III. Operating for success in FY2013

Standardization and Network Optimization

Transition from POSTNET barcode to the Intelligent Mail barcode (IMb). On January 28, 2013, the POSTNET barcode was retired and mailers were required to use the Intelligent Mail barcode (IMb) on their business mail in order to claim automation postage rates. The conversion from POSTNET to IMb set the foundation for mailers to participate in the Full Service Intelligent Mail option.

Unique barcoding coupled with data reporting requirements of the Full Service program provide the Postal Service with 100 percent visibility into the mailstream. Using the Full Service IMb information, a suite of service performance diagnostic tools was developed for use by Field Managers to analyze and improve service performance. These tools leverage the information provided by Full Service IMb. The suite of reports includes Mail Processing — Work in Process, Scorecard, Top 10 Impacts and Start-the-Clock Day of Week Analysis. Also daily and weekly push reports focused on Containers at Risk, Daily Commercial Mail Scores and Network Rationalization.

The service performance diagnostic tools provided Field Managers with timely and meaningful information on potential service impacts; allowing corrective action to be taken proactively eliminating a potential service failure. The ability to see diagnostic data in near-real-time supported ongoing efforts to improve mail processing throughput allowing USPS to discover systemic issues and bottlenecks in processes that led to permanent resolutions. For example, Field Managers were able to measure and then reduce cycle time to consistently meet service targets. In addition, through container and individual mailpiece scans, Field Managers gained visibility into the elapsed time between each operational step in the process. As a result, incorrect mail flows and mishandlings were identified and corrected.

Diagnostic reports allowed mailers to uncover mail or documentation issues, which, when resolved, facilitated service improvements for their mail. Through the Full Service option, mailers have access to (1) the lowest automation rates, (2) address correction for Full Service mailpieces and (3) visibility into their own mailings. The IMb Planning Tool, available on the Rapid Information Bulletin Board System (RIBBS), shows mailers, by induction facility, how many days it takes to accept, process and deliver their mail. It also explains service variance, allowing mailers to track on-time delivery performance and see the elapsed duration (in hours) between entry time and the first automated scan. Mailers use this IMb information to better manage their customer expectations about when the mail should be delivered and make informed marketing, financial and operational decisions.

Full Service adoption increased in FY2013. Out of the 90 percent of IMb volume that is potentially eligible for participation in Full Service, 65 percent is Full Service as of September 2013 compared with 50 percent in October 2012. Among the major mail products, Standard Mail Letters experienced the highest increase in adoption rate (15 percent) in FY2013 from 42 percent to 57 percent. Full Service adoption continues to be the highest for Presorted First-Class Mail, increasing by 10 percent in FY2013 from 62 percent to 72 percent. The Full Service Standard Mail Flats increased by 11 percent, from 41 percent to 52 percent. Full Service Periodicals increased by 8 percent, from 60 percent to 68 percent.

Through use of the Service Performance Diagnostic tool, USPS achieved continuous improvement in service performance. Commercial Mail service scores at the end of Fiscal Year 2013 for First-Class Mail were: Overnight, 97.2 percent; 2-Day, 97.0 percent and 3-to-5 Day, 95.1 percent. Standard Mail Destination Entry stood at 88.8 percent, with Standard Mail End-to-End at 63.3 percent. Periodicals ended the year at 82.0 percent.

Network Realignment. The Postal Service continued to consolidate its mail processing network in 2013 due to declining mail volume and the financial challenges it faces. At the end of 2012, the number of processing facilities was at 417. Minimal consolidation activity was scheduled during the peak political mailing and fall holiday seasons. Consolidations began again in January 2013. In 2013, we consolidated 143 mail processing operations from certain facilities into other facilities. These consolidations allowed us to close 97 mail processing facilities and left the total number of processing facilities in the Postal network at 320. The remaining 46 of the facilities consolidated in 2013 are still conducting processing operations but at a reduced level. These changes to our Postal network have been accomplished while maintaining a high level of service for our customers.