**Highlights**

**Mailers\' Technical Advisory Committee (MTAC)**

**February 4 - 5, 2004**

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

**Benjamin Franklin Room**

**Washington, D.C.**

**First Day**

**Welcome**

**John Wargo, Postal Chair**

**Marty Emery, Postal Vice-Chair**

**Bob O'Brien, Industry Chair**

Bob O'Brien called the meeting to order, and welcomed members and
guests. Marty Emery echoed the welcome and introduced new MTAC members:

Brenda Palmer, Pharmaceutical Care Management Association (PCMA)

Heidi Gioseffi, U.S. Chamber of Commerce

Liz Treanor, National Retail Federation

Steve McKinnon, representing the Saturation Mailers Coalition

Randy Stumbo, representing the Gravure Association of America

Scott Lorenz, representing the Magazine Publishers of America (MPA)

Val Scansaroli, representing the Agricultural Circulation Association

Pat McCarthy, representing the National Association of County Recorders,

> Election Officials and Clerks
>
> Wess Sparkman, representing the National Catholic Development
> Conference
>
> Jack Kirkwood, representing the Recording Industry Association of
> America

John Wargo presented a special recognition to John Cochran, Jr. retiring
and attending his last MTAC meeting after 55 years of service to the
mailing industry -- 45 years with the U.S. Postal Service and 10 years
most recently with MBNA.

**USPS Operations Update, Pat Donahoe, Chief Operating Office and EVP**

Pat Donahoe assured MTAC that efforts to improve service and reduce
costs would continue. Areas of focus during the next year will include
retail service (wait time) and improvement of efficiencies related to
mail acceptance. Cost reductions will include assessment of delivery and
transportation efficiency, and employee health and well being, including
efforts to further reduce work site injuries and vehicular accidents.
Mr. Donahoe, noting a current level of automation of 75%, emphasized the
ultimate goal of full mail automation with an objective for 2004 to
increase delivery point sequencing to 85% and reach 90% by the end of
2005.

**USPS Financial Update, Richard J. Strasser, Jr., Chief Financial
Officer and Executive Vice President**

Richard Strasser provided first quarter results for FY2004 covering the
period October 1 through December 31, 2003. This is the Postal Service's
first quarterly report under its new monthly reporting format.. Net
income was \$1.8 billion, compared to a net income of \$2.3 billion in
the first quarter of 2003. The \$1.8 billion net income was achieved
despite a mail volume decrease of 0.3 percent and revenues 1.0 percent
below last year. Expenses only grew 1.7 percent despite the rising costs
of health benefits, fuel, and a growth of 1.7 million delivery points.
Expense growth was constrained through continuing cost reduction efforts
and complement control. Workhours were 10 million less than last year
and career complement decreased by over 8,000 employees since the end of
FY 2003. The first quarter results are summarized below:

Gross revenue \$18.2 billion

Total expenses [16.4 billion]{.underline}

Net income 1.8 billion

[Please click here to view the
presentation](../../MTAC0204/Rich%20Sstrasser%201235.ppt)

**Marketing Update \--Anita Bizzotto, Chief Marketing Officer and SVP**

New "Stuff" from the Postal Service:

-   Customized Market Mail to increase direct mail response rates

-   Parcel Return Service taps into the expanding Internet and mail
    order market

-   Co-palletization to eliminate the use of sacks

-   Pre-paid Priority Mail envelopes

-   The "Mili-pac" makes it easier to mail to military personnel

Ease of Use Services:

-   Customer Connect -- carriers tell customers about services to
    increase business

-   Free Next-Day Carrier Pick-Up of packages arranged by e-mail

-   USPS.com -- web traffic up 38%, online sales up over 120%

-   Customer Gateway -- offers large customers customized communications

Outreach:

-   The Executive Mail Center Manager training program, an intense
    one-week course to help customers manage their own mail centers

-   Direct Mail Made Easy, an inexpensive short course for small and
    medium-sized customers (2,800 took the course last year)

-   Expansion and improvement of the Postal Customer Councils

-   Mailing equipment and service vendors visit selected retail sites to
    talk to customers about improving mailing operations

-   Professional certificate programs in various specialties (mail
    center professional, mail piece design, mail center safety and
    periodicals)

-   Customer training programs on Merlin, periodical mailing and
    periodical design

[Please click here to view the
presentation](../../MTAC0204/Anita%20115pm.ppt)

**Corporate Automation Plan -- Phase 2, John Rapp, SVP Operations**

John Rapp reviewed the history of automation since the first corporate
automation plan (CAP) was published in 1989, a plan that focused on
letters, flats and packages. Letter automation was very successful,
leading to the current level of 75% of letter mail being sorted to
delivery point sequence.

CAP Phase 2 will provide a "roadmap" to implement automation and
identify opportunities and future plans for realizing automation's
potential. CAP Phase 2 continues to include improvements in automation
of letters, flats and parcels, as well as bundles, trays and containers
processing, and automation related to delivery, transportation, tracking
and scanning. The new PARS and APPS equipment will play an important
role, as will improved image processing software and equipment, use of
MERLIN and the development of the Intelligent Barcode.

Finally, the plan includes potential enhancements to Delivery
Confirmation and CONFIRM that Intelligent Mail strategies could bring
about. CAP Phase 2 includes longer term plans to expand the reach of
automation to include the delivery function through research and
development of the potential for delivery point packaging (DPP) and
flats sequencing system (FSS).

[Please click here to view the
presentation](../../MTAC0204/John%20rapp%20200pm.PPT)

**Hill Response Briefing, Linda Kingsley, Vice President, Strategic
Planning**

The Postal Service has developed a plan providing rationale for future
capital management and investment in response to a Congressional
request. It includes a discussion of the current uncertain operating
environment that has seen declining volumes, and increasing demand for
delivery points, an increase in work sharing that has changed the
profile of mail acceptance, and uncertainty in developing reliable
forecasts (because of the impact of the Internet, electronic
transactions, terrorism and the need for preparedness and response). The
sources of funds includes limited borrowing (restricted by regulation),
deferment of facilities renewal, and sale of some assets. But the major
source of capital comes from depreciation. The report also discussed the
Postal Service's successful cost reduction program, improvements in
productivity, reduction in work force, and standardization of processes.
The report commits to achieving a billion dollars in savings, improved
service levels, and generation of funds through traditional means. It
states that the escrow should not be changed. The report will be made
public when the Congress receives it and indicates a final disposition.

[Please click here to view the
presentation](../../MTAC0204/300%20linda.ppt)

**New MTAC Work Group**

**Consistency of Mailing Standards and Business Mail Acceptance (WG
#86)**

**Michele Denny, Sherry Freda and Sue Taylor**

A new MTAC work group was announced which will look at the Postal
Service goal of providing consistent interpretation and application of
mailing standards and business mail acceptance procedures. The first
meeting is scheduled for February 25 and interested individuals are
invited to join.

**MERLIN -- John Sadler, Manager, Business Mail Acceptance**

John Sadler reported that Merlin has been fully deployed. Overall
barcode readability is about 94% (99% of the 35,000 mailings tested in
the last few weeks have passed). In those tests there have been 22
instances of the use of 0000, which is not a valid code and does not
exist in the address management database, and 17 instances of the
improper use of 9999 for general delivery. A new MTAC work group will be
formed with regard to Phase 2 that will allow a sufficient forum for
discussion of the next issue, fineness of depth of code.

[Please click here to view the
presentation](../../MTAC0204/sadler%20340.ppt)

***PostalOne!~®~* Postage Payment and Statements (WG #84) -- Approach
and Design, Dan Minnick and Larry Goodman**

Larry Goodman reported that *PostalOne!* is on schedule, trainers are
being qualified, three districts will move from the legacy permits to
the *PostalOne!* System (mid-June release will allow national
transformation to the new permit system). The *PostalOne!* Web service
allows one application to communicate (exchange data) with another,
supporting submission of postage statements and other postal
documentation that supports verification, acceptance, payment and
induction processes in the business mail area. The Web service will be
tested through June.

The work group's mission is to support the Postal Service in developing
strategies, activities and processes to achieve *complete* support of
electronic postage payment statement and payment processing for *all*
classes of mail. This includes electronic systems that will effectively
supplant processes that previously required human effort.

[Please click here to view the
presentation](../../MTAC0204/postal%201%20355.ppt)

**First-Class Business Mail Measurement System (WG# 83), Ken Metroff and
Maryellen Clarke**

There is now a requirements document that specifies that mailers will be
certified to enter mail, which will then be scanned for start- and
stop-the-clock data, which will pass through a quality control process
to insure that the data is valid, after which valid data will go to the
"clean" database for construction of reports. Problem data will go to
the mailer and USPS for resolution.

[Please click here to view the
presentation](../../MTAC0204/414%20ken.ppt)

**Parcel Delivery Performance Measurement Effectiveness (WG #82), Chris
Finley and Bob Fisher**

This work group suspended work during the peak mailing season, and will
resume with a meeting on February 24^th^ to consider available reports,
quality metrics, start-the-clock process and communications.

[Please click here to view the
presentation](../../MTAC0204/435%20bob.PPT)

**Second Day**

**Mail Technology Study Report, Jeff Freeman, Manager, Mail Technology
Strategy**

The Mail Technology Study sought to identify industry capabilities
related to printing intelligent barcodes. The survey indicated that 85%
of respondents believed that the intelligent mail technology would be
beneficial. About 63% of mailers used barcode printing equipment (mainly
inkjet) capable of 300 dpi (many use 240 dpi equipment for high speed
printing) and most print PostNet codes, a capability compatible with the
4-state barcode.

[Please click here to view the presentation](../../MTAC0204/805day2.ppt)

**Intelligent Mail and Address Quality (IMAQ), Gary Reblin, Manager**

**and Jan Caldwell, Manager, Address Quality**

Gary Reblin discussed the technology approach to achieving the ability
to handle the sophisticated 2D barcode. Although currently a challenge
for most commercial mailers, beginning with the 4-state barcode provides
the first step in reaching that objective. Technology will focus on
improved readability of both barcodes and development of an AFCS-IBI
detection device that can handle the red ink on metered mail. This
should lead to an enhanced ability to read the information-rich 2D
barcode. Letter sorting equipment contractors will upgrade readers to
handle the 4-state code. The new Flats ID Code Sorter and the Planet ACS
Program, which will be integrated with PARS equipment, will contribute
to the effort to handle automatic routing of undeliverable as addressed
(UAA) and forwarded mail. Once available throughout the system, all
UAA/forwarded mail will be routed to automatic routing equipment located
at each site, which will provide an electronic notice back to the
mailer.

[Please click here to view the presentation](../../MTAC0204/835day2.ppt)

**Product Redesign, Nick Barranca, Vice President, Product Development**

**Don O'Hara, Manager and Bob O'Brien**

Don O'Hara focused his comments on cost-based rate structures. An
initiative that does not require Postal Rate Commission (PRC) review
includes a proposal to raise the Standard Mail 5-digit bundle
requirement to 15 for pieces not greater than 5 ounces and thickness not
greater than ¾-inch (for flats that are ASM 100-compatible). Issues that
would require PRC review include retention of current weight limitations
(for ergonomic reasons), a lower limit on bundle size (since a very
light two-piece bundle might actually increase handling costs); and a
limit on how much "inefficient" preparation a mailer is allowed (e.g., a
mailer might be willing to pay for a prep -- like a 10-piece sack --
that could result in significant and costly handling situations).
Concerning the change to a cost-based pricing structure, mailers have
traditionally put bundles together, and then looked for the proper sack
or pallet. In the new environment, the first question is what container
is most appropriate for the way the mail will be processed; then pieces
are put together to match the container requirements.

[Please click here to view the
presentation](../../MTAC0204/day%20202-05-04%20905.ppt)

**Flat Mail Preparation Optimization (WG \# 81), Joe Lubenow and Tony
Mazzei**

The work group met to hear presentations on a number of presort ideas as
follows:

-   A simplified mail preparation proposal related to the AFSM 100
    (mailers could "soften" the bundling to reduce handling at the
    equipment, reduce the amount of strapping, avoiding shrink-wrapping
    and counter-stacking)

-   High editorial content publications, a niche classification that
    pertains to palletization in lieu of sacks, with a weight limit of
    at least nine ounces with no more than 15% advertising, with a limit
    on circulation.

-   Placing carrier route mail on the bottom of the pallet and other
    flats on top, separated by a slip sheet.

-   Optional endorsement lines (OELs) based on a 30-character line, with
    inclusion of APPS information and ACS codes.

[Please click here to view the
presentation](../../MTAC0204/day%202%20955.ppt)

**Enhancing Confirm (WG \# 80), Martin Bernstein and Paul Bakshi**

Martin Bernstein reported that new reports initiated in November 2003,
have been enhanced in response to a number of issues noted by users,
including faster access to reports (less than 3 minutes). CONFIRM has
been modified to allow update of all elements of pre-shipment
notification. There is a draft web-based training program that should be
available in the spring \-- two sessions covering Confirm service
performance and mail tracking reports, and Confirm quality and
diagnostics reports.

[Please click here to view the
presentation](../../MTAC0204/day%202%201015.ppt)

**Mail Irregularity Feedback (WG \# 55), Pat Killeen and Susan Redman**

Pilot tests have revealed mail irregularities are mainly in the bundle
package area -- 479 reports were routed to BMEUs for resolution and 60%
were successfully resolved (usually by conferring with the mailer). Most
of those not resolved failed because the mail entry point could not be
ascertained. The work group has effected an improved data entry
interface and a revamped resolution for the BMEUs and a better interface
between Postal One! and the iBSNs. Full deployment is anticipated in
June 2004.

[Please click here to view the
presentation](../../MTAC0204/day2%201035.ppt)