January 7, 2001, the
same date that domestic rates are scheduled to change,

Mr. Michelson explained that the content-based system results in too
many rate structures, many of which are inconsistent and even illogical
(some air rates are less than surface rates).

Every five years the Universal Postal Service Congress, 189 postal
administrations around the world meet to set ground rules and rates for
exchange of mail. In August the Congress met in Beijing and set separate
rates for industrialized and developing countries. There was a 15%
increase in these terminal dues, which demands a 7.5% increase in
international rates just to cover those costs.

Rather than simply pass the cost on, the United States (because in
addition to the USPS, the State Department and other federal agencies
are involved in the process) decided to restructure based on speed of
service --Global Express Guaranteed, Express Mail Global Priority Mail,
Airmail and Surface. This reduces the rate categories from 15 to 5.

Mr. Michelson explained, in some detail, the rate changes in the various
classes, noting that the fastest service in very class logically carries
the highest cost. The international equivalents of First Class Presort
(IPA) and Standard A (ISAL) increases, on average, about 7%, with the
discount structure remaining intact. The new product and rate structure,
which reflects the two-tier rates (developing and industrialized country
rates) will result in 8 major rate groups in the USPS. Canada is Group
1, Mexico is Group 2, and the remaining countries fall into the
remaining 6 groups depending maining on parcel weight limits in various
countries.

The steps to achieve the restructure began with the Federal Register
announcement with comments due by October 21. The comments will go to
the Board in November with final rule published if approved by the
Board. Implementation should then become possible by January. The Postal
Service is confident that the structure will be adopted with only minor
amendments. International rates may be changed without recourse to the
Postal Rate Commission.

During discussion, Mr. Michelson announced that a software program,
IDMAPS, which contained marketing opportunities in 189 countries, was
available for sale from the Postal Service.

**First Class Update**

**Laine Ropson**

**Business Reply**

Sue Taylor reported that in June the work group released the new
publication, "Designing Letter and Reply Mail" (combining Publications
323 and 325). Soon a Postal Bulletin will address design and approval
guidelines. The Postal Service also standardizing the software related
to processing BRM.

The work group also looked at other First Class mail delivery versus BRM
delivery and determined that courtesy reply mail has a performance
rating of about 95% and business reply mail lags well behind at 81%. A
goal of at 90% was set for the first quarter 2001 and several service
solutions were suggested. A letter already went out to each service area
showing actual performance. Standard operating procedures are being
developed which include best practices and a checklist that would
constitute a self-audit for each unit handling BRM. There will also be
an independent audit by the business reply mail task force that will
visit some of the high volume operations and some of the units that have
evidenced poor performance.

The task force spent three days in Baltimore, following every step of
the BRM procedure. Cooperating with the task force, the Baltimore unit
was able to eliminate delays in BRM and actually speed up the process by
several hours.

A web site application is in development with an implementation target
date of February 2001. The application will allow mailers to access the
site, submit permit and zip+4 code information and receive back, within
24 hours, approved artwork. Mailers with permits may also request and
receive a new zip+4 code and then receive approved artwork. The site
will also allow creation of courtesy reply mail artwork.

Also in the works, Centralized Automated Payment System customers will
be not be required to submit Form 3554. Non-CAPS customers must wait for
Postal One. There has been approval for permit payment with commercial
credit cards, implementation to be announced later, and there is a
request to allow low-volume mailers to also use a credit card for
payment.

Finally, Core Business Marketing for First Class Mail received a 2000
Quality Award because they effectively used the project management tool
to improve the BRM process.

**SAVE/MQA Update**

**Scott Hamel**

Mr. Hamel provided an update on SAVE, noting that the failure rate has
been holding steady at about 4% and upgradable data is about 7%. Partly
prompted by MTAC, especially the list mailers, there was a visit audit
of 38 cities to determine if each was in compliance with the SAVE
operating procedures, especially with regard to consistency and
objectivity. Of the 38, 28 were in full compliance, 7 were in major
compliance and there were discrepancies in 4.

One problem uncovered in the process was a situation resulting in
failure of a mailing when a tray was missing from the delivery (or
possibly when a tray is mislabeled), usually in the case of a large
mailer using multilines in an internally complex and/or continuous
mailing process. The solution in progress, which seems to be working, is
to identify vulnerable mailers and work with them to assure that all
trays for destinations to be verified have been captured.

Pilot testing at 4 mailer sites was performed for list mailers that
confirmed that SAVE does not adversely impact verification process time.
In addition, the Postal Service is rolling SAVE out to list mailers on
September 7^th^ to be applied to mailings of 75,000 pieces or greater.
Later in the year it will begin to come down to perhaps 40,000-piece
mailings. One objective is to achieve consistency in the SAVE
verification process.

Mr. Hamel noted that current policy, when implemented, will be to
increase charges for failed mail to the single piece rate but, at the
request of mailers, the Postal Service will look at alternatives that
may be lower. There is also the issue of spoilage at the mailer's plant,
where procedures related to spoilage may adversely affect the SAVE
verification. One mailer's solution is to go to the Mail Preparation
Total Quality Management process and use that as an effort to develop
procedures to both reduce and properly document spoilage.

Mr. Hamel added that MPTQM may also be useful in pushing quality control
up the mail preparation process, especially when several vendors may
perform operations on the mail before the mailer finally has control.

Turning to Mail Quality Assurance, Mr. Hamel noted that a major concern
is the post-acceptance adjustment that will be made because many mailers
have not yet had the MQA process accomplished in order to see baseline
data. Therefore, the implementation is deferred until January.

The MQA process accumulates extensive data about the quality of mail
that will allow analysis of systemic issues that may exist. Data
includes types of mailer (multiline, barcode sorter, etc.), status of
mailer (MPTQM certified, Postal One, both, neither), whether mail is
sorted by third party, hardware vendor used and software vendor used,
sort level (mixed, ADC 3-digit, 5-digit), class of mail (First Class or
Standard A), category (automated or upgradable) and acceptance point
(BMU or DMU). Volume of total mailing and sample may also be accessed
from a separate report. The analysis can reveal level of error based on
any or all of the variables.

During discussion, two issues were mentioned by members. First, a kind
of double jeopardy issue, there is concern about being exposed to
postage adjustments after a mailing has been accepted, including any
verification processes that may occur at acceptance. Scott pointed out
that if a postage adjustment was charged at acceptance time, that
mailing would be excluded from MQA. Second, if a piece of mail is
inadvertently moved from one tray to another tray, it would seem to be a
single error, but it is counted as two errors in the MQA process. Scott
stated that both trays are wrong. (After MTAC note: Because of the way
MQA works, and because only some destinations are selected for analysis,
the probability that both trays would be analyzed with both errors
counted, is remote).

**Engineering & Technology Update**

**Robert Lindsay**

**Delivery Operations Information System -- DOIS**

Charles Fisher announced that the DOIS would be one of the first
projects to go on the Information Platform. The system replaces an
inefficient delivery management process that was unable to communicate
with other applications. Six districts are now using DOIS, which allows
a finer tuning of letter carrier workload distribution. The program
allows a supervisor to review all route delivery requirements each day
so that real time adjustments can be made to improve delivery
efficiency. The Board has recently approved implementation of the system
over a 30-month period to delivery units with ten or more routes.

**Surface-Air Management System -- SAMS**

Harry Alstadt explained that SAMS replaces the current Air Contracting
Data Collection System. Its purpose is to integrate surface and air mail
movement management to dramatically improve efficiency. That is, since
mail from multiple origin units can be monitored and controlled, air
shipments that are "overbooked" or "under-booked" should nearly be
eliminated, and it guards against sending mail by air that should be
most economically sent by surface. The system also automatically creates
an on-line manifest for the air or surface carrier (more accurate
billing) and provides an audit trail on all shipment parts.

SAMS can interface with all other systems on the Information Platform
that may require the SAMS data. The pilot tests will begin within weeks,
with national deployment anticipated by March of 2001.

**Drop Ship Appointment System Enhancements**

Robert Reeves reported that the work group was aware that the no-shows
had increased to about 30% and there is concern that milers may be
hoarding appointments as a matter of self-protection. The work group
suggested that the Postal Service keep users n the loop when training
might interrupt normal service, conduct focus groups on DSAS and that
some sort of performance report be developed.

The Postal Service agreed to review the pallet constraint in the system
now. They suggested that knowing the number of working pallets versus
cross-dock pallets would be helpful. Concerning outages, the work group
suggested informing users of time and duration.

The Postal Service has indicated that a mirror (redundant) system has
been established, an industry recommendation. Secondly, a batch
appointment process will be developed so that major users can create a
single appointment schedule and submit it in a single transaction. That
system should be available in March 2001.

The work group recommended developing an automatic reward system based
on objective performance factors, rewards to be determined. Another
improvement would be a dynamic release process that could track a
multi-stop trailer and automatically set up appointments based on the
time of first appointment arrival.

A mailing identifier could be developed that would allow confirmation
that the trailer and the specific mailing have arrived at the postal
facility. There were additional minor improvements in the paper work.

The DSAS work group will meet with the Postal One group to help identify
the needs and actions required for integrating DSAS with Postal One.

Presort Optimization

Joe Lubenow reported that initiatives of the work group are in the
Federal Register and use will be authorized on December 15^th^. The work
group also reviewed software written by MTAC member Peter Moore to
analyze periodical options using Mail.dat. Using the software, mailers
can identify container requirements that vary by a factor of ten and
postage rates that vary by a factor of two, and varying service
patterns, depending on the makeup chosen. Finally, the Postal Service
made a presentation on a test to do presort without making packages for
the 5- and 3- digit, automated and non-automated -- a procedure that
would reduce human time, increase machine time.

(Brief recess)

**USPS Multicultural Initiatives**

**Brett Savage, Specialty Markets**

Mr. Savage described the USPS efforts to emphasize the importance of the
major multicultural business markets that utilize the mail to enhance
revenues. Initial research confirmed that the market was important,
about \$2.3 billion in a three-year period. A decision was made to
develop a strategy to optimize the participation of these diverse
businesses in services offered by the Postal Service.

There are major mailers who have effectively reached multicultural
audiences and these successes have been highlighted at events such as
the Postal Forum. There are also efforts at the retail level to
recognize the importance of this market, such as multilingual displays
and forms at the retail level. This extends as well to the Postal
Service Internet presence, as well as advertising and promotion
campaigns.

The Postal Customer Council network is a powerful influence that can be
effective in connecting the minority business community with the Postal
Service. There is also an internal effort to expose minority businesses
to supplier opportunities with the Postal Service. Finally, since many
of the minority businesses are in the mid-market level, a joint program
between the Specialty Markets group and the Mid-market group will be
developed to increase awareness in that market level.

Mr. Savage concluded by noting that the Postal Service will continue to
focus on major events, like the Postal Forum, to bring the message to
the minority community. The Postal Service wishes to partner with the
mailing industry to realize the full potential of the multicultural
markets for the benefit of the USPS and the industry.

**Standard B/Parcels**

**Clarence Banks**

**Increased Parcel Volume in Mail Recovery Center**

Aaron Horowitz commented that the final report was submitted earlier,
but the work group continued as a monitoring/review body. From the final
report, the Postal Service is developing a standard operating procedures
manual for "loose in the mail" procedures. Workshops will be conducted,
especially for new mailers, to help mailers reduce the potential for
mail ending up in the MRCs. Since the recommendations seem to be in
process, the work group may end its activities.

**Bound Printed Matter**

Tom DeVaughan announced that the proposed rule was published in the
Federal Register August 29, 2000, and the comment period closed

October 2, 2000 (with only 6 comments received). The issues related to
those comments will be reviewed and a final rule will be developed.

**Future Flats Strategy**

Clarence Banks reported that the work group met recently to review
concerns about the location of the barcode on flats such that the
scanners picked up the return address. In addition, the rate case may
result in a second barcode being placed on the flat piece, which could
cause additional problems. Finally, address quality was discussed
related to the flat sorters not reading the OCR characters as well as
the barcodes. A presentation to MTAC is planned concerning solutions to
these problems. There also may be an addressing manual created including
the information in the presentation.

The work group recommended that some feedback mechanism should be
developed to let mailers know when address quality is below par.
Finally, the standard operating procedures for flats sorters, being
revised after receiving feedback from mailers, should be ready for test
in about April 2001 and mailers will be needed to participate.

The flat bundle collator test is going well in Annapolis and more
11-digit barcode mail would be welcome, particularly carrier route LOT
mail.

**Priority Mail Strategy**

**Larry Wood, Associate VP and EPS**

Mr. Wood introduced Jim Cochran, Associate Vice President of Marketing,
who discussed the market aspect of Priority Mail. He noted that package
Priority Mail has grown, slower than anticipated, and that, in addition
to significant expense increases, has resulted in a 15% rate case
request. Of the 1.2 billion packages handled last year, about 55% was
retail across-the-counter mail. The remaining 540 million packages came
from commercial sources, compared to over 800 million being handled by
the package delivery competitors. The primary reason for the USPS market
share is price, an advantage that will be weakened after the January
rate increases. The weaknesses which limit increased sales include the
tracking capabilities, ease of use (pick-up), Internet connectivity and,
frankly, there is a perception that FedEx/UPS service is better, mainly
because of the delivery guarantees.

Concerns about future sales volume include, first, electronic diversion
of documents. The ratio of packages to flats has steadily changed in
favor of packages. It is now 70% packages, 30% flats. Second, the rate
increase will impact volume negatively, at least in the short term.
Third, the UPS IPO will generate cash, giving them more flexibility.

Mr. Cochran discussed strategies that should overcome the negatives
described. Research has revealed that 32 major package markets exist in
the US, mainly in Standard Metropolitan Areas that handle 93% of all
packages shipped. The Postal Service learned from the recent Emory
subcontract arrangement that a well-managed, closed network can produce
higher service levels.

A proposed network may allow a guaranteed product, which makes the
Postal Service fully competitive with other carriers. A major part of
that network could be an outsourcing component. Important
customer-related considerations include making it easier to get packages
into the system, hopefully in a paper-less mode, with convenient payment
options. An innovation under consideration is a fulfillment service that
will be tested at four sites in cooperation with a third-part
fulfillment company partner.

**Information Platform**

**Charlie Bravo**

Mr. Bravo noted that his staff was working with three MTAC work groups
-- unit load tracking, Confirm and facilities database.

He stated the goal of the IP, to use information to realize improved
service and financial benefits by making it easier to do business with
the Postal Service, by improving mail visibility and resource
management, and implementing activity-based costing. The IP group is
working towards collecting data once, as passively as possible,
maintaining security and integrity of data, and developing universal
infrastructure standards.

Although these are not the only components of the IP, the primary focus
is on developing cornerstones initiatives -- mail induction supported by
Postal One, processing with the Processing Operations Information
System, transportation using Surface-Air Management System and delivery
using the Delivery Operations Information System program.

Mr. Bravo described the basics of Postal One, SAMS and DOIS (all
discussed by other speakers). The POIS, now in testing, is a production
planning and control system that tracks real-time mail inventories and
status of plant components. He added that implementing SAMS performance
measurement module will require close cooperation with the airline
contractors as well as movement toward passive tracking, such as RFID.

Focus is on strengthening the Confirm/Planet Code system, delivery
confirmation, progress on 24-digit barcodes and an ID code program to be
used for sorting and diagnostics. There are also PC postage codes
designed for revenue protection, RFID technology and a continuing effort
to determine a universal coding strategy in the Postal Service (a task
force is in place that will soon invite members of the mailing community
to participate). Concerning the universal coding strategy, it may be a
unique ID code on each mail piece tracked passively (possibly by RFID)
so that constant tracking is possible.

Mr. Bravo described the data hub architecture of the IP, noting that
various data sources, hopefully including data directly from mailers, if
fed into a central operational data store, where it can be manipulated
to produce information for a wide variety of users -- the Postal Service
and the customers. This should allow a single interface on either side
of the operational data store.

Mr. Bravo described a customer relationship management initiative, soon
to be in a test phase, using off-the-shelf software to determine whether
IP processes can be aligned to this commercially available software.

**Planet Code/Postal One Update**

**Paul Bakshi and Ron Williams**

Mr. Bakshi announced that the USPS Capital Investment Committee has
approved funding for Confirm for the next 8 years. Hardware upgrades are
progressing well. All barcode sorters in plants can now read Planet Code
and the Delivery Units are being upgraded with completion scheduled by
the end of the year. The same upgrades are being made to flats sorts
with the same deadline.

He assured mailers that the system can support their data needs through
an electronic post office system, which will be increased to three
additional systems in the near future. The work group suggested use of
Confirm data internally to monitor service and solve systemic problems
and a format has been identified that will allow that process. Finally,
also at the suggestion of the work group, the web site is being updated
and enhanced, and the software is being improved to enhance access and
security. There is a preliminary plan to charge for the service on a
subscription basis, not a per piece or per mailing basis, and that may
be in place by May 2001.

Mr. Williams explained that the foundation for the electronic business
partnership, which includes the ability to share electronically
information about bulk business mailings with both internal and external
customer's is in place. Within a short time, 70 test sites will be
participating in the e-information access and e-documentation business
capabilities. Finally, by the end of the calendar year, for CAPS debit
account customers, pilot testing of 3602-PV postage statements will be
initiated.

**Adjournment**

Mr. Lubenow noted that there was no further business. The meeting
adjourned at 12:00 a.m.