March 13, 2001

To: Plant Managers, AFSM 100 Processing Sites

Subject: AFSM 100 National Standardization Guide

The AFSM 100 represents a significant capital investment on the part of the US Postal Service. As a user of this critical technology, you play a key role in our future competitiveness.

This book has been designed to provide you with the critical operating policies, procedures, and instructions that will enable you to achieve our national performance targets. By operating to these, I am convinced you will be able to achieve the productivity and distribution quality levels that this technology offers. This will help reduce flats processing costs, which, of course, is an essential part of our strategy to grow this key product segment.

The book is designed to describe a standard process and drive consistent operating results throughout the USPS network. The procedures, described here, have already been proven to produce the performance targets shown. We are therefore, not only giving you an operating target to achieve; we are also giving you the process tools to achieve it. As the owner of this process, it is my obligation to you, the Operator - to provide you with a well-documented process that is capable of achieving the performance needed. Your obligation is to conform to the process and therefore be compliant with its procedures. (An electronic version of this book can be found on the National Standardization Web page.)

The implementation of this national standard process is concluded with your expected 'Certification' as an Operator (i.e., the AFSM 100 location, its operating personnel and management) who is in compliance with both the process procedures and the performance results. It is only natural, however, for processes to degrade over time. Therefore, periodic assessments of the process will be conducted, by the Areas, to assure that process compliance and performance results are maintained.

We are striving for more than just a process status quo. Like any successful business, we will, over time, make continuous improvements in what the process can achieve. To accomplish that, I am dependent on feedback and suggestions from you, and the other Operators throughout the national network, as you gain experience and find ways to improve the process. Your ideas, therefore, are welcome, encouraged and needed. As I receive them, we will review and evaluate those that can drive national improvements. These enhancements will then be combined and rolled out in subsequent releases of the AFSM 100 National Standardized Process.

This is an excellent process to use for Standardization and I am pleased to be its owner for many reasons:

• During "The Year of the Flats", this process has more improvement potential than most.

• With the AFSM 100, we have invested a significant amount of capital to improve our competitiveness.

• It is supported by excellent Standardization tools.

Walt O'Tormey

Manager, Processing Operations

National Process Owner, AFSM 100

The USPS is undertaking a major effort to improve flats processing. We are attacking our cost structures and performance levels across all of our flat processes in our processing system. Just as with our past automated letter strategy, we will drive down annual cost increases to be less than inflation, and we will improve our product quality to achieve service levels comparable to our current letter performance.

During the FY 2000 to FY 2002 period, we are rolling out 535 Automated Flat Sorting Machines, Model 100’s, (AFSM 100’s). These machines will replace our FSM 881 machines and will allow us to substantially reduce the volumes of flat mail sorted manually in plants and in delivery units. Additionally, the FSM 1000’s will be retrofitted for automated feeding and sorting for automated handling of oversize flats. The output from the AFSM 100’s and FSM 1000’s are much more uniform when mail processed is properly oriented when sorted. This also improves downstream processing.

Process improvements and costs savings will occur in waves with plants getting the first direct impact by replacing FSM881s with the higher productivity machines and by greatly reducing plant manual flats distribution. The second set of processes to gain from our new flats technologies will be our Customer Service clerical operations. We will be able to substantially reduce LDC 43 work hours as this wave of impacts takes effect. We also will provide carriers with earlier mail flows and with better oriented mail.

Standardization of our flat processes and the preparation & readability of flat mails by our originating mailers will be our primary tactics for achieving the targeted cost reductions and quality improvements. We will systematically certify all flat distribution sites in our network for compliance to the standardized processes and to the attainment of targeted performance levels.

The AFSM 100 systems include an optical character reader, bar code reader, and on-line video coding system for processing OCR rejects. The AFSM 100 is equipped with three automatic feed stations and 120 stackers, and it has the capability of future stacker expansion. Those features, along with its high speed processing (over 17,000 pieces per hour), high OCR/BCR read rates, and the planned tie-in to material handling systems (e.g., Tray Management System), makes the AFSM 100 a highly efficient automated processor and minimal user of manual labor.

The AFSM 100 will provide additional machine capacity that must be optimized by properly managing the flow of mail. It processes mail approximately 2 - 3 times faster than the FMOCR/881 and its utilization needs to be maximized.

Operations managers need to continuously determine the availability of mail by type and class and process it on the equipment that will result in the lowest processing cost per thousand pieces. Given the capabilities of the AFSM 100, it will be the least costly of the three types of flat sorting equipment to operate based on throughput, the number of handlings required to finalize distribution, and staffing. However, due to mail type characteristics, read rates, service commitments and available processing windows, the AFSM 100 can only process approximately 80% of the current mail flat base. FSM 1000’s and typically one flat case per sort program will process the balance of the flat mail for primary distribution.

To help achieve our operational objectives, national standard procedures and work instructions have been developed for the operation of the AFSM 100 proven to achieve the performance levels in the table below. All employees (craft and management) need to be knowledgeable of, and trained in, the procedures and instructions that support these targets and understand these guidelines in relation to their duties.

A key finding in the initial deployment sites was the distinct correlation to AFSM 100 Standard Operating Procedures compliance and overall productivity. The initial sites' AFSM 100 inventory ranged from one to four machines. It is expected that volume per machine will fluctuate depending on availability of mail type, but productivity by source types should be maintained at national requirements. The following performance indicators and targets represent demonstrated levels of performance achieved through compliance to the processes and procedures in this guide.

The total AFSM 100 productivity target will vary depending on relative amount of Image load (as % of TPH), mailmix percentage (as % primary mail of total) and imagemix percentage (as primary images of total images). Below are three examples.

Note: With the exception of keyer performance requirements for speed and accuracy, the following are targets, not employee work performance standards. Also, for additional information on what an indicator means or how to measure it, please review the appropriate Work Instruction.

There are six groups of critical success processes that drive the achievement to performance levels.

• NATIONAL and LOCAL PROGRAM LEADERSHIP and IMPLEMENTATION

• AFSM 100 Coordinator

• AFSM 100 Cross Functional Team

• Program Plans and Timelines with initial Certification

• Work Instruction: Preparation for Local Process Certification

You need to invest wisely up front in implementing our new flats technology solutions so we will not expend funds later through long-term poor performance. All employees who operate or manage the AFSM 100’s and the various support operations need to be trained on all applicable procedures, instructions, and this Guideline. Furthermore, they need to fully understand how to best do their jobs so that they can achieve the targeted performance levels. Local leadership must dedicate and train critical resources for site preparation, training of employees, machine acceptance, machine ramp up, and site certification. A dedicated AFSM 100 coordinator is needed for roughly 60 days prior to machine deployment. This coordinator will need to continue until 30 days after the last machine is installed and certified as being in full compliance with the Standard Operating Processes and in full attainment of the targeted performance levels. The AFSM 100 coordinator must have the usage of cross-functional resources such as in-plant support, maintenance, customer services (Function 4), delivery programs support, budget, human resources, facilities, and Labor Relations. These resources will be used to identify FSM 881 volumes and manual volumes in plants and customer service units that can be captured and processed on the AFSM 100’s. They also will identify and capture the work hour savings and complement reductions from shifting this processing to the AFSM 100’s.

• KEY ONGOING OPERATIONAL PROCESSES

• System Level Procedure

• Supervising AFSM 100 Operations

• Mail Preparation

• AFSM 100 End of Run/Sort program Changeover

• AFSM Feeder Operations

• AFSM Sweeper Operations

• Clearing Jams on the AFSM 100

• Preventive and Operational Maintenance

The following processes were also identified at National AFSM 100 Standardization Pilot Sites as driving cost performance of the AFSM 100. These processes are key to optimize machine throughput.

The most critical process steps are the preparation of mail and management of the mail flow. With untimely preparation and mail flow management, these high-speed machines easily run out of mail to process.

Also important is the management of transition periods, such as start-ups, program/tour changeovers, and dead times from jams and ineffective feeding / sweeping.

Proper staffing in any operation is important and the AFSM 100 is no exception. A very important point to keep in mind when staffing is scheduled for an AFSM 100 is that it is a system of three parts: mail preparation, direct machine distribution, and the Video Coding System. Staffing for the machine itself has been determined. The following information is provided to assist a site in determining the proper staffing for an AFSM 100 process.

• VCS Staffing

• Mail Preparation Staffing

• COMMUNICATION PROCESSES

• Pocket Cards
• Performance Tracking (real time during tour)
• Work Instruction: AFSM 100 Performance Tracking and Coaching

To properly standardize any operations, standardized Communication Aids such as posters, signage, and pocket cards are needed. These are prepared and installed prior to machine acceptance and must be maintained after operation start-up. Ongoing communication of Supervisors with their crews, including daily AFSM 100 process discussions using performance tracking reports and discussion boards are needed to ensure the crews always understand their performance to targets, and that we transfer result ownership to our operators to the maximum extent possible.

• Productivity Performance vs. Targets
• AFSM 100 Certification Assessment Checklist
• Employee Training and Records of Demonstrated Skills
• System Level Procedure: Resolution of Process Assessment Non-Compliances

• Maintaining Certification
  • Assessment Triggers
  • Random / Periodic and Performance-Triggered ongoing Assessments

The USPS expects a new machine, such as the AFSM 100, to be fully operational and attaining its performance targets within 60 days of machine acceptance. After the 60-day ramp up period, the planned work hour reductions are taken out of each Performance Cluster’s budget. Historically, intended business targets have often been missed when processes have not been certified or otherwise validated to be effective. Initial certification, therefore, proves the demonstrated ability of a site to properly use all of the national standard processes and tools and to attain the nationally targeted performance levels.

Individual locations that identify and test improved process approaches should forward these revised processes, with supporting test results, to the National Process Owner / Manager, Processing Operations for consideration for national application. Approved national enhancements need to be as fully implemented and documented as in the original process. Based on change complexity, re-certification may also be required.

NATIONAL PROGRAM LEADERSHIP

Successful implementation of the AFSM 100 requires an integrated approach by various functional units; each contributing tasks vital to the overall mission. This overview furnishes a macro-level information tool supported by the indicated source references. It is advised that the AFSM 100 Coordinator and all functional department coordinators also review both the AFSM 100 Implementation Guide and the AFSM 100 Support Guide for additional specifics relative to their tasks and for continuing operation.

The following is a text schematic of the AFSM 100 implementation process through location Certification, demonstrating the phases of the effort.

IMPLEMENTATION OF AFSM 100

60 Days Prior - Site Team Established

7 Days Prior – Sort Programs, Mail Volume and Base Set. Train Craft & Supervisors

Installation

10 Days After – Individual Supervisor & Employee Demonstrated Ability Verification

45 Days After – Formal Walk-through

52 Days After – Full Operation Certification

60 Days – Budget Reductions and Process Assessments Begin

240 Days

DCO has 12 weeks/60 days to reach full ability

CRITICAL ONGOING AFSM 100 OPERATION PROCESSES

National standard procedures and work instructions have been developed for the operation of the AFSM 100 proven to achieve critical performance levels covered in the Executive Summary.

Eight critical operational processes have been documented at the System Level Procedure or the Work Instruction level and are presented in this Standardization Guide. Below is a short summary of the contents of each of these critical processes. On the following pages is each individual document in the order of the summaries below:

• System Level Procedure: "AFSM 100 Operation": To provide a high level overview for management, supervisors and operational personnel of the entire AFSM 100 process, including task responsibilities, desired performance, productivity, and controls.

• Work Instruction: "Supervising AFSM 100 Operations": To provide a structure for the effective supervision of an AFSM 100 operation and tools for achieving national operational goals. This instruction is performance based and focuses on WHAT the supervisor needs to do or facilitate for his/her tour to satisfy all performance targets. It focuses on how to maximize machine operational run time, whether through proper and timely tour preparation, fast and smooth changeovers or minimizing time lost from jams.

• Work Instruction: "Mail Preparation": To describe HOW mail preparation is to be performed. Although not a performance requirement, it helps the AFSM 100 sorting operations to achieve performance targets using the Flat Mail Cart (FMC). It emphasizes preparation personnel being productive as well as the importance of achieving by-pass, by taking advantage of mail from high volume mailers and from originating plants that sort flats using an AFSM 100.

• Work Instruction: "AFSM 100 End of Run/Sort program Changeover": Program changeovers create periods when mail is not being processed but workhours are still being incurred. Effective productivity management requires smooth and orderly procedures. The Work Instruction thoroughly details HOW to perform this activity correctly. It includes a diagram (of the period from 30 minutes before to 20 minutes after program changeover) with explanatory notes on the duties of each member of the machine crew during this 50-minute period.

• Work Instruction: "AFSM Feeder Operations": This covers HOW each of the 3 feeders prepares for operation, loads the machine and assists in changeovers on the AFSM 100.

• Work Instruction: "AFSM Sweeper Operations": This covers HOW each of the 2 sweepers prepares for operation, sweeps the machine and performs changeovers on the AFSM 100.

• Work Instruction: "Clearing Jams on the AFSM 100": Since jams impact productivity in TWO ways (Slowing down or stopping the machine AND taking up personnel time in clearing them), this Work Instruction describes HOW to efficiently clear each type of jams.

• Work Instruction: " Preventive and Operational Maintenance": Since availability, state of tune, and proneness to jams have exceptional influence on a plant’s success in meeting the AFSM 100’s performance and productivity targets, several key responsibilities, functions, and required activities are covered.

4. PERFORMANCE METRICS: