The AFCS Ink Jet Canceller (IJC) system will replace the current hub and die canceling mechanism with an ink jet printer. This upgrade provides many benefits: it is more reliable and requires less maintenance; it automates date setting and introduces a time stamp to enhance mailpiece tracking, tracing, and security capabilities; it provides flexibility in the cancellation appearance and content without the need to manufacture, deploy, and inventory new dies for each different cancellation mark, and it creates potential marketing opportunities. The AFCS-IJC contract was awarded in March 2004. In-plant testing is scheduled in December 2004 and first article testing is scheduled for January 2005. Deployment of 1,086 systems will begin in March 2005 and end in March 2006.

d. Business Mail Acceptance

The Postal Service automated the labor-intensive process of evaluating bulk mailing eligibility for work-sharing discounts. The Mailing Evaluation Readability and Lookup INstrument (MERLIN) verifies nearly all mail preparation requirements for both letters and flats. It produces all reports necessary for mailing acceptance and provides the mailer with images of preparation problems to support process improvement. Deployment of the last 105 of 1,203 systems was completed in 2004.

Another innovation is the PostalOne! system, which provides business customers with a single point of electronic access to detailed mailing, payment, quality and other postal and mailing information frequently requested. Migration of the acceptance unit and business reply user functions of the legacy Permit system into the new PostalOne! system was completed in 2004 and migration of accounts from the current Centralized Accounts Payment System to the PostalOne! system was begun.

The Postal Service also continued deploying the PostalOne! transportation management function and the Electronic Verification System. The PostalOne! Transportation Management program has deployed 105 shipping systems into customers' mail production facilities to integrate and align customer and Postal Service business processes more effectively. Under the program, transportation routings are assigned to more than 30 million trays per year.

4. Material Handling

Material handling offers a significant opportunity for technology investments to reduce operating costs through improved productivity and efficiency. Development and production activities during 2004 included equipment for flats, receipt, dispatch, and material transport operations within processing plants.

When mail is ready for dispatch from a processing facility, trays are sleeved, lids are applied to flat tubs, and strapping is applied to secure the mail during transport. The Postal Service has automated these processes. Conversely, when mail arrives at a processing facility, the strapping must be cut, and the sleeves and lids removed to access the mail for processing.

A contract option for flat tub lidding equipment was exercised for an additional 100 units that were deployed in 2004.

Development of prototype flat tub unlidding and mail tray unsleeving technologies have been completed and field-tested for operational reliability. Deployment of the unlidding and unsleeving technology will reduce costs in receiving operations and provide ergonomic benefits.

During 2004 a program was developed to procure and deploy a substantial quantity of dispatch and receipt equipment with integration into existing plant material handling systems. The Integrated Dispatch and Receipt (IDR) program was approved in September 2004. The IDR equipment and systems integration will reduce costs in incoming and outgoing dock operations, as well as receipt and dispatch operations inside processing facilities. Funding was approved in September 2004 to deploy IDR systems to 229 mail processing facilities which is planned for 2005 to 2006.

5. Support Systems for Mail Processing

Current cost-reduction initiatives focus on maintaining critical systems and replacing obsolete ones.

a. Transportation Optimization Planning and Scheduling

Transportation Optimization Planning and Scheduling (TOPS) is a program designed to plan and optimize the transportation network. TOPS will plan the movement of all mail traveling on all modes (contracted and postal). TOPS is designed to perform both long-range and week-to-week transportation optimization planning and analysis. The formulation of the model was completed in 2003 and efforts in 2004 focused on synchronizing the model with the results of the logistics scanning pilot. The first outputs of the long-range planning portion of TOPS became available in October 2004. During 2005 TOPS will provide output to help reduce transportation costs.