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Memo to Mailers
Mar 2002


Reflecting Customer Needs
After a period of proposal development, the Postal Service's Product Redesign project is moving toward its market research and cost analysis stage in preparation for a tentative spring 2003 rate case filing with the Postal Rate Commission. Why is this effort being undertaken now?
The time is right, says Chief Marketing Officer Anita Bizzotto. A lot has changed since the Classification Reform program of the mid-1990s. This new Product Redesign effort is aimed at modifying Postal Service products to reflect changes in customer needs and capabilities, changes in the Postal Service operating environment, and changes in the type and intensity of competition faced by USPS and its customers.
"We are looking at needs and capabilities across the whole spectrum of customers," says Don O'Hara, manager of Product Redesign.
With input from mailing industry workgroups, the Product Redesign project in the past months has focused on developing and refining proposals. The operating principle for the workgroups is to provide a process that allows all USPS and customers' views to be considered equally and fairly.
The workgroups have five key goals: to develop flexible cost-based presort, preparation and entry; to define additional work-sharing opportunities; to improve USPS value (price and service) to customers; to drive costs out of the system through incentive-based mailing practices; and to have prices and products that generate growth in volume and contribution.
The Postal Service believes there are major Product Redesign opportunities in flats processing. O'Hara says, "We'd like to replicate the letter automation success story with flats - reducing both customer preparation costs and Postal Service processing costs.
"A key theme that is coming into focus is the need to recognize the enormous diversity in the needs and capabilities of our commercial customers," says O'Hara. "A 'one-size-fits-all' approach doesn't do the job anymore."
O'Hara says small customers need preparation options that are simpler. At the other end of the spectrum, mail-intensive customers can do more to take costs out of the system. "For both types of customers, the wider range of options should increase the net value that mail provides," he says.
For mail-intensive customers, the current rate structure is focused on reducing USPS piece-handling costs by providing detailed incentives for mailer barcoding and presorting. "In contrast," says O'Hara, "incentives for mailer preparation that reduce our bundle- and container-handling costs are limited, indirect and inflexible. We're looking at various ways to give mailers direct incentives in this area."
Also, says O'Hara, for businesses that do not now use mail systematically to communicate with existing and prospective customers, the simpler options will make it easier to begin doing so, contributing to long-run volume growth.
O'Hara says packages are another area where customers' needs have changed. "For households, and also for business mailers of small packages, we need to make our package offerings simpler and easier to use," he says.
The goal is to implement Product Redesign by May 2004, adds O'Hara.

Despite the difficulties of recent months, "we've kept our eye on service and the bottom line while continuing to add to our delivery network," says Robert Rider, chairman of the Postal Service Board of Governors.
Rider and Postmaster General John E. Potter, addressing a February board meeting, both praised cost-cutting efforts that have led to a 33 million workhour reduction in the first five months of the fiscal year and reducednumber of career employees by 5,600 - that number is growing steadily.
Reinforcing Rider's comment, the PMG said management "remains focused on costs and service" and noted two operational success stories - the Automated Flat Sorting Machine (AFSM) 100 and the ongoing Breakthrough Productivity Initiatives (BPI).
"We now have 428 machines operating in 184 locations. One of our long-term goals is to move flats processing - traditionally one of our most labor intensive operations - from a manual-mechanized environment to one that is automated," Potter said.
"These machines are doing that and helping us to capture significant savings."
Nationwide flats productivity in plants has improved by more than 200 pieces per hour compared to last year. USPS is using 700,000 fewer workhours per accounting period at a cost savings of roughly $15 million per accounting period.
While BPI efforts may not have the pizzazz of breakthrough technology like the AFSM, they're just as important, and have helped USPS to achieve savings "on the order of $2.8 billion since we started the program in 2000," Potter added.

Ride-along some more
The Postal Rate Commission's (PRC) decision to extend the "ride-along" experiment is welcomed by the Postal Service's Board of Governors, says Chairman Robert Rider.
The decision means a piece of Standard Mail can continue to ride along with a host periodical. The program, which would have ended Feb. 26, allows periodical mailers to include one ride-along item of up to 3.3 ounces for a flat rate of 10 cents each.
It's an "incredibly efficient" way for periodical publishers to reach readers with special offers, says Rider.
"Mailers save money by not having to independently prepare and enter two separate mailings," he says. "The Postal Service benefits by saving time and effort in processing and delivery. By agreeing that the ride-along experiment can continue through the current rate case, the commission has supported our creation of an environment that makes it easier for mailers to take advantage of our services," Rider said.
The PRC recommended that the Board of Governors continue the program until June 30, when new rates could take effect under a settlement proposal negotiated with major mailers. The rate case proposal would make the ride-along program permanent, with the per-piece cost increasing to 12.4 cents.

Experimental and new postal products
Over the past 24 months, USPS has introduced several new postal products through both the Postal Rate Commission's (PRC) experimental rules and through omnibus rate case proceedings. Several experimental proposals currently are pending before the PRC, including negotiated service agreements, delivery information for Certified/Registered Mail, Delivery Confirmation for First-Class Mail parcels, electronic return receipts, Priority Mail zoned rates, and rate changes for the Priority Mail and Express Mail flat-rate envelope.
The PRC has specific rules for new products that are introduced on an experimental basis or independent of omnibus rate case proceedings. The Postal Service must file testimony and documentation supporting each filing. USPS must present detailed cost and price data for each new product. For more information on proposed USPS products and services, go to http://www.usps.com/ news/2002/press/pr02_0220experimental.htm.

No evidence of anthrax was found after precautionary testing at the South Jersey Processing and Distribution Center in Bellmawr, NJ. The testing was conducted over a two-day period, Feb. 14 and Feb. 15.
Last November, a single trace of anthrax was found in the Bellmawr facility. Since then, no evidence of anthrax has been found at the facility and no worker has been diagnosed with any anthrax-related condition. But at that time, the Postal Service and the American Postal Workers Union, AFL-CIO, agreed that USPS would conduct followup testing there.

Did we mention global discounts?
International parcel shippers, this one's for you. The Postal Service's new Global Package Discount Program will help you better manage your international shipping costs through postage discounts and customized mailings.
The program consists of three parts. First, any postal customer paying for Global Express Mail using an Express Mail Corporate Account (EMCA) will qualify for a discount. Customers will receive a 5 percent discount when they open an EMCA or use it to send Global Express Mail items. The discount applies only to Global Express Mail items. The discount is applied to the customer's total monthly international Global Express Mail items. Customers will now be able to open an EMCA by using a credit card.
Second, larger discounts are available to customers who use an EMCA to mail at least 600 items or spend at least $12,000 in Global Express Mail postage annually. Customers will be able to receive larger discounts by entering into an International Customized Mail (ICM) agreement with the Postal Service. The ICM provides the terms and conditions of the discounts. The size of the discount varies by the customer's volume or revenue and is adjusted each quarter based on the actual volume mailed by the customer during the preceding quarter.
Third, customers who have special needs or very high volumes will be able to customize the service they receive from the Postal Service for all international packages, including Global Express Guaranteed, Global Express Mail, Global Priority Mail and Global Air Parcel Post. Customized services include labeling, customs pre-advise, customs harmonization, providing a landed price for overseas customers and address correction service. Rates and service features for such very high volume customers will be negotiated to meet their unique needs.
For more information about the new Global Package Discount Program, call 1-800-THE-USPS, extension GD2376.

Spring NPF keynote
The big picture
Mailers will have the opportunity to hear first-hand about a history-making effort at postal transformation when Postmaster General John E. Potter delivers his keynote address at the Spring 2002 National Postal Forum (NPF). Potter's appearance will come three weeks after USPS delivers its comprehensive transformation plan to Congress.
"We're trying to create an overall plan for the Postal Service and where we're going in the future," says Potter. "This isn't about a lot of little things - it's about the big picture and where we're going in the long term."
The NPF is being held April 21-24 in San Diego. A registration form is included in this issue of Memo to Mailers.

USPS and Mail Handlers reach tentative agreement
The Postal Service and the National Postal Mail Handlers Union reached a tentative four-year agreement, which now goes to union members for ratification. The agreement provides for general wage increases totaling 5.6 percent over four years. It approximates the wage increases reached in the Goldberg arbitration decision for the American Postal Workers Union, AFL-CIO, announced Dec. 18, 2001. If ratified by the 60,000 mail handlers NPMUH represents, this will be the second negotiated labor agreement between the parties since 1987.

Brought to you…BY USPS!
The great strength of the Postal Service is its ability to bring people together. USPS products and services connect customers to the important people in their lives - friends, family and business customers. Each time the Postal Service delivers a piece of mail, it helps to build relationships. This is the foundation for the Postal Service's newest marketing campaign featuring the tagline, "Brought to you by the United States Postal Service."

Keeping POSTED
News from and for Postal Customer Councils ® www.usps.com/nationalpcc
2001 PCC Award Winners
The PCC Advisory Committee (PCCAC) had its work cut out for it. In spirited judging, PCCAC members picked six PCC Award winners out of 121 nominations sent in by 61 PCCs. The awards will be presented in April at the National Postal Forum in San Diego.
Best Single PCC Event -Omaha PCC. The Omaha PCC is no stranger to this award, having won it in 1998 and finishing second in the category last year. Led by Postmaster EvaJon Sperling and Dave Herbert, president, Modern Office Services, the Omaha PCC used a creative and innovative theme in conjunction with the Pacific Rainforest stamps, "Survivor ….OPCC 2001 Conference." The conference included "tribes" named for animals, a jungle, an idol, a waterfall, a campfire, contests, feasts and fun. (By the way, the Frogs beat the Jaguars.) The PCC drew over 230 attendees, featured 10 sessions, included 28 vendors in 30 "huts" (booths), and utilized mail, the media and personal visits to promote the show. The PCC mailed invitations as far away as South Dakota, Iowa, Missouri and Kansas.
Best Multi-PCC Event - Dallas and Ft.Worth PCCs. Postcard and brochure mailings, newspaper and radio coverage helped the DFW Mailers Conference attract nearly 450 attendees and 46 vendors (in 53 booths). There were nine business sessions, a special luncheon speaker and an active exhibit hall. Extensive media coverage, drawings, raffles and door prizes complimented this effort. Many new members were signed up and current members were renewed. A Mail Manager of the Year award was established. The successful event made everyone "Texas proud."
Best Communications Program - Central OH PCC. Co-chairs Anthony Pacella, postmaster, Columbus, OH, and Ann Ostrander, IT manager, Columbus Zoo lead an executive board that utilizes all means of communication to reach its members concerning PCC activities. They emphasize the "one-two punch" of newsletter (Sharon Dilbone, editor) and website (Jeff White, webmaster) and supplement those with e-mail letters, phone calls and one-to-one meetings. The PCCAC was particularly impressed with its website.
Best Co-Chair's Team - Southern Maine PCC. Susan Mexcur, manager, marketing, Headlight Audio Visual, Inc., and Tatiana Roy, marketing manager, District of Maine, revamped, enhanced and improved the operation of the PCC. Refocusing on their mission statement's goals and objectives, they offered new seminars, new topics and a new "can do" attitude. At one meeting alone they added over 40 new members. They instituted an e-mail mailing list, updated their hard copy list and expanded their monthly customer mailings to over 3,500 customers. They re-focused on the needs of customers and the value proposition of the PCC.
MVP Award - Industry - Joseph Boswell, manager, Delivery Services, Bureau of National Affairs, Washington Metro PCC. Boswell has been active with the PCC in Washington for over 20 years. He has held virtually every position in the PCC. He is credited with "inventing" PCC night at National Postal Forums (NPFs). During the early 1990s attendance began to slip and interest wane in the PCC. Realizing this, Boswell reactivated his role as PCC co-chair and built membership to more than 400. Under his leadership over the years, improvements have been made in the quantity and quality of seminars, speakers, communications and vendor participation. His guidance contributed to the PCC winning the 1999 PCC Award for Outstanding Newsletter.
MVP Award - Postal - Nicholas Caprola, account management team leader, Area Sales Office, PCC of New York City. If there is a "Mr. PCC" anywhere in America, it's Caprola. Active with the PCC since the mid-1980s, Caprola is a guiding light for the organization. During his tenure with the PCC, attendance at major events has gone from 100-200 to 500-600 on average, with nearly 1,100 at the NY Hilton & Towers meeting. Industry and postal co-chairs change, executive board members change, but through it all, Caprola has been there. He has overseen the improvement of educational sessions, community outreach programs, program themes and NPF support. His drive, leadership and caring have helped to maintain the New York PCC as one of the most active and successful PCCs in the country.

1. Most creative and innovative program by a single PCC: Omaha PCC
Runners-up: New York City, Houston, Dallas, Greater Philadelphia
2. Most creative and innovative program held by multiple PCCs: Dallas and Ft. Worth PCCs
Runners-up: Upstate NY (Albany District), Connecticut PCCs, Dayton-Miami Valley OH
3. Most exceptional/inventive PCC Communications Program: Central Ohio PCC
Runners-up: Western MA, Ft. Wayne, Houston, Central AR, Middle TN
4. Most outstanding PCC Co-Chairs - Team Award: Southern Maine PCC
Runners-up: San Diego, Greater Atlanta, Greater Hartford, Tampa
5. PCC MVP Award (Industry): Joseph Boswell, Washington Metropolitan PCC
Runners-up: Pauline McNeill, Greater Triangle Area; Janis Rader, Dallas; Sharon Corriston, Houston; Lisa Victory-Oertel, Milwaukee; Jeff White, Central OH; Loleta Sump, Manhattan KS; David Rich, Orange County
6. PCC MVP Award (Postal): Nicholas Caprola, PCC, New York City
Runners-up: Maureen Marion, Central NY & Greater Utica; Mary Martir, Southern Tier; Annette Benefield, Greater Atlanta; Marvin Roth, Manhattan KS

National Postal FORUM Special Section April, 2002

Looking for a copy of the Postal Service's 2001 Annual Report? It's available online at http://www.usps.com/history/anrpt01/. The report contains an overview of fiscal year 2001, including performance and service highlights, financial statements and a glossary of postal terms. It's a record of achievement against a backdrop of dramatic challenges.
Postmaster General John E. Potter appointed Jean Picker Firstenberg, director and CEO of the American Film Institute (AFI), and Cary Brick, retired U.S. House of Representatives executive, to the Citizens' Stamp Advisory Committee (CSAC).
Established in 1957, the CSAC reviews the more than 50,000 stamp subject proposals received annually by USPS and is responsible for making subject and design recommendations to the Postmaster General.
Chief Postal Inspector Kenneth Weaver retires this month after more than 30 years with the Inspection Service and Postal Service. Postmaster General John E. Potter credits Weaver with leaving the Inspection Service in a position of strength and with the confidence of the American public. During the anthrax crisis, Weaver "brought stability and old-fashioned common sense to the table," said Potter.
The Postal Service Board of Governors named William Johnstone as the new Secretary to the Board. He replaces David Hunter, who announced plans to retire.
The Board Secretary is responsible for managing matters related to the operation of the Office of the Board of Governors.
Robert Pedersen was named vice president and treasurer by Postmaster General John E. Potter, effective March 2. He replaces Michele Purton, who retired. Pedersen will manage the Postal Service's cash flows and debt. In addition, he will oversee business evaluation activities and the new audit response function within Finance.

USPS this month issues a stamp celebrating the bicentennial of the U.S. Military Academy at West Point.

Two USPS employees from the Material Distribution Center in Topeka, KS, were recognized for their roles in the recovery of a Marc Chagall painting.
Kathleen Tsukamoto, a material analyst and communications specialist, and Douglas Myers, manager of the National Materials Customer Service Center, were on hand when The Jewish Museum in Manhattan announced the painting was the real Chagall.
The unfinished painting, "Study for 'Over Vitebsk,'" was stolen from the museum last June. In January, Tsukamoto noticed the painting in the undeliverable mail.
Douglas Myers and Kathleen Tsukamoto (right) with a grateful Bella Meyer (center), the artist's granddaughter who authenticated the painting.

Trust in the mail
Your mail remains welcome in the homes of the American people, survey results show. Support for the Postal Service's response to bioterrorism is strong. In fact, the American public views USPS quality, brand reputation and value more favorably now than prior to Sept. 11 and the subsequent anthrax attacks through the mail.
A majority of those surveyed say they haven't changed their mailing behavior, with 92 percent mailing letters and 91 percent mailing packages like always, according to the survey. Consumers appreciate postal workers and managers more, saying they have a more favorable view of postal management (24 percent) and postal workers (39 percent).
Other highlights from the survey include the following:
97 percent approve of the way USPS is handling the bioterrorist situation.
96 percent agree that USPS is doing everything within reason to protect against future terrorism.
95 percent agree that USPS is doing everything within reason to maintain customers' trust.
96 percent believe that letters and packages received from USPS are safe.
Thirty-three percent of those surveyed say they have changed the way they open or receive mail. Of these, 67 percent examine mail for unknown return addresses, 7 percent wash their hands after opening mail, 5 percent throw out mail, 1 percent open mail outside and 1 percent use protective gloves.
The December 2001 survey was conducted by Arthur Andersen, which telephoned 1,000 households, including 500 who were part of a similar Consumer Brand Equity Survey conducted in August 2001. The remaining 500 households were randomly selected.

Volume 37 Number 3
Ilze Sella
Editorial Services
Frank Papandrea
Art Director
David Ostroff
Jim Fisher
Printing Specialist
John E. Potter
Postmaster General and CEO
Deborah K. Willhite
Senior Vice President,
Government Relations
and Public Policy
Azeezaly S. Jaffer
Vice President, Public Affairs
and Communications
is published by U.S. Postal Service Public Affairs and Communications.
USPS eagle symbol and logotype are registered marks of the United States Postal Service.

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MEMPHIS TN 38188-0001

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fax: (202) 268-2392
e-mail: mmailers@email.usps.gov

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Direct Mail Kit: (800) THE-USPS x 2110


POSTAL INSPECTORS Preserving the Trust POSTAL INSPECTORS Preserving the Trust


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