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APPENDIX — TRANSFORMATION STRATEGIES AND SUBSTRATEGIES

blank In Progress/Under Development1 Completed2 Discontinued/ Suspended3
2.1 FOSTER GROWTH THROUGH CUSTOMER VALUE
(Some Growth through the Customer Value strategies listed in the 2002 Plan have been consolidated with other strategies as noted)
2.1.1 RETAIL: EXPAND ACCESS TO POSTAL SERVICES
1. Move Simple Transactions Out of Post Offices
(Now called "Move Simple Transactions Away From the Retail Counter; Increase Household Access to USPS Products and Services")
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• Communications on alternative services

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2. Create New, Low-Cost Retail Alternatives X blank blank

• Expand self-service

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• New functionality for www.usps.com

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• Retail Partnerships

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• Product simplification
(See Design Rates and Mail Preparation)

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• Leverage commercially-developed innovations

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3. Optimize the Retail Network X blank blank
4. Develop New Retail Services that Increase Customer Value and Postal Revenue X blank blank

• Government and other services

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• Leverage retail assets

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• Complementary retail products

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2.1.2 PRODUCTS AND SERVICES: IMPROVE VALUE AND GROWTH
1. Use Technology to Enhance Value X blank blank

• Identify and track mail pieces

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• Use technology to improve the response mechanism

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• Use technology to improve the access, speed, and reliability of accountable mail services

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• Intelligent Mail

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2. Design Rates and Mail Preparation to Match Customer Capabilities and Needs X blank blank

• Simplify the rate structure, preparation, and acceptance requirements in accordance with differing customer needs

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• Simplify the rate structure for mailing books and parcels from nine rates to two rates

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3. Position Mail as a Key Communications and Customer Relationship Management (CRM) Tool blank X blank

• Adopt optimal channel strategies to improve access to postal products and services

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4. Enhance Package Services X blank blank

• Merchandise return — Implement acceptance scanning of return parcels

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• Online postage label application — Design and implement online postage label for mailing packages

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• New parcel categories — Make it easier for customers to mail with the Postal Service by reducing the number of mail categories, rate structures, and confusing requirements

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5. Map Channel Strategies Around Customer Needs, Contribution, and Growth Potential X blank blank
6. Develop New Features and Services X blank blank
7. Leverage Existing Assets
(Incorporated into Retail: Expand Access; Enhance Package Services; and Develop New Features and Services)
8. Promote Greater Ease-of-Use
(Incorporated into Develop a Corporate Pricing Plan)
9. Make rules and regulations more market-responsive

• Improve access to and ease-of-use of postal products and services as a way to build additional customer loyalty and penetrate new markets

(Incorporated throughout other Growth Through Value strategies)
10. Develop a Corporate Pricing Plan X blank blank
11. Generate New Revenue for the Postal Service by Retaining and Increasing International Market Share X blank blank
2.2 INCREASE OPERATIONAL EFFICIENCY
1. Enhance Already Efficient Letter Processing X blank blank

• Deploy Postal Automated Redirection System (PARS)

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2. Complete Automation of Flats Processing X blank blank

• Complete deployment of Automated Flat Sorting Machine (AFSM) 100

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• Install automated flat feed and optical character reader (AFF/OCR) modifications on Upgraded Flat Sorting Machine (UFSM) 1000

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• Deploy Automatic Tray Handling System (ATHS) for AFSM 100

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• Deploy ATHS for UFSM 1000

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• Deploy semiautomatic tray take-away mechanism on the UFSM 1000

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• Deploy Flats Remote Encoding System (FRES)

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3. Expand Mechanization of Material Handling Operations X blank blank

• Deploy low cost tray sorters

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• Develop universal tray system

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4. Improve Delivery Efficiency X blank blank

• Delivery point sequence of flat mail

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• Delivery point packaging (DPP)

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• Deploy delivery operations information systems

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• Deploy managed service points

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• Delivery performance achievement and recognition system (DPARS)

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• Improve rural delivery

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• Carrier optimal routing

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• Segway Human Transporter

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5. Deploy Next Generation Package Sorting Equipment X blank blank

• Deploy Singulate, Scan, Induction Unit (SSIU)

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• Deploy Automated Package Processing Systems (APPS)

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6. Optimize Transportation and Distribution Networks X blank blank

• Deploy surface air management system

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• Develop transportation optimization planning and scheduling (TOPS)

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• Deploy surface air support system (SASS)

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• Develop transportation contract support system (TCSS)

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• Increase utilization of mail transport equipment (MTE)

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• Evolutionary Network Development (END)

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7. Increase Retail and Customer Service Productivity X blank blank

• Retail/customer service productivity improvement

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• Facility design changes

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8. Improve Performance Management blank X blank

• Area mail processing consolidation

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• Other direct labor reviews and standardization

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• Priority Mail standardization

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• Implement Complement Planning, Tracking, and Management (CPTM)
(Incorporated into Performance-Based Culture strategies)

9. Manage Realty Assets X blank blank

• Postal Service properties for sale/development

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• Short-term leasing
(Incorporated throughout other Manage Realty Assets strategies)

• Developmental leasing
(Incorporated throughout other Manage Realty Assets strategies)

• Developmental added value properties
(Incorporated throughout other Manage Realty Assets strategies)

• Other programs
(Incorporated throughout other Manage Realty Assets strategies)

• Space to be outleased

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10. International Air Transportation Deregulation X blank blank
2.3 MOVE TOWARD A PERFORMANCE-BASED CULTURE
1. Retain and Recruit Quality Employees X blank blank

• Retain employees with skills critical to the success of the Postal Service

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• Concentrate recruitment efforts on bringing talent, skills, and experience from within the organization and from the outside labor market to address potential loss of Postal Service leadership

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2. Develop Future Leaders
(Now called "Develop Current and Future Leaders")
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3. Ensure Training and Development X blank blank

• Maximize available training and development programs in order to have a pool of potential successors at all levels of the organization

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• Implement more technology-based training solutions

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• Secure/develop a learning management system utilizing current legacy systems to coordinate administration, scheduling, tracking, assessment, and testing of learners in both classroom and e-learning settings

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4. Create a Performance-Based Pay System blank X blank
5. Build a Highly Effective and Motivated Workforce X blank blank

• Use existing programs and measures to create managerial accountability

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• Organize the most predictive workplace data into proactive information for use by the districts and areas to create proactive interventions

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6. Improve Labor/Management Relations X blank blank

• Expand various joint employee involvement and quality of work life initiatives with labor unions. Develop and provide contract administration and labor/management training to both management and bargaining unit employees

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• Postal Service employee and management leadership participation in joint initiatives

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• Development and expansion of Joint Contract Administration Handbooks and Manuals

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• Development and expansion of alternatives to traditional discipline and dispute resolution methods

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7. Improve Workforce Planning X blank blank
8. Expand Shared Services and Explore Outsourcing X blank blank

• Expand Use of Shared Services
(Now called "Accounting Shared Services," Shared Services/Accounting is ongoing)

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(Shared Services/Human Resources is in progress.) X blank blank

• Implement those outsourcing initiatives which have the potential to: increase service and quality levels; better utilize resources; reduce costs; allow greater emphasis on the Postal Services core business

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9. Improve the Collective Bargaining Interest Arbitration Process X blank blank
10. Reduce Workers' Compensation Costs X blank blank

• Expand the Preferred Provider Organization Program with First Health and Office of Workers' Compensation Programs

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• Move all Federal Employees' Compensation Act recipients to FECA annuity at age 65

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• Encourage the Office of Workers' Compensation Programs to revise current regulations to allow for direct contact with the treating physician by the employing agency

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• Private sector outplacement of injured Postal Service employees and the creation of new internal positions to accommodate injured workers

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• Interagency work cooperation to attain organizational objectives

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2.4 ENABLING STRATEGIES
2.4.1 ENHANCE FINANCIAL MANAGEMENT
1. Reduce outstanding debt blank X blank

• Preserve liquidity while managing interest expense

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• Incurring debt for high return capital investments only

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2. Enhance reporting transparency blank X blank

• Monthly reporting — Converting from accounting period reporting to monthly and calendar quarter reporting

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3. Finance delivery network expansion on current basis and explore alternative investments for deferred retirement liabilities blank X blank
2.4.2 EXPAND USE OF SUPPLY CHAIN MANAGEMENT

• Focus Postal Service resources on lowering overall cost and furthering competitive and business objectives

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• Consolidate purchases for better quality and lower cost

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2.4.3 STRATEGICALLY APPLY TECHNOLOGY

Intelligent Mail
(Incorporated into Growth Through Value, Use Technology to Enhance Value)

Enhance security across all technology
Enhance security across postal technologies to avoid disruption in critical operations and protect sensitive information from unauthorized disclosure or modification X blank blank

• Education and training

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• Certification process

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• Contingency planning

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• Intrusion protection

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• Automated monitoring

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Upgrade the infrastructure
Leverage technological advances and business partnerships to upgrade and leverage the infrastructure X blank blank

• Upgrade distributed computing infrastructure

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• Upgrade mainframe computing infrastructure

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• Upgrade midrange computing infrastructure

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• Technical shared services

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• Corporate shared services

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Provide universal computing connectivity
Expand core/backbone, wide area network, and local area networks to provide universal computing connectivity X blank blank

• Consolidate voice, data, and video network

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• Wireless technology

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2.4.4 ENHANCE THE SAFETY, SECURITY, AND PRIVACY OF THE MAIL
POSTAL INSPECTION SERVICE — SAFETY

• Ensure a safe, secure, and drug-free work environment

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• Reduce and deter employee-on-employee assaults and credible threats

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• Deter robberies of postal employees and facilities

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• Reduce and deter illegal drugs in the postal environment

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POSTAL INSPECTION SERVICE - SECURITY

• Reduce theft of mail

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• Reduce and deter attacks on postal vehicles, apartment panels, collection boxes, neighborhood delivery collection box units, and collection box units

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• Identify and resolve domestic and international in-transit mail theft

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• Reduce and deter mail theft-related identity theft and identity takeover crimes

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• Reduce and deter criminal attack of postal products, services, and assets

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• Reduce and deter embezzlements

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• Reduce and deter criminal misuse of the Postal Service's workers' compensation program and reduce long-term compensation cost

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• Reduce and deter postage fraud schemes

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• Ensure sanctity and security of U.S. Mail

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• Assist postal management in the deployment and implementation of new safety and security procedures and technology

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POSTAL INSPECTION SERVICE - INTEGRITY

• Reduce the use of the mail to defraud consumers, businesses and government agencies

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• Reduce and deter the use of the U.S. Mail for the procurement or delivery of materials that promote the sexual exploitation of children

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• Reduce and deter the use of the postal system for prohibited, illegal, and dangerous mailings

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• Reduce and deter multi-state domestic and international telemarketing operations and direct mail operations

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• Reduce and deter deceptive mailing operations

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• Reduce and deter the use of the nation's mail system by organized groups to transport illegal narcotics

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• Reduce and deter use of U.S. postal money orders to launder money by disrupting money laundering operations

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PRIVACY

• Standardize privacy policies and processes

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• Streamline compliance procedures to reduce costs and increase productivity by saving time

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• Work with internal and external groups to ensure that privacy is built into data-oriented initiatives

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2.5 SEEK MODERATE REGULATORY AND LEGISLATIVE REFORMS
(Progress on these reform initiatives is contained throughout this report.)
1. Seek the maximum flexibility consistent with the current rate-making process X blank blank

• Negotiated Service Agreements

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• Targeted Pricing Incentives

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• Experimental Classification

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• Phased Rates

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2. Rationalize Retail Network Facilities X blank blank
3. Modernize Purchasing Procedures X blank blank
4. Reform Labor and Employment Provisions X blank blank

• Impasse Resolution

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• Salary Cap

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1 In Progress / Under Development - Initiative is in the process of being implemented.

2 Completed - Item complete. Strategy integrated into business processes.

3 Discontinued / Suspended - Initiative determined to be infeasible or not viable. No further action to be taken at this time.