**Highlights**

**Mailers\' Technical Advisory Committee**

**August 6 -- 7, 2003**

###### U. S. Postal Service Headquarters

**Ben Franklin Room**

**Washington, D.C.**

**Welcoming Remarks**

**John E. Potter**

**Postmaster General, Chief Executive Officer**

Postmaster General John E. Potter, having received the final report of
the President's Commission on the Postal Service, expressed appreciation
to Jim Johnson and Harry Pierce, the co-chairs and Dennis Shea as
Executive Director for the work of the Commission. The Postal Service is
a complex organization and the assessment of the issues was challenging,
resulting in a process that was both thorough and fair. The Postal
Service views these recommendations as valuable, and is now reviewing
the Commission's Report with an expectation that all stakeholders will
have to accept change. The Commission's Report is an affirmation of the
Transformation Plan. The Postal Service will continue to make sure that
every dollar spent and everything the Postal Service pursues is
appropriate to its mission. The message the Postal Service is
communicating is that service is at an all-time high, it will be
maintained, and that efficient use of resources is viewed as the key to
continued financial success.

**USPS Financial Update**

**Richard J. Strasser, Jr.**

**Chief Financial Officer & Executive Vice President**

Although volume and revenues are less than anticipated, the
extraordinary success of the Postal Service in reducing expenses has
resulted in a year-to-date net income of \$1.68 billion, \$560 million
dollars better than plan, even before the effects of the Civil Service
Retirement System (CSRS) legislation, Public Law 108-18. This has
effectively increased net income to almost \$4.7 billion. Work hour
reduction has been substantial (already at a reduction of 49 million
work hours through AP 11 versus a goal of 40 million for the year), and
the reduction in career complement should reach a projected 22,000
positions for this fiscal year.

According to the National Bureau of Economic Research, the economy
recovered from the recession in 2001, but unlike the typical historical
trend in which the Postal Service lags about two quarters behind a
recovery, this has not been reflected in household response. Employment
continues to weaken, and money that individuals may receive from
refinanced home mortgages appears to be going into major purchases, like
automobiles, and not the consumer goods that are typically advertised in
advertising mail.

There is some evidence that employment will increase in the second
quarter of fiscal year 2004, which should support standard mail volume
increases of three or four percent. Although that is not a substantial
increase, it suggests improvement in the second half of fiscal year 2004
(during which the Postal Service financial reports will be based on the
normal calendar months). We hope for a more robust recovery at that
time. The Postal Service will be in a position to handle a major
increase in demand for services.

Following up on an earlier announcement by the Postmaster General Mr.
Strasser discussed the reasoning and economics surrounding the Postal
Service's action to convert \$6.5 billion in long-term debt to
short-term debt. This action complies with the CSRS law that requires
the use of savings generated to reduce debt. These savings will amount
to about \$3.5 billion this year and \$2.6 billion next year. Although
the conversion costs a certain amount in premium related to early
payoff, that cost will be recovered in approximately 18 months because
of lower interest rates.

[Click here to view the presentation](../../MTAC0803/RSA03ppt.ppt)

**Flats Strategy Consolidated Under Corporate Automation Plan**

**John Rapp, Senior Vice President Operations**

The corporate flats strategy, previously a separate program to advance
automation of flats, has been merged into a unified Corporate Automation
Plan Phase 2 that will include the continuation of letter mail
automation, the automation of packages and flats, material handling of
all classes and the improvement of scanning, tracking and data
management.

About 80% of all letters mailed have reached the delivery point sequence
level through automation. The goal is to bring that to the near 100%
level by enhancing OCR capabilities and initiating OCR recognition
earlier in the mail process (at the facer/canceller equipment) and by
separating local and out-of-town mail to reduce the cycle time in
handling mail. New package handling equipment will be installed to allow
scanning of bar codes and automation of package handling at the Bulk
Mail Centers (BMCs). The Automated Package Processing System (APPS) will
allow rapid handling of packages, bundles and other irregular-shape
mail. Material handling equipment (including robotics) is being refined
and created to reduce the manual handling requirements for not only mail
pieces, but trays and bundles -- including equipment to do tasks like
banding and unbanding trays, sleeving and un-sleeving trays, and the use
of automated heavy product movers like tows and forklifts.

Concerning flats specifically, over 80 plants are certified and using
the standardized AFSM 100 system, which increases productivity by over
400 pieces per hour (in excess of 2,000 pieces per hour per machine).
There is also a new automated tray system that will dramatically reduce
the manual handling requirements, reducing crew size by about 20%.

[Click here to view the
presentation](../../MTAC0803/John%20Rapp%20at%20MTAC%20August%206%20manb.ppt)

**Intelligent Mail & Address Quality**

**Charlie Bravo, Senior Vice President**

**Gary Reblin, Manager**

**Jim Wilson for Jan Caldwell, Manager**

The Postal Service has developed a unified internal plan for Intelligent
Mail and Address Quality. This plan supports the service's OneCode^TM^
Vision. The external plan is under development and should be published
soon. The plan focuses on uniquely identifying all mail (including
aggregates like trays, bundles and pallets) with a single code for each
mail type, developing the infrastructure to support that code, and
improving address quality. A key consideration, especially as Delivery
Point Packaging (DPP) comes about, is that address quality will have to
reach even higher levels because the carrier will not be handling
letters and flats in the office as machines will accomplish most all of
the mail handling.

A Mail Technology Strategy Council has been established, with industry
representation, to look at the future of technology in printing,
scanning, tracking and tracing. There is currently a Mail Technology
Study under way that focuses on the ability of mailers to adapt to the
One-Code Vision -- capabilities, costs, pros and cons.

In developing the coding strategy, every aspect of mail processing will
be considered -- mail piece design, forms, unit loads, identifying sacks
and trays, the impact on the recognition capability and infrastructure
(changes in software/hardware), continuity (mail piece to tray to
container to trailer), and the ability of the scan process to interface
with a database (which could increase the amount of information
available from a single barcode). The entire process will be carefully
considered to determine the impact on the Postal Service and the
customer.

Jim Wilson addressed NCOA^LINK^ noting that the Postal Service Executive
Committee was briefed on June 16. A Federal Register announcement was
published on July 1 that explains the program, lists various products
and pricing, and sets forth timing of the various steps in the process
of replacing the old system. NCOA^LINK^ will be activated on October 1,
2003 and finalized licenses should be available by September 1, 2003.
Additional information on the NCOA^LINK^ Product can be found at
[http://ribbs.usps.gov](http://ribbs.usps.gov/) under the NCOALink tab.

A list of the membership in the Mail Technology Strategy Council was
requested and it is provided as follows:

**U.S. Postal Service**

**Mail Technology Strategy Council**

Judith Auslander, Ph.D. Senior Fellow, Advanced Concepts and Technology,
Pitney Bowes

Nick Barranca Vice President, Product Development, USPS

Maynard Benjamin President, Envelope Manufacturers Association

Charles Bravo Senior Vice President, Intelligent Mail and Address
Quality, USPS

Tom Day Vice President, Engineering, USPS

Craig K. Harmon President, Q.E.D. Systems

John Jackson Program Coordinator, Envelope Product Development,
International Paper

J P Leon Vice President, Advanced Technology, Stamps.com

Dr. David F. McQueeney Vice President, Technology, IBM Global Services

Robert Otto Vice President, Chief Technology Officer, USPS

Dr. Michael H. Scholla Senior Consultant - Medical Packaging & Fabrics,
Dupont

Joshua Smith Director, Escher Labs, Chief Scientist, Escher Group

Michael Smith Group Leader, New Ventures, MeadWestvaco

Dr. Howard Taub Director, Printing and Imaging Technologies Program,
Hewlett-Packard Laboratories

Doug Tygar Professor, Computer Science and Information Management,
University of California

Other USPS Participants:

Jeff Freeman Manager, Mail Technology Strategy

Wayne Wilkerson Manager, Postage Technology Management

George Davis Chief Counsel, Corporate Law

George Wright Manager, Finance and Administration Systems

[Click here to view the presentation](../../MTAC0803/MTAC72803.PPT)

**Automated Package Processing System (APPS) Doubles Throughput**

**Tom Day, Vice President**

**Engineering**

The Automated Parcel Processing System (APPS) will replace the small
parcel and bundle sorter (SPBS), which has been in use for more than a
decade. An important difference is a design feature that allows mail to
be recirculated when remote keying is required. The APPS allows OCR and
BCR scanning, and can handle a broader range of mail than existing
equipment -- providing both weight and dimensional data. Scanning can be
done from several sides of the package. It is also more efficient at
"singulating" packages -- ordering them in a single file for scanning.
Throughput is over 9500 pieces per hour (double the previous
capability). Initial deployment to 70 locations is scheduled to begin in
February 2004.

[Click here to view the presentation](../../MTAC0803/APPS.ppt)

**Flats Processing Improvements**

**Tom Day, Vice President**

**Engineering**

There are two enhancements to the AFSM100 under way -- a flat ID code
sort and an automatic tray handling system.

The flat ID code sort is a small (16-inch) module that will add ID tags
to non-barcoded flat mail. The benefits include a reduction of images
sent to the remote encoding centers, a reduction in coding errors, and
substantial savings in labor and associated costs. The USPS Board of
Governors has approved the project, a contract will be awarded by the
end of the fiscal year, initial tests will begin February 2004 and
roll-out is scheduled for completion by February 2005.

The automatic tray handling system collects empty tubs, applies adhesive
labels, and reloads the empty tubs for use, eliminating the need for a
sweeper currently assigned to each sorting machine. It is anticipated
that the contract for this system will be negotiated in September,
deployment will begin in April 2005 and completion is scheduled by July
2007.

[Click here to view the presentation](../../MTAC0803/MTACFICSATHS.ppt)

[Click here to view the video](../../MTAC0803/ATHS%206B.mpg)

**Product Redesign**

**Nick Barranca, VP Product Development**

**Don O'Hara, Manager Product Redesign**

**Bob O'Brien**

The tentative schedule for the next rate increase, in 2006, is
relatively tight, and requires Product Redesign to determine which
proposals can only go forward in that omnibus case and which might be
done before then and without increasing anyone's rates (perhaps as niche
classifications or NSAs). In the near-term, for several proposals that
would take costs out of the system and do not require PRC approval, work
is proceeding on Federal Register Notices of proposed rules.

Since the May MTAC meeting, the Steering Committee has met several times
to discuss next steps, and in July there was a joint meeting of all the
work groups for an update on Redesign activity over the past year,
followed by individual work groups sessions to discuss those proposals
identified as high priority by the Steering Committee and the Postal
Service. The First-Class Mail group looked at shape-based rate
structures and their potential to generate more worksharing of First
Class flats. They also discussed efforts to improve both business reply
mail and remittance mail processes that are underway outside the main
Redesign framework.

The Periodicals workgroup considered a change in the rate structure that
would apply a forwarding fee to each piece forwarded or returned (rather
than the present system of averaging total Periodicals UAA costs across
all Periodicals and recovering these costs through piece & pound rates).
They also discussed cost-based rates, a proposal that will have
different impacts on different Periodicals; it was agreed that work on
this should continue, even though some work group members may in the end
oppose the proposal. Finally, the work groups discussed whether and in
what situations time-sensitive Periodicals might cause additional costs,
agreeing that this should be studied and also recognizing that such a
study would be difficult.

The Standard Mail work group briefly discussed cost-based rates for
flats and simplification of preparation requirements for small mailers,
but gave primary attention to proposals for co-palletization of
Standard, Periodicals, and BPM flats, and, for later implementation, the
co-bundling of these flats.

The Parcels/Bound Printed Matter (BPM) work group looked at the parcel
return service, e-VS for acceptance and verification, "machinable"
containers for small parcels, and co-palletization of BPM catalogs with
Standard Mail and Periodicals. Finally the Address Quality workgroup
reviewed their matrix proposal that would provide incentives for
improved address quality in several dimensions.

Also, the decision to create a separate work group for saturation
Standard Mail was announced.

[Click here to view the presentation](../../MTAC0803/prodrA03.ppt)

[Click here to view the presentation](../../MTAC0803/MTAC%208-6-03.ppt)

**MERLIN Deployment Update**

**John Sadler, Manager**

**Business Mail Acceptance**

The deployment of MERLIN is nearing completion, with 918 of 1,253
machines in place. Full deployment is expected by November 2003. Most of
the early technical issues have been resolved and readability has
stabilized at about 94% for both letter mail and flats. Mail make-up and
accurate payment of metered mail is averaging 99%.

There are several new features on the horizon:

Multi-directional flats feed capability (expected by October)

A new national maintenance database (by September)

A national operations database (by November)

Integration of address accuracy capability (in FY 2004 QTR 1)

and two new features in the planning and development stage:

Carrier route walk sequencing

PARS-Address change service

[Click here to view the
presentation](../../MTAC0803/1105%20am%20MTACAug7.ppt)

**Work Group Updates:**

**Parcel Processing Field Study (WG \# 73)**

The work group started with a site visit to look at the possible
negative effects of excess wrapping material (mainly polywrap) on
equipment operation and scanning efficiency. Unless excess material
(selvage) was excessive, there was no apparent additional jamming or
mail piece damage. There was some evidence that certain wrapping
materials affected scan readability. The work group recommends a
thorough test at multiple sites on various package handling equipment to
quantify the effects of selvage on jamming, damage and scan capability.

[Click here to view the
presentation](../../MTAC0803/805%20am%20Presentation%20to%20Steering%20Committee%20Aug%207-2003.ppt)

**Parcel Delivery Performance Measurement Effectiveness (WG \# 82)**

This new work group (a follow-on to an earlier work group -- DDU Test)
will look at delivery performance measurement with regard to operations
and processes and assess how the data is used to actually improve
performance. Specific issues to be addressed include development of a
manifest quality indicator (comparing actual packages received and
scanned in versus the manifest information), a new methodology for
start-the-clock (since the 8125 will soon be eliminated), and the
relationship of a quality measure and how it is used in service
reporting.

Historical data is being loaded into the Electronic Data Warehouse and
reports should begin to be available in September. One new report will
deal with packages not scanned, which has been an issue with mailers.

[Click here to view the
presentation](../../MTAC0803/825%20am%20MTAC%20Parcel%20Service%20Bob%20Fisher.PPT)

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

This work group has completed developing a set of recommended procedures
for improving specific aspects of flat-size mail -- relating to the
general design and construction of the mail piece, banding and folds,
saddlestitching, cover design and materials, and polywrap. There is also
a glossary included in the recommendations. The work group wanted to
create a set of helpful recommendations that would help the mailer save
time and money, but would not result in new regulations (nor be
presented in such a way that Postal Service employees would interpret
any of the recommendations as in agreement or disagreement with
regulations).

[Click here to view the
presentation](../../MTAC0803/845%20am%20MTAC%20Pres%208-7-03.ppt)

**Flat Mail Preparation Optimization (WG \# 81)**

This new work group (also a follow-on to the Presort Optimization work
group) will focus on procedures, processes and regulations that will be
implemented in the future (such as the APPS). In its first meetings, the
work group addressed a possible 3-digit scheme for flats that would
match mail prep with USPS processing procedures (when two or three
separate 3-digit sorts are internally combined into a single mail sort
process); co-palletization of mixed classes to reduce smaller aggregates
such as bundles and increase the use of pallets; co-packaging of
Standard and Periodical flats (for similar reasons); and addressing
issues related to the roll-out of APPS (including the use of the
pressure-sensitive labels, an optional endorsement line, and improved
package integrity to reduce bundle breakage).

[Click here to view the
presentation](../../MTAC0803/905%20am%20flat_mtac1.ppt)

**Flats Container Development (WG \# 71)**

The work group has evaluated several alternative flat tray designs and
identified issues related to the new designs. One issue especially
important to tray integrity is creating relatively full trays versus
regulatory prep requirements, which involves working with other work
groups (like the Flat Mail Preparation Optimization work group). Tray
contents (less than full trays) can affect stacking and the equipment
use efficiency (partially filled trays can slow the sorting process).

[Click here to view the
presentation](../../MTAC0803/925%20am%20Trayprstn%208.07.03.PPT)

**Enhancing Confirm (WG #80)**

This new work group, a follow-on to an earlier work group on Planet
Code, has established several work teams to look at pre-shipment
notification (regarding start-the-clock accuracy in the absence of the
8125), scan performance (definition, consistency and quality control),
reports enhancement, training (including education, training and a
certification process), and a "futures" group that will look at new uses
for Confirm and Planet Code, the impact of the OneCode Vision, and
potential innovations and enhancements.

[Click here to view the
presentation](../../MTAC0803/945%20am%20MTAC%20Overview_%20Bernstein.ppt)

**Mail Irregularity Feedback (WG \# 55)**

The work group concluded a three-site pilot test that involved 138
reports of 152 mail irregularities. The tests looked at data collection
and data entry, issue tracking and resolution, and the efficiency of
system-to-system data exchange (e.g., between Postal One! and the ISBN).
Work group recommendations will include a focus on education, training
and communications; development of a resolution interface for the BMEU,
and an automated data interface with the ISBN. Current issues to be
resolved include how to identify the mail owner versus mail preparer
(since permits are the key connection), who to notify, and how to
coordinate resolution efforts within the Postal Service structure. An
expanded test will begin in October, with implementation of the system
in February 2004.

[Click here to view the
presentation](../../MTAC0803/1025%20am%20Aug%207%20MTAC.ppt)

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

The work group has assessed the process by which mailers may request
specific delivery dates (or time windows) for time- and event-sensitive
advertising mail delivered to a DDU. This is a voluntary service offered
by the Postal Service, which makes every effort to comply with the
mailer's request but cannot guarantee such delivery. There are options
(in the DMM) that allow the mailer to include disposition instructions
in an OEL or by memorandum to the DDU if delivery cannot be made on or
before the requested delivery (to delivery anyway, to dispose of the
mail, etc.) The work group developed an alternative and more efficient
method for providing the instructions. A full description will be
included in an upcoming Postal Bulletin and in the Mailer's Companion.

[Click here to view the
presentation](../../MTAC0803/1045%20am%20MTAC_08_07_03_inhome_del_2003.pps)

**First-Class Business Mail Measurement System (WG \# 83)**

Since EXFC does not measure presorted First-Class Business Mail, this
new work group will develop a proposal for an inexpensive, statistically
valid service measurement system for that mail that will be acceptable
to the Postal Service and mailers, with reports published monthly (with
weekly updates). In the near future a detailed task list will be
developed. It will involve working with the Confirm work group (WG \#
80).

[Click here to view the
presentation](../../MTAC0803/1125amWorkgroup%2083.ppt)

**MAILER'S TECHNICAL ADVISORY COMMITTEE (MTAC)**

**MEMBERS' SURVEY -- RESULTS & RECOMMENDATIONS:**

**[BACKGROUND]{.underline}**

Two previous surveys of MTAC members were taken in 2001 and 2002 to
better understand membership needs and to identify actions needed to
better achieve MTAC's purpose "...to share technical information, advice
recommendations on matters concerning mail-related products and services
in order to enhance customer value and expand the use of these products
and services for mutual benefit." In continuing efforts to evaluate
program effectiveness, as well as the effectiveness of enhancements
implemented as a result of membership responses in previous years, a
2003 MTAC Program Survey was conducted in July.

**[SURVEY RESPONDENTS]{.underline}**

A total of 72 responses were received via mail.

**[SUMMARY OF FINDINGS AND OBSERVATIONS]{.underline}**

Survey questions were developed to focus primarily on three main areas
of the MTAC Program - Mission and Purpose, Process and Implementation
(Workgroups), and Program Communication and Information Distribution.

**Mission and Purpose:**

-   92% of the respondents indicated their agreement that MTAC is
    effective in identifying issues of mutual interest and importance to
    the USPS and the mailing industry.

-   68% of the respondents agreed that detailed minutes of MTAC General
    Sessions are essential.

-   A majority of the responses received (47%) agreed that Summary
    *[Highlights]{.underline}* of MTAC General Sessions are preferable
    to detailed minutes. However, 29% of respondents

**Mission and Purpose: (continued)**

> disagreed, which may indicate the need to actively increase membership
> awareness of Summary *[Highlights]{.underline}* and/or improve the
> content of the Summary.

**Process and Implementation (Work Groups):**

-   A majority of the responses received (49%) generally agreed that
    MTAC's Steering Committee ensures that the most important
    initiatives are being worked on, while 15% disagreed.

-   68% of respondents agreed that MTAC's Work Groups focus on the
    highest priority issues facing USPS and the mailing industry.

-   A majority of the responses received (40%) generally agreed that the
    process of getting a new Work Group started is about right.

-   The majority of responses received (33%) confirmed that the time
    needed to get a new Work Group started is about right.

-   The majority of responses received (41%) generally agreed that the
    number of Work Groups is about right.

-   51% of respondents agreed that findings and recommendations from
    MTAC's Work Groups are effectively implemented.

### Communication and Information Distribution:

-   Clear majorities of the respondents agreed that MTAC's General
    Session topics provide relevant and timely information (92%), and
    that MTAC news and information is effectively communicated by MTAC
    associations to their members (76%).

-   76% of respondents generally agreed that the "new" MTAC format of
    having all active Work Groups fully report on progress against
    objectives at each General Session is preferable to the old format.

-   A clear majority of respondents (88%) generally agreed that Work
    Group presentations at General Sessions promote valuable and useful
    information. However, 57% generally disagreed that these Work Group
    presentations should be "clustered by subject matter" and offered in
    separate rooms.

-   53% of respondents generally agreed that access to MTAC information
    on the MITS website is easy and convenient, yet 15% disagreed, which
    may indicate the need to review system upgrades options available.

[Click here to view the presentation](../../MTAC0803/survyppt.PPT)

**[RECOMMENDATIONS]{.underline}**

Overall, the collective sense of the responses received would appear to
indicate that the MTAC Program, its established directional reporting
structure, and its Work Group Concept are currently on track and
effective.

However, additional attention to promoting the availability of Summary
*[Highlights]{.underline}* in support of MTAC General Session detailed
minutes, and a review of system upgrade options to MITS is recommended.