# Presentation: 770770

## Service Standards October 2, 2008

**Notes:**
Good Morning I’m Pat Donahoe I would like to welcome the Area and District Management Teams to the first in a series of ‘webinars’ that we will be conducting on the implementation of the new service standards. 

## “Establishment of Modern Service Standards”

By December 20, 2007, in consultation with the PRC for all Market Dominant Products

Various Objectives and Factors to be considered
Value, access, reliability, measurability

Implementation of a Measurement System

- By December 20, 2007, in consultation with the PRC for all Market Dominant Products
- Various Objectives and Factors to be considered
- Value, access, reliability, measurability
- Implementation of a Measurement System

**Law Requirements**

**Service Standards and Targets **

**Notes:**
The Postal Accountability Enhancement Act, of 2006 required the Postal Service to establish “modern service standards” for its newly defined market dominant products.  Market dominant mail was categorized as First-Class Mail, Periodical Mail, Package Service Mail and Standard Mail.  

The law also stipulated that the Postal Service establish its new standards in “consultation” with the PRC and further required that various objectives and factors be considered in the process including value, access, reliability and measurability.

## Service Standard Review Process

- Evaluate existing product origin entry (3-digit to 3-digit) service standards
- Incorporate destination entry guidelines as a new dimension within the standards

**Service Standard Review Process**

**Service Standards and Targets **

**Notes:**
The service standards review process consisted of two components:

A comprehensive review of our existing 3-digit to 3-digit service to ensure our standards accurately reflect today’s reality.

2.  The creation of new destination entry service standards.  Due to continued growth in worksharing, which today has approximately 75% Standard Mail being entered at destination, it was important for us to accurately define service standards.

## Service Standard Business Rules

- Class based, independent of shape
- Integrate origin entry and destination entry standards

**Service Standard Business Rules**

**Service Standards and Targets **

**Notes:**
As a result of the initial review of the old service standards, we identified the need to adjust the rules used to determine the specific destination service standards, many of which had not been reviewed since their inception in the 1970’s.  We developed these rules based on three key guidelines.  These guidelines are the foundation of our new service standards.  

1.  Our new standards are based on network capability. The new standards take into account mail processing time at facilities as well as transit time (transportation) required to move mail between facilities, thus producing a service standard the Postal Service can consistently and reliably achieve.

2.  The service standards will remain at the class level, independent of shape.

3.  In order to keep service standards consistent across the network, products entered at both origin and destination follow similar flows and have the same service standards from the point at which the mail streams merge.

## Estimated Volume Distribution –                 

**All Market Dominant Products**

*Sources: FY2007 ODIS/RPW, and YTD2007 Trend Summaries*

**Service Standards and Targets **

**Notes:**
After implementing the new business rules, approximately 90% of all market dominant products receive a 1-5 day service standard.  Less than 10% of our mail falls within a six to ten day service standard and less than .1% of the mail is greater than an eleven day standard which consist of our off-shore locations.  The higher day ranges for the off-shore points are a result of the logistical challenges of transporting off-shore mail.

## Estimated Volume Distribution –                 All Market Dominant Products

*Sources: FY2007 ODIS/RPW, and YTD2007 Trend Summaries*

**Service Standards and Targets **

**Notes:**
A closer look at the volume distribution shows approximately 75% of all market dominant volume falls within a 1-3 day standard.  This is due to the First-Class Mail end to end standards and the new destination entry standards which have the majority of destination entry volume with a 3-day or less standard. 

## Estimated Volume Distribution –                 

**First-Class Mail**

*Sources: FY2007 ODIS/RPW and FY2007 WebEIS*

**Service Standards and Targets **

**Notes:**
The next series of slides illustrate the volume distribution by mail class.

-FCM Overnight 41.2%
-FCM 2-day 26.4%
-FCM 3-day 32.2%
-FCM 4-5 day 0.3% (represents off-shore) 

## Estimated Volume Distribution –                 Periodicals

*Sources: FY2007 ODIS/RPW, and YTD2007 Trend Summaries*

**Service Standards and Targets **

**Notes:**
This chart illustrates the volume distribution for Periodical Mail.

-PER Overnight 64.7%
-PER 2-day 7.6%
-PER 3-day 13.6%

Approximately 85% of Periodical mail is within a 1-3 day service standard.

## Estimated Volume Distribution –                 Standard Mail

*Sources: FY2007 ODIS/RPW, and YTD2007 Trend Summaries*

**Service Standards and Targets **

**Notes:**
This chart illustrates the volume distribution for Standard Mail.

For Standard Mail, 55% of the volume is within a 2-3 day service standard while approximately 80% of the volume has a 5-day or less service standard.  Higher service standards are a result of mail entered at origin and needing to flow through the entire end to end network.

## Estimated Volume Distribution –                 Package Services

*Sources: FY2007 ODIS/RPW*

**Service Standards and Targets **

**Notes:**
This chart illustrates the volume distribution for Package Services Mail.

-PSVC overnight 5.8%
-PSVC 2-day 37.0%
-PSVC 3-day 29.4%

Approximately 70% of Package Services Mail falls within a 1-3 day service standard. 

## First-Class Mail Flow

**First-Class Mail Flow**

- Origin Entry

- Post

- Office

- Mailer

- Surface/Air

- Transportation

- In

- Home

- 1 - 4 Days

- Origin

- P&DC

- Turnaround O/N

- SCF Service

- Area

- Non- turnaround

- O/N SCF

- Service Area

- ADC

- SCF

- DDU

**Service Standards and Targets **

**Notes:**
As we highlighted a minute ago, the most important component of our new business rules is that they represent our processing and transportation network capabilities.  The next series of slides illustrates the specific flows used to derive the end to end and destination entry service standards for each class.  

This diagram shows the flow of First-Class Mail through the network.  The majority of FCM receives a 1-3 day service standard.  The four and five day standards apply to some off-shore pairs.

## Periodicals Mail Flow

- Origin Entry

- Destination Entry

**Service Standards and Targets **

**Notes:**
This flow illustrates how Periodicals travel through the network.  Periodical flows were defined not only with the need to depict reality, but also with the need to control cost.  This flow allows Periodicals to be merged with FCM (where surface transportation is available) and Standard Mail to eliminate the need to run a redundant network for Periodicals only.  

## Standard Mail Flow

- Origin Entry

- Destination Entry

**Service Standards and Targets **

**Notes:**
As you can see, the Standard Mail flow allows for the use of origin consolidate sites (L009) to achieve economies of scale thus keeping costs down.  In addition, the day of deferability has been included in these calculations.

## Package Services Flow

- Origin Entry

- Destination Entry

**Service Standards and Targets **

**Notes:**
The Package Services flow was designed based on the BMC network.  

## New Destination Entry Service Standards - Domestic

- *   Alaska, Hawaii and Puerto Rico not included
- **  Only applies to Periodicals receiving the DBMC Container rate** **

*****

******

**Service Standards and Targets **

**Notes:**
As the previous slides illustrate, designing service standards based on our network capabilities will allow us to consistently and reliably achieve the standards.

NOTE: Mail qualifies for this service standard if it is entered at the proper facility prior to the applicable CET.

## New Origin Entry Service Standards - Domestic

- * Alaska, Hawaii and Puerto Rico not included

**Service Standards and Targets **

**Notes:**
The resulting end to end standards are very similar to today’s day ranges.  The most significant change is in the day ranges of Periodical mail changing from 1-7 days to 1-9 days. This change was to allow the ability of Standard Mail to merge with Periodical Mail in order to gain economies of scale.  The Package Services day range also changed to 2-8 days from 2-9 days in order to reflect current capabilities within the BMC/ASF network. 

## USPS Operational Changes – Internal

- Establish process for Mail Flow to achieve Service Standards
- Revise Color Code policy
- Revise Mail Condition Reporting System policy
- Update all Mail Processing Operating Plans

**Service Standards and Targets **

**Notes:**
In order to ensure the achievement of Modern Service Standards, changes to internal postal operations were necessary.

We needed to establish consistent standardized mail flows. One policy change, Sort Program Bin Standardization, ensures processing locations use consistent standardized methods to flow mail. Bin Standardization ensures that all special handling bins flows conform across all processing platforms based on subsequent handling operations.

A new program, called Run Plan Generator (RPG) is a software tool that assists processing operations managers in developing efficient scheduling of mail processing equipment. RPG provides benchmarks for assessments of ongoing mail processing operations and allows for adjustments and planning for future volume trends.

For standard mail, our Color Code Policy was revised. Standard mail is now color coded based on entry location and service commitment. The color code delivery commitment stays with the mail until delivered.

Our Mail Condition Reporting System was updated to conform to the new color code policy.  A new category, Delayed Mail Flow, will serve as a process indicator for standard mail performance. Delayed mail flow identifies mail that has not been processed timely in our facilities based on the color code commitment and service standards established for standard mail.

Lastly, all Mail Processing Operating plans were revisited, updated and approved.  This exercise ensured that facilities were able to timely process and dispatch volumes throughout the network to ensure service standard achievement. 	

## Overview of Service Measurement

## Service Measurement Required by Law for all Market-Dominant products

**First Class (Single-Piece and Pre-sort)**
**Periodicals**
**Standard**
**Single-Piece Parcel Post**
**Library Rate**
**Media Mail**
**Bound Printed Matter**
**Special Services **
**Single Piece International**

## Service Measurement...

**Fulfill Regulatory Requirement**
**Leverage Requirements for **
**External customers**
**Internal customers**
**Improve Performance**
**Drive Changes in Internal Processes**
**Drive the Right Behaviors**

## Service Measurement Drivers

**Keep implementation and ongoing support costs low**
**Include as much volume as reasonably possible**
**Encourage use of Intelligent Mail****®**** Barcodes**
**Implement expeditiously, but cautiously**

## Service Measurement Approaches

**External Measurement **
- First-Class (Single-Piece) – EXFC
- Single Piece International – IMMS
**Hybrid Measurement**
- Supplements mail scans from internal Intelligent Mail® system with externally collected data
- First-Class (Pre-sort Letters)
- Periodicals
- Standard
**Internal Measurement**
- End-to-End Parcel Services – DELCON
- Special Services – INDEX

## Current EXFC Design:

463 3-Digit ZIP Code areas tested representing about 74% of total single-piece FC volume
Sample size is approximately 2.7 million pieces per year
Represents wide variety of characteristics designed to represent total FCM  
Panel of approximately 600 senders (droppers) and 13,000 receivers used 
Mail entered in randomly selected collection boxes and mail chutes and received by households and small businesses

- Current EXFC Design:
- 463 3-Digit ZIP Code areas tested representing about 74% of total single-piece FC volume
- Sample size is approximately 2.7 million pieces per year
- Represents wide variety of characteristics designed to represent total FCM
- Panel of approximately 600 senders (droppers) and 13,000 receivers used
- Mail entered in randomly selected collection boxes and mail chutes and received by households and small businesses

## Requirements for Service Measurement Inclusion of Commercial Mail

- Prepare mailings with Intelligent Mail® series of barcodes
- Delivery Confirmation for Parcels
- Media Mail, Parcel Post and Library Mail
- Provide IMTM barcodes with sufficient uniqueness
- Submit electronic documentation
- Schedule dropship appointments (except DDU)
- Mailings must pass verification

## Hybrid Measurement Approach 

- Combine benefits of external measurement and internal systems to produce externally validated service performance measures
- External measurement focuses on validating internal data and on measuring the portion not visible in internal system

- Visible with Intelligent Mail

- Use random sample of live mail with IMBs to calculate service performance results from acceptance to final incoming processing. Use live (non-test) mail received by EXFC receiver panel equipped with barcode reader devices to capture delivery of a sample of mail with IMBs to estimate the delivery adjustment factor for each product and sub-class. Reporter panel or machine scan stops-the-clock.

- External

## First-Class and StandardPresorted Letters & Flats

- Origin Processing

- Destination Processing

- Delivery

- Acceptance

- Transport to Delivery Unit

- Transport to Destination

- Delivery Unit Processing

**Stop-the-Clock**
- External reporters scan IMBC on mail at delivery

- External Measurement System
- External Reporters will scan live mail
- Contractor will calculate last mile service performance factor for each mail class
- Factors combined with IM data to form end-to-end measurement

**First-Class and Standard****Presorted Letters & Flats**

**External **
**Stop-the-Clock**

## Parcel Services

- Retail clerk scans Delivery Confirmation form applied to mailpiece
_**Commercial:**_
- Mailer submits electronic documentation
- Mailer schedules appointment in FAST (Facility Access & Tracking System)
- Appointment arrival time as recorded in FAST will Start-the-Clock
- Machine verification scans
- Similar Checks and Flags as letters and flats

- Plant

**BMEU**

**Dock**

**DMU**

**       **Scan DELCONs upon verification

**Start-the-Clock Triggers:**

**Start-the-Clock Triggers:**

**At retail:  **Clerk scans DELCON

**Parcel Services**

**Notes:**
First-Class Letters and Flat, Standard Letters...