RECEIVE
J
USPS-T-4
JN IO 3 N PiI‘97
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON. DC 20268-0001
Posl:.i Ed,L C~.~.iiiiSS,O~i
OFFICE OF 1liE SICLETdiiY
DOCKET NO. R-97-l
DIRECT TESTIMONY OF
RALPH J. MODEN
ON BEHALF OF
UNITED STATES POST/% SER~VICE
TABLE OF CONTENTS
I
_--
Paqe
2
1
..............................................................................
3
Autobiographical
4
I.
5
II. Letter and Flat Processing
6
Purpose of Testimony..
1. Growth in Barcoded
8
2. Equipment.
IO
II
12
13
.......................................................
Operations
A. Letter Mail Processing ...........................................................................
7
9
Letters.. ...........................................................
......................................................................................
5
7
3. Utilization of Barcodes .....................................................................
7
a. Status of Delivery Point Sequencing
........................................
of Future System ..........................................................
4. Description
b. Operating
Concepts. ..................................................................
B. Flat Mail Processing
...........................................................................
Flats ..............................................................
17
I. Growth in Barcoded
18
2. Equipment
19
3. Utilization of Barcodes ...................................................................
.....................................................................................
a. Costing of Barcoded versus Non-Barcoded
.............................
of Future System ........................................................
4. Description
22
a. Equipment ................................................................................
23
b. Operating
24
4
b. Barcode Sorting .........................................................................
I5
21
4
5
a. Equipment ..................................................................................
20
4
...................................................................
a. Barcode Application
14
16
.r--
Sketch .................................................................................
3
Ill. An Operations
Concepts .................................................................
Perspective
on MODS Based Costing .............................
8
9
9
9
10
10
10
10
11
13
13
13
15
25
A. System Description
.......................................................................
15
26
B. IJse of MODS Data .......................................................................
16
27
C. MODS Based Cost Pools.. ............................................................
17
28
D. The Productivity
29
E. Changes
Information
in Productivity
Reporting System (PIRS) ................ 18
................................................................
I
19
1. Volume Increases
2. Seasonal
3. Automated
Improve Productivity.. .................................
Effects.. ....................................................................
19
20
Sorting Operations.. ...............................................
20
......................................................
21
4. Manual Sorting Operations
5. Support Operations..
F. Similar Operations
................................................................
at Non-MODS
ii
Facilities ..................................
21
22
1
Direct Testimony
I
2
of
3
Ralph J. Moden
Autobiographical
4
Sketch
5
6
My name is Ralph J. Moden.
7
within Operations
Support.
8
planning (processing
9
planning to ensure integration
I am the Manager, Operational
Requirements
My office serves as the focal point for operations
and delivery).
We manage the coordinaticln
across functional
of oper;ations
areas. We evaluate the impact of
10
programs and plans outside of Operations.
We have specific responsibilky
II
development
and customer requirements.
12
have responsibility
I3
Operations
14
and integration
of operational
for maintenance
of the Corporate Automation
for the
We also
Plan, anld
Models.
I joined the Postal Service in 1975. For three years I held various iheld
I5
positions in Mail Processing
and Delivery.
I came to the Mail Processing
16
Department
17
being promoted
I8
Resource
19
development
20
served as Special Assistant to the Deputy Postmaster
21
June 1987.
,.C,
22
at Headquarters
in 1978 and held various staff level positions until
in 1983 to Manager, Operations
Management
Department.
of information
Systems within the Information
In that position, I was responsible
requirements
and systems for the Operations
I was promoted to General Manager of Distribution
for development
Operations
that position, I was responsible
24
relating to the distribution
25
1991, I was promoted to Manager, Customer Mail Preparation
26
Postal Service’s primary interface with industry on issues pertaining
27
requirements
28
of Future Product Requirements
29
that new product development
30
requirements.
and distribution
for mail entry and discount qualification.
plans considered
I
in 1987.
In
of national policies and procedures
activities within processing
within Marketing.
Group.
General from June 1986 to
23
.L.
for
centers.
In
where I was the
to preparation
In 1993, I became Manager
I was responsible
operational
for ensuring
capabilities
and
I held that position until assuming my current responsibilitiles
in 1995.
2
I have appeared
occasions.
before the Postal Rate Commission
First in R-90 where I presented testimony
Service’s rate proposals
and delivery functions.
based upon automated
My second appearance
on two previous
in support of the Postal
operations
in the mail processing
before the PRC was in MC 93-2
where I testified regarding mailer and vendor readiness for conversion
to Delivery
Point Barcoding.
I have a Bachelor of Science Degree in Business Administration
Mason University and a Masters of Business Administration
University of Maryland at College Park.
--
--__
from George
Degree from the
3
I
/-
2
The purpose of my testimony
is to support various elements of the Postal
3
Service’s rates proposals.
4
test year processing
5
years to improve operating efficiencies.
6
perspective
7
costing methodology
8
9
10
,--
I. Purpose of Testimony
In Chapter Two, I provide an overview of the current and
operations,
on the new Management
Specifically,
Operating
Data System (MODS) based
Degen and Bradley.
I address the following:
of automation
equipment
2. The equipment
I2
3. The progress made in utilization of the barcoded
13
4. The design/structure,
14
5. The reasonableness
15
6. The Productivity
16
and workload
18
deployments
in the operations
planned through the test year and beyond.
mailstream.
purpose, and usage of MODS.
of the MODS-based
Information
information
7. The appropriateness
facilities.
employed
in pertinent Postal Service testimony.
II
17
in ,the coming
In Chapter Three, I provide an operations
in support of witnesses
1. The types and capabilities
analyzed
the Postal Service will be employing
cost pools and volume variabilities.
Reporting System (PIRS) used to collect workhour
in the Bulk Mail Centers (BMCs).
of applying the MODS-based
cost pools to nonMODS
4
I
II. Letter and Flat Processinq
Operations
In this part of my testimony,
2
3
they relate to the processing
4
are processing
5
flats as two distinct mailstreams,
6
topic includes four sections:
I will provide an overview of our operations
of letters and flats. Specifically,
more mail in automated
operations.
as
I will focus on how we
Since we process letters and
I will treat each one as a separate topic.
mail has increased significantly
Each
7
The volume of barcoded
over the past three
8
years. In the first section, I will highlight the growth that we have realized in
9
barcoded
letters and flats.
10
We have been aggressive
II
of mail. In the second section, I will review the equipment
12
using to process barcoded
13
The combination
14
barc:oded mail has allowed us to achieve savings in the automation
15
In the third section, I provide an update on how we are utilizing barcodes
16
including our progress with Delivery Point Sequencing
17
In the final section, I will describe the future operating
18
highlight equipment
19
our automation
A.
20
Barcoded
22
to automate the processing
modifications
deployments
along with the growth in
program.
(DPS).
environment
and additional deploymlents
I will also describe our distribution
Growth in Barcoded
and
that will support
concepts.
Letters
letter mail has grown dramatically.
share of all letter mail, has increased
Barcoded
23
percentage
24
past two years.
25
Fiscal Year 1996, 70.1 percent of all letters were barcoded;
26
Fiscal Year 1997, the percentage
letters, as a
by about 10 points in each of the
In Fiscal Year 1995. 60.4 percent of all letters were barcoded;
The growth in barcoded
27
that we <are currently
mail.
of our equipment
program.
equipment
Letter Mail Processing
1.
21
in deploying
in
and through AP 9,
share is at 80.5 percent.
letters has already allowed us to remove over
28
seventy five percent of the Letter Sorting Machines (LSMs) from our automated
29
plants.
30
as the Postal Service’s automation
At one time, the majority of letter mail was processed
on LSMs.
However,
program has evolved, the LSM’s value to
5
,.F‘
1
operations
2
were needed to staff keying consoles and an additional five employees
3
needed to sweep and load the machine.
4
60 per minute, depending
5
was relatively high and the equivalent
6
employees
7
LSMs as we approach
8
Customer
9
has diminished.
When the LSM operated at full cap,acity, 12 employees
Letters were processed
letters.
mail on the LSM
volume of mail can now be proces:sed by two
Reader (OCR).
We will continue to remove
our goal of barcoding 88 percent of all letters in FY1998.
rate incentives for prebarcoding
in prebarcoded
at a rate of 50 to
on the sort plan. The cost of processing
on an Optical Character
were
have produced
substarltial
growth
Through AP 9, Fiscal Year 1997, mailer applied barcodes
IO
comprise 57.5 percent of the total letter mail barcodes.
II
of all barcoded
12
by a Multiline Optical Character
13
Remote Bar Coding (RBCS).
14
original
The remaining 42.5 percent
letters are barcoded by the Postal Service with ‘19.1 percent applied
Reader (MLOCR) and 23.4 pertcent applied by
The mailer share of total barcoded
letters exceeds our
projections.’
2.
I5
Equipment
T--%
The following is an update on the equipment
16
17
barcodes.
a. Barcode Application
18
19
,c-
that we use to apply and/or sort
.
Multiline Optical Character
Reader (MLOCR) -
Mail that is not prebarcoded
20
receives its first chance to obtain a postal applied barcode on this piece of
21
equipment.
22
1996. No additional deployments
23
are currently being, or have recently been, made to the MLOCR include a new
24
Grayscale
Camera, a co-directory
25
Grayscale
Camera facilitates
The last 38, of a total 875, MLOCRs were deployed
in Fiscal Year
are planned, but several enhancements
lookup, and a co-processor.
that
The new
better image capture and recognition
while the
CO-
’ In 1989, the Postal Service projected, that in a “full-up” automated letter
environment, the first 40 percent of the barcodes would be applied by mailers, the
second 40 percent of the barcodes would be applied by USPS’ Optical Character
Readers (OCRs), and the remaining 20 percent would be applied by USPS Remote
Bar Coding Systems (RBCSs).
6
directory and co-processor
augment the address matching process.
These
2
enhancements
3
reduce the amount of mail that obtains a barcode through Remote Bar Coding.
4
l
should help to improve the overall encode rate of the OCR and
Low Cost MLOCR -
This machine is a result of a modification
5
Barcode Sorter (DBCS) that enables it to function as a MLOCR.
6
1997, the first 46, of a scheduled
7
Deployment
8
and will be targeted to sites as a replacement
9
(SLOCRs)
is scheduled
100 machines,
to a Delivery
As of June,
have been deployed
to continue through the remainder
for outdated
to the ifield.
of Fiscal Year I!397
Single Liine OCRs
that are not able to read more than one line of an address.
The
10
SLOCRs cannot apply a Delivery Point Bar Code (DPBC) and are tlherefore
II
incompatible
12
l
with our overall automation
Remote Bar Codinq System (RBCS) -
objectives.
RBCS has three distinct components8:
13
the Input Sub System (ISS). the Image Processing
14
Output Sub System (OSS). The ISS, which consists of a retrofitted
15
(MLOCR-ISS)
16
ISS)‘, is used to “lift images” of mailpieces that are not OCR readable. A
17
flourescent
18
mailpiece
I9
resolved through the use of a Remote Computer
20
forwarded
21
address information
22
DPBC level, the mailpiece is fed back through the OSS, which consists of a
23
retrofitted
24
Sorter (MPBCS-OSS).
and/or a retrofitted Advanced
Sub System (IPSS), and the
MLOCR
Facer Canceller Systern (AFCS-
ID tag is sprayed on the back of the mailpiece and an image of the
is forwarded
to the IPSS. While in the IPSS. the image may be
Reader (RCR)3 or may be
on to a Remote Encoding Center (REC) where an operator keys the
into a computer.
DBCS (DBCS-OSS)
Once the address is resolved to the
and/or a retrofitted Mail Processing
where the delivery point information
Barcode
is matched to the
’ The AFCS faces, cancels, and sorts letter mail by mail type. AFCSs that have
received the ISS modification can also lift images of non-readable mailpieces.
3 RCR is an off-line optical character recognition device that is part of RBCS. It uses
advanced recognition techniques and the additional time available because it
operates off-line to resolve script images and other difficult to read addresses.
RCR
reduces keying work by 25 percent.
--
7
I
flourescent
2
plants and is scheduled
3
sites. There are 55 RECs.
/-.
ID tag and a barcode is applied.
RBCS is currently deployed
to be deployed to an additional
12 for a total of 250
b. Barcode Sorting
4
5
l
Delivery Bar Code Sorter (DBCS) barcoded
This machine is primarily used for
6
processing
7
Point Sequencing.
8
have either 190 or 206 bins. The DBCS can sequence
9
letter mail in the order of delivery in two passes.
mail on an incoming secondary
phase of deployment.
II
will have nearly 4,800 operational
l
Carrier Sequence
sort plan such as Delivery
The DBCS comes in multiple configurations;
10
I2
to 238
5-digit presort barcoded
The DBCSs are in the final
As of May 1997, we have deployed
when deployment
Bar Code Sorter (CSBCS) -
most machines
‘over 3,900 units and
is completed
later this year.
This machine is located
13
in many of the larger delivery units and is used principally for Delivery Point
14
Sequencing.
IS
of delivery in three passes -the
16
carrier route at a time due to the limited number of bins (i.e., two machine
17
configurations
18
completed
/--
19
l
The CSBCS can sequence
-
carrier route presorted
mail is processed
13 and 17 bins). The deployment
mail in the order
on this machine to one
of 3,73:2 CSBCSs was
in March 1997.
Mail Processinq
Bar Code Sorter (MPBCS) -
This machine has 96 bins and is
20
used primarily for outgoing primary and incoming primary pirocessing.
21
1,369 MPBCSs deployed.
22
3.
23
The strong growth in customer-prebarcoded
There are
Utilization of Barcodes
schedule of automated
letters combined with a
24
steady deployment
equipment
25
As of Accounting
26
percent of their total incoming secondary
27
eight point increase over the same period last year (SPLY)!
Period 9, 1997, Processing
has yielded positive results.
& Distribution
plants proce,ssed 87
letter volume in autornated
operations,
an
A,nother rellevant
4 This is determined at the incoming secondary level by dividing the numrber of piece
handlings in automated operations by the piece handlings in all incomimg secondary
operations
8
indicator of utilization is that 72 percent of the total letter barccldes received
2
automated
secondary
processing
in the plants.5 This percentage
3
of only the volumes that are processed
4
barcodes that received automated
secondary
5
CSBCS processing
As mentioned
6
delivery units and the volume of automated
7
reflected in the plant totals.
is considered.
is representative
in the plants, so the overall percentage
processing
of
is actually higher when
earlier, CSBrCSs are located at
secondary
processed
on them is not
a. Status of Delivery Point Sequencing
8
A considerable
9
portion of the barcoded
in secondary
10
operations
II
1995, 58,710 routes in 3,020 delivery zones were receiving DPS maiL6 As of
12
Accounting
13
in 7,122 zones, and the average volume of DPS mail is over 1~09 million pieces a
14
day.
I5
received Delivery Point Sequencing
mail processed
(DPS). As of Accounting
Period 5,
Period 9, 1997, the number of routes has more than doubled to 133,462
Our delivery units have worked closely with the plants to increase the amount
16
of DPS mail. They have worked together to identify and capture bundles of non-
17
barcoded
Enhanced
18
the plant.
By doing so, they have been able to incorporate
19
carriers’ DPS mail, thus eliminating
20
barcoded
21
DPS zones has increased,
22
is processed
23
no value.
24
mail will diminish even more. As a result, the Postal Service is proposing
Carrier Route (ECR) Basic letters in order to barcode them at
these pieces into the
the need for manual casing.
As barcoding
non-
ECR basic letters has become a common practice and as the number of
the value of ECR Basic letters has diminished.
This mail
on the OCR to the 5-digit level, so the carrier route sortation provides
As we continue to increase the number of DPS zones, the value of this
that the
’ This is determined by dividing the number of piece handlings in automated
incoming secondary operations by the total destinating 9- and 1 l-digit barcoded
letters.
’ Docket No.MC95-1,
Testimony
of Jeff W. Lewis, USPS-T-4
9
pricing of the ECR Basic letter tier be changed to better reflect its reduced ,value to
operations.
The quality of the DPS sort has improved dramatically
fact that over 96 percent of the routes receiving sequenced
as evidenced
by the
mail take it directly to
the street instead of using office time to case the mail.’ Through ,Accounting
9,1997, overall city carrier workhours
below the planned budget.
Period
are 1 .I percent below SPLY and 0.2 percent
As further evidence of the success of DPS processing,
the number of career city carriers is 5,280 below SPLY.
4.
9
_.--
of Future System
a. Equipment
JO
II
Description
The Postal Service is nearing completion
deployments
that
I2
support the automated
13
equipment
14
deployments
IS
broaden our existing automation
16
the number of DBCSs from over 3,900 to nearly 4,800; the number of Low Cost
17
OCRs from 46 to 100; and the number of RBCS sites from 238 to 250. Similarly, we
18
will continue to look for possible enhancements
19
leverage evolving technologies
deployments
As a result, there are no major new
planned in the near term. However, scheduled
of existing equipment
and technologies
capabilities.
will continue in order ,to
As I mentioned
earlier, we will expand
to our existing equipment
kn order to
for additional operating efficiencies.
b. Operating
20
21
letters program.
of equipment
Concepts
We will continue to strive to maximize the benefits of automated
Our corporate objective is that barcoded
letters destinating
letter
22
processing.
at
23
automated
24
and/or rural routes with city style addressing.
25
receive automated
26
routes may also receive DPS as a result of local decisions.
27
Year 1998, we anticipate that there will be 154,000 routes on DP.S. The increase in
plants will be sorted to DPS for zones having 10 or more city routes
Zones having five to nine routes will
sottation to the route level. Some zones with fewer than 10
By the end of Fiscal
’ Carriers take the DPS mail directly to the street once the quality of the sort for their
routes is certified at 98 percent correct or better for three consecutive days.
10
I
the number of routes on DPS, along with additional barcoded volume, will enable us
2
to better manage our costs and improve the level of service to our customers.
B.
3
Flat Mail Processing
1.
4
Growth in Barcoded
The percentage
3
Flats
of flat mail that is barcoded
has grown significantly
6
of the increase occurring since the implementation
7
1996. Our indicator of barcoded growth is the percentage
8
flats that are barcoded.
9
we only process flats to the carrier route level and no sequencing
Only the non-carrier
Fiscal Year 1995, 37.4 percent of all non-carrier
II
Year 1996, 43.2 percent of all non-carrier
I2
9, Fiscal Year 1997, the percentage
2.
14
l
Multi-Position
Reform in July of
of all non-carrier
route
route flats are used as the base since
10
13
of Classification
with much
is performed.
route flats were barcoded;
route flats were barcoded;
In
in Fiscal
and through AP
is 58.8 percent.
Equipment
Flat Sortinq Machine (MPFSM 8811 -This
IS
piece of equipment
16
deployed
17
keying or inducting barcoded flats. Flats are manually fed into the machine and
18
are sorted to 100 separations.
19
l
that is used for processing
machine is the primary
and each machine has four consoles that can be used for manual
Multi-Position
Flat Sortinq Machine (MPFSM 1000) -This
20
generation
21
non-machinable
22
process about 25 percent of all non-carrier
23
processed
24
not presently equipped with barcode readers.
25
FSM 1000s was completed
26
additional
27
28
flats. There are 812 machines
machine is the newest
of flat sorter and is intended to process nearly all of the flats that are
on the FSM 881. It is estimated that this machine will ultimately
routed flats; currently, these flats are
manually. The FSM 1000 has four keying stations and 100 bins, but is
Phase one deployment
in June, 1997. Phase two deployment
of 100
of an
240 FSM 1000s will start in July of this year.
3.
Utilization of Barcodes
Through AP 9, Fiscal Year 1997, Processing
8 Distribution
plants processed
29
28 percent of their total incoming secondary
flat volume using barcode readers on
30
flat sorters, a six point increase over the same period last year (SPLY).
Keying
11
I
operations
2
incoming secondary
flat volume.
3
incoming secondary
volume was processed
4
somewhat
5
flats. The percentage
6
Another
7
flat barcodes
/-,
8
9
on the flat sorter accounted
understated
for an additional 24 percent of their total
The net result was that 52 percent of the total
on the flat sorter.8 This percentage
since it includes both the machinable
is higher when only the machinable
relevant indicator of utilization is the achievement
processed
in incoming secondary
and non-machinable
mai’lbase is considered.
of 21 percent of the total
operations
The utilization of flats barcodes, when compared
is
using barcode readers.g
to letter barcode utilization,
may seem low. However, it is important to recognize that there are significant
10
differences
in the two automation
II
the Postal Service and mailers, but flats barcodes can be applied only by mailers.
I2
While mailer barcode participation
13
participation
14
earlier, there has been recent significant growth in the volume of barcoded
IS
The relatively small proportion
16
identify and capture all of the barcoded flats. Likewise, the deployment
17
processing
18
still under evaluation
I9
Year 199’8 and should help to improve barcode utilization.
in flats barcoding
programs.
Letter barcodes can be applied by both
in letters has exceeded
has been below expectations
expectations,
although,
the
as indicated
flats.
of barcoded flats volume has made it difficult to
.-
20
21
equipment
is near completion
and testing.
while future flats processing
These deployments
of letter mail
equipment
is
will continue well past Fiscal
Costing of Barcoded versus Non-barcodecl
a.
I have been advised that there are a couple of peculiar outputs from the cost
22
models that do not reflect the aforementioned
23
both Periodicals
24
appear to adequately
value of barcoding
to operations.
In
and Standard (A) Nonprofit flats, the cost model Outputs do not
reflect the inherent differences
in processing
efficiencies
’ This is determined at the incoming secondary level by dividing the number of piece
handlings in flat sorter operations by the piece handlings in all incoming secondary
operations.
/-
’ This is determined by dividing the number of piece handlings
barcode readers in automated incoming secondary operations
destinating 9- and 1 l-digit barcoded flats.
processed by FSM
by the total
12
between barcoded
2
are determined
and non-barcoded
is enigmatic,
and we
assessment
requirements
of this matter in Periodicals
shows that the
4
unique preparation
3
may have had some impact.
6
mailers have the option to prepare a less than required sack when they deem1 it
7
appropriate
8
digit sack with only six pieces instead of placing the mail in a 3-digit sack.“’
9
behavior creates a shift of mail to the Sdigit level. It is probable that this behavior
occurs more frequently
II
difference
12
below.
and options that apply only to that class of mail
One way in which the requirements
for service reasons.
10
13
For instance, a mailer may elect to prepare a 5-
in non-barcoded
within the Periodical class as described
mail, the 3/5 flat rate elrgrbility requirement
is si,x or more pieces
sorted to 5-digit or unique 3-digit packages,
15
mixed ADC sacks.
16
six or more pieces sorted to 5-digit or unique 3-digit packages,
17
and unique 3-digit sacks only. Because of these sacking differences,
18
barcoded
19
qualify for the 3/5 rate. There is, therefore,
20
barcoded
21
pieces), in order to obtain the lower 3/5 rate. Consequently,
22
the non-barcoded
23
would have been received had the packages
24
sack. This shift results in reduced handlings for these packages.
25
barcoded
26
ADC) sack.
28
For non-barcoded
packages,
This
flats than in barcoded flats because of the
in rate elrgrbility requirements
For barcoded
am unique is that
14
27
_
to identify the factors that may have led to these results.
Our preliminary
3
mail. This circumstance
placed into 5-digit, 3-digit, ADC, and
mail, the 3/5 flat rate elrgrbilrty requirement
of six or more pieces, have significantly
is
placed into 5-digit
the non-
less opportunity
to
a financial incentive to shift the non-
flats into a 5-digit sack, when there is less than required volume (i.e., 24
packages
packages
a significant
portion of
shift to the 5-digit sack and bypass a handling that
remained in a lower level (e.g., :3-digit)
In contrast, the
can obtain the same 315 rate by being placed in any level (e.g.,
It is probable that the aforementioned
the output of our Periodicals
cost models.
circumstances
have had an impact on
They are not however intended to lbe
“The Domestic Mail Manual (DMM) allows the preparation of a less than required
24 piece sack when the publisher believes it will improve service.
-
13
/-
I
inclusive of all of the factors that could have created this situation.
2
be looking at both Periodicals
3
months to determine
4
place in time for implementation
of the new rates.
of Future System
a. Equipment
6
7
and Standard (A) Nonprofit mail over the (coming
the causes and develop solutions which we expect to have in
4. Description
5
We will therefore,
l
OCR for FSM 881s -All
812 FSM 881 flat sorters will be retrofitted with OCR
8
capabilities
including full address recognition.
9
881 to process non-barcoded
The retrofit will enable the FSM
mailpieces that are manually keyed at present.
10
The OCR will read and sort the mailpiece, but will not spray a barcode.
I1
modification
was approved by the Board of Governors
I2
is scheduled
to begin in early Fiscal Year 1998 and continue through the
13
remainder
in M,ay 1997; deployment
of calendar year 1998.
There are two additional modifications
14
The
IS
possible deployment
16
.
that are being evaluated for
over the next couple of years.
P
HSFF on FSM 881s -A
High Speed Flats Feeder (HSFF) for the FSM 881
17
would provide automated
feeding at the end of the flat sorter thus eliminating
18
need ,for manual induction.
19
tested at one site.
20
.
Efor
The HSFF is currently under review and is being field
FSM 1000s -Adding
a barcode reader to the FSM 1000 wiill allow us to
21
process both barcoded and keyed mail. We are currently field testing the
22
modification
23
positive results from the test, deployment
24
assuming
at one site and expect to have results later this year.
If we see
could begin in Fiscal Year 1998,
approval by the Board of Governors.
b. Operating
25
/-
the
Concepts
26
Our distribution
concept for flats is somewhat
27
as the main emphasis
28
However, unlike letters, barcoded flats to those zones will be sorted only to carrier
29
route level using barcode readers and/or OCR technology.
30
with fewer than IO routes may also receive carrier route processing
is placed on automated
similar to ,the concept for letters
zones with 10 or more routes.
In addition, some zones
of automated
14
I
flats as a result of local decisions.
2
order.
3
There are no plans to sequence
Prior to this fiscal year, forecasts
indicated that the volume of barcoded
4
generated
5
mailstream.
6
flat mail OCR. As indicated earlier, we have realized a significant
7
level of growth in barcoded flats since the implementation
6
This growth in customer barcodes combined with the equipment
9
are planned or being considered,
IO
II
by customers
Accordingly,
flats in delivery
would not result in the attainment
of a fully automated
the Postal Service started development
flats
and testing of the
increase in the
of Classification
Reform.
deployments,
that
will enhance our ability to pr’ocess more mail on
flat sorters.
The flat mail OCR (FMOCR) will also help us improve olur overall barcode
12
utilization by reducing the number of barcodes that are keyed on the flat sorter.
13
Barcoded
14
segregation.
I5
works in conjunction
16
a barcode is found on the flat, the piece is sorted based on the barcode.
17
barcode is not found, the piece is sorted based on the address information
18
the FMOCR.
I9
that have barcodes.
20
flats
pieces sometimes
get keyed on the flat sorter as a result of poor
The FMOCR should help to improve flat barcode utilization because
with the barcode reader to determine
if a flat has a barcode.
it
If
If a
read by
As a result, we achieve better barcode utilization by not keying pieces
The additional
equipment
deployments
should help us significantly
and modifications,
21
highlighted,
22
process on the flat sorter thus improving our overall efficiency.
that I have
increase the amount of flats that we can
15
I
,-..
2
Ill. An Operations
Perspective
on MODS Based Costing
This portion of the testimony relates the workroom
3
variabilrties”,
4
derived results in terms of work flow, data collection, equipment,
5
mail base.
6
as developed
The Management
by witness Bradley.
floor to “volume
Operating
It interprets
his mathematically
Data System (MODS) is used by the Postal
7
Service to collect workload
8
processing
9
MODS is used by the Postal Service, and Section C describes
IO
II
plants.
staffing and the
and workhour
data on activities performed
Section A briefly describes this system, Section B discusses
form cost pools to estimate mail processing
The Productivity
Information
costs.
Reporting System (PIRS) is used by the Postal
Service to collect workload
13
Section D briefly describes the distinction between the mail processing
14
the BMCs, and how those distinctions
Productivity,
how
how it was applied to
12
I5
in mail
and workhour
data on the Bulk Maiil Centers (BMCs).
plants and
are reflected in PIRS.
defined as pieces processed
per hour in a mail processing
M--S
16
operation,
is a familiar measure in operations
17
variability.
Section E discusses why greater volume at a specified operation
18
plant generally
19
productivity
in automated
20
operations;
and how the increase in automated
21
productivity.
22
results in better productivity;
that is closely related to volume
and
seasonal effects oln productivity;
and manual sorting operations;
processing
productivity
in support
has affected manual
Section F briefly discusses why volume variability results derivecl for cost
23
pools at large facilities using MODS are also appropriate
24
smaller facilities.
25
A.
26
MODS has been used by postal management
for similar cost pools at
System Description
27
control activities within postal facilities.
28
data and accumulates
29
management.
it centrally.
.-
for over 25 years to plan and
The system collects workload
The information
and workhour
is reported to all levels of
16
MODS uses standard three-digit
I
operation numbers to designate
2
performed
in plants.
Some of these numbers designate
3
processing
function performed
4
Operation
5
Optical Character
Reader (MLOCR).
6
general function.
For example, “Platform Load/Unload”
7
individual
6
docks, loading bays, and related platform functions.
9
actual workhours
of mail type,
used to perform it. For example,
831 is an Outgoing Primary Sort performed
on letters using a Multiline
In other cases, operation
numbers defined locally to accommodate
numbers designate
is the series 210-229 wi,th
the facility’s arrangement
of
MODS records and reports
by operation.
Piece-handlings
IO
and the technology
a combination
all activities
are the usual measure of workload
in Mail Processing
since
II
its fundamental
purpose is to sort each individual piece of mail to an appropriate
I2
destination,
13
purpose.
I4
meter, machine printouts, actual piece counts, or, if these methods are not feasible,
IS
by weight, feet, or containers,
16
using national conversion
17
maintenance,
18
handled in bulk or workhours
19
(e.g. platform, pouching,
and most Mail Processing
Mail volume is measured
are expended
for each piece-handling
factors.
operation
by machine
For many activities such as administration
mail volume.
are expended
or
In other instances where mail is
to support piece-handling
etc.) only the workhours
operations
are recorded.
details on MODS, refer to Handbook
21
Operating
22
B.
23
MODS data are used by postal management
M-32: Management
Data System (MODS), USPS-LR-H-147.
Use of MODS Data
24
levels.
25
comparing
26
develop local staffing plans and work schedules
27
in support of that
which are then converted to pieces within MODS
there is no associated
For additional
20
workhours
Local operations
management
uses MODS to plan and control activities by
actual versus projected workhours
Operations
management
equipment
at both the local and national
and workload.
Calculations
used ,to
depend on MODS data.
at the Area and National level uses MODS to study
28
trends in productivity,
utilization, and similar planning related factors.
29
MODS data is used in the calculations
for both operational
decisions
such as
a
17
.--
I
equipment
2
budgeting.
3
4
deployments
Engineering
and financial analyses such as workhour
uses MODS to monitor equipment
the basic data used in equipment
investment
5
C.
6
The grouping of MODS operations
performance
and
and IO provide
decisions.
MODS Based Cost Pools
7
function and equipment
8
optical character
9
sorting operations
10
requirements
is discussed
into cost pools based on similarity of
by witnesses
reading operations
Bradley and Degan.
For example,
are grouped in one cost pool and manual letter
in another.
The cost pools generally mimic the layout of the workroom
floor because
II
equipment
of the same type is normally grouped together to facilitate maintenance
12
and management
13
originating
14
morning nears, the function of, say, the barcode letter sorters will change from
15
sorting mail to destinations
throughout
I6
route in local post offices.
However, the basic functionality
17
operations
I8
address) does not change.
19
volume or workhours
20
function, there is little chance of data integrity problems at the c:ost pool l’evel. For
21
example, while an individual clerk may remain clocked into an operation
22
sorting scheme has changed to another operation,
23
to the correct cost pool.
control of the mail flow. As the worknight
progresses
from sorting
mail early in the evening to preparing mail for local dIelivery as the
the country to sorting mail for each carrier
,-
24
(i.e. individual piece distribution
using a barcode representation
of an
Also, while in the haste to meet dispatch schedules,
may occasionally
USPS-LR-H-146
of barcode sorter
mail
be assigned to the wrong barcodfe sorting
after the
the clerks hours are still assigned
Part I defines cost pools in terms of MODS operations.
25
However, for convenience
the most significant cost pools are dIescribed here. These
26
cost pools represent six major varieties of mail sorting activities and three main
27
support activities in a mail processing
28
described
29
Chapter 2. The sorting activities are:
here use the automated
plant. The last three of thie six sorting activities
processing
equipment
described
above in
18
1. Manual Letter operations
I
case containing
2
“pigeonholes”
2. Manual Flat operations
3
sort individual letters by hand into a rectangular
by destination.
sort larger than letter size mail pieces into larger
cases in the same manner.
4
3. In Letter Sorting Machine operations
5
the operator(s)
an appropriate
readIs the Zip code or
6
the address and depresses
key combination
7
machine into which bin to sort the letter. These operations
8
phased out due to continuing
9
4. Flat Sorting Machine operations
improvements
in automated
include both mechanized
to tell the
are being
processing.
(i.e., operator
IO
keyed similar to the letter sorting machine process described
11
automated
(i.e., barcode sort) capabilities.
5. Optical Character
I2
Readers read the address, apply a barcode, ancl do an
13
initial sort on the letters.
14
an image of the piece to the Remote Barcoding
15
decipher the address and assign a barcode.
16
6. Barcode Sorters sort letters using the barcodes
17
above) and
If they are unable to read an address, they send
System (RBCS) to
imprinted on them.
The three main support activities are:
1. Opening Units are the operational
18
areas within a plant where pouches,
19
sacks, pallets, and other containers
20
prepared for distribution.
21
2. Pouching Operations
22
3. Platform Operations
of mail are opened arnd the contents
place sorted mail in containers
for clispatch.
load and unload mail from trucks.
23
The Productivity
Information
24
D.
25
The PIR system records workload
Reporting System (PIRS:)
and workhour
information
26
Bulk Mail System consisting
27
distribution
28
BMCs act as hubs and transfer points oriented to processing
29
parcels.
30
designated
emphasized
of 21 Bulk Mail Centers (BMCs).
in the mail processing
In contrast to the piece
plants covered by MODS, the 21
Each BMC serves as the central processing
geographic
for the National
area; receiving, processing,
containers
of mail and
and transfer point for a
and distributing
originating
and
19
I
destinating
2
Parcels.
3
and sack sorters, sortation of pallets and similar containers,
4
machineable
5
operation
6
sack sorter).
7
workload
8
using standard conversion
/-
volumes of Standard and Periodical Letter and Flat Mail, ancl Standard
BMCs are highly mechanized
However, to compute comparative
in each operation
Changes
II
changed significantly
12
study.
13
productivity.
17
(e.g. sacks for a
,across BMCs in PIRS,
parcel sorting vvorkload
in Productivity
on majlor factors that affect
increase in volume at a cost pool in a single facility will generally
There are several reasons for this:
Most activities have some associated
positioning
19
proportionately
20
schedule for the activity.
b.
perspective
Improve Productivity
result in some increase in productivity.
a.
have
over the long period, FY 88 to FY 96, covered by the cost
1. Volume Increases
A sustained
for each
factors for each operation
18
21
productivities
is converted to an equivalent
This section provides an operations
14
16
in the natural handling unit for the operation
Even at the level of an individual facility and cost pool, productivities
10
15
manual sortation of non-
parcels, and support activities such as the platforlm. Workload
is measured
E.
9
facilities with the work oriented around parcel
work such as #obtaining mail,
rolling stock, or changing schemes that d’oes not change
with changes in volume, but is driven more by the operating
Mail volumes are inherently difficult to forecast so the staffing plan in an
22
operation will match the workload
23
volume increases it becomes easier to avoid briefly running shrort of mail in
24
the middle of an operation.
25
c.
In human--paced
operations
only roughly on any given night. As mail
such as manual sortingI, experience
suggests
26
that people work faster when there is a steady inventory of mail waiting to
27
be processed.
28
inventory
As volumes increase, it is easier to maintain such an
20
2. Seasonal
1
2
Operational
Effects
analyses compare current productivity
3
previous years because the volume and characteristics
4
with the mailing seasons.
5
each November
6
mail volume is overwhelmed
7
temporary
surge in staffing requirements.
8
packages
with illegible handwriting
9
use colored envelopes
and December.
The beneficial effect on productivity
by detrimental
of a greater
changes in mail characteristics
addresses.
Many of the letters
which are difficult for the OCRs and many of the packages
II
clerks are needed who are significantly
To process the workload
3. Automated
in manual operations,
less productive
temporary
than the regular staff.
Sorting Operations
The volume in automated
operations
has grown substantially.
In the last few
14
years, a large portion of the growth has been due to mailer barcoding
15
impetus from the recent Classification
16
In letter OCR operations,
the shift of readable mail to pre-barcoded
leaving less readable mail for the OCR, has resulted in increased
18
despite engineering
19
engineering
20
processor
21
reject rate in the OCR cost pool has grown.
22
credit is not given for rejects in the calculation.
23
improvements
improvements
with added
Reform.
17
described
and the
There is a large increase in letters and
and incomplete
are poorly wrapped.
13
of the mail vary significantly
The largest seasonal effect is certalinly the holiday mail
IO
12
to the same pleriod in
in the equipment
such as the Grayscale
mail,
OCR rejects
read capability.
Recent
Camera, co.-directory
and co-
earlier should help to improve the reject riate. Nonetheless,
Each facility is unique.
This has effected productivity
Its mailbase is determined
the
since
by the mailing pattern of the
24
community
it serves and the location of major mailers.
25
determined
by the distance to neighboring
26
physical plant is often one-of-a-kind,
and work practices, negotiated
27
agreements,
Because of these factors there is an adjustment
28
period when automated
29
developed
30
national labor agreements,
can differ significantly.
equipment
and staffing adjustments
Its operating
schedule
post offices and airline schedules.
is installed at a facility.
are planned.
is
The
in local labor
A performance
history is
Under terms of the local and
each staffing change, including schedule
adjustments,
21
.-
I
requires a seniority based bidding process which cascades through the facility as
2
each successful
3
knowledge
4
applicant to acquire the skill or revert to another position.
5
delay achievement
old position must be bid under the same procedure.
This adjustment
period can
of the optimal productivity.
4. Manual Sorting Operations
The increased
8
operating
9
automation,
proportion
of mail processed
in automation
has affected the
strategy in this area. More of the manual mail is mail rejected by
and many of these rejects arrive in manual operati’ons close to a
IO
dispatch time as automated
II
stacker, before a scheme change.
I2
especially
13
quantity.
I4
these late surges.
IS
If
of a sorting scheme is required, a training period is provided for the
6
7
applicant’s
operations
sweep their stackers, irlcluding the reject
Manual cases become the method-of-last-resort,
late in the evening as rejects from automated
To meet service commitments,
These effects are compounded
operations
appear in
manual cases must bl? staffed to handle
in some operations
by ICIWand even erratic
/16
volumes.
17
be staffed for service reasons whether there is much mail or not. Likewise, there is a
18
higher degree of “overhead”
I9
requirement
20
associated
21
when full or at dispatch time. In other words, those activities must take place
22
whether there is one or twenty parcels in a sack.
23
Manual Parcel operations
frequently suffer from these problems but must
activities in manual parcel operations
due to the
to prepare the operation for start-up (i.e., hang sacks), as well as the
non-distribution
activities of “dropping,”
labeling and handling the sacks
Priority mail can be affected by all of these issues as well. In particular, the
24
time sensitive nature of this product has a significant influence on local staffing
25
decisions.
5. Support Operations
26
27
Adding a sophisticated
automated
processing
stream to existing mechanized
28
and manual streams also required an increase in workhours
29
activities, such as moving mail between operations,
30
that resulted.
,----
fol: non-distribution
to handle the complex mail flows
Most support activities occur in the Allied Labor Operations
- Platform,
22
I
Pouching,
and Opening Units -described
2
and are affected by many of the same factors that affect manual :sorting.
Other operations
3
earlier.
such as the cancellation
These activities are largely manual
/ mail preparation
The cancellation
operaticlns are
4
critical support activities for mail sorting.
/ mail preparation
5
accepts the originating
6
mail, cancels the stamped mail, and divides the mail into functional
7
categories:
A'
barcoded
9
evidence of the night’s volumes and arrival times are seen in these operations
mail collected locally, orients this mail, separates
non-machineable
mail for hand-cancellation
activity
the metered
processing
and manual sorting,
mail to go directly to the BCSs, and mail for the OCRs and RBCS.
10
they are critical to the success of the night’s processing.
II
cannot work at capacity until the cancellation
12
to them.
13
sorting operations
14
operations
I5
expeditiously
These operations
The first
and
Outgoing sorting activities
/ mail preparation
activities get the mail
act as a gateway through which mail for subsequent
must pass.
It is critical to the success of the outgoing
that mail be processed
through the cancellation
operations
distribution
as
as possible.
16
F.
Similar Operations
at Non-MODS
Facilities
17
In smaller facilities not covered by MODS, sorting schemes are often simpler,
18
the workroom
floor is smaller, clerks have greater personal knowledge
19
delivery area, and their very size makes it easier to keep a steady flow of m#ail to
20
operations
21
mailflows are similar to those at facilities reporting to MODS, and the factors
22
accounting
23
size.
such as manual letters and flats. Nonetheless,
of the local
the equipment
for volume variability would thus be much the same regardless
and
of facility