The Sourcing Interests Group (SIG) has facilitated networking and education in the procurement and sourcing fields since 1991, helping members optimize outsourcing and reduce costs. The document highlights strategies for managing costs associated with the USPS's shape-based pricing changes, emphasizing the importance of adapting mail practices to leverage discounts. Upcoming SIG events include webinars and summits, aimed at providing further education and networking opportunities for procurement professionals.

1. Since 1991, the Sourcing Interests Group (SIG) has provided forums for networking, relationship building, knowledge sharing and education in a non-commercial environment. SIG, a recognized industry-leading, membership-based organization, helps members to achieve improved business results, sooner, at a lower cost and with reduced risk across the spectrum of outsourcing, offshoring, insourcing, procurement and shared services. SIG members are from both the user and provider communities drawn from Fortune 500 companies. For more information go to www.sourcinginterests.org Welcome to Neutralizing the US Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals Should Know to Help Control the Cost of Mail Presented by Océ Business Services, Inc.

2. Upcoming SIG Events SIG Webinar Series- every Tuesday Register at www.sourcinginterests.org NEW DATE: Thursday, April 23, 2009 - Winning Tools and Techniques for Sourcing in a Down Market Presented By: Denali Consulting April 28, 2009 - An Integrated View of Supplier Risk: Protecting your Company’s Results and Reputation Presented By: Hiperos LLC May 5, 2009 - Untapped Savings Opportunity: An Innovative Approach to Rapidly Reduce Costs Presented By: ICG Commerce and The Hackett Group SIG Global Leadership Summit, Loews Coronado Bay, Coronado, Calif. October 20 – 23, 2009 Upcoming Regional Meetings Regional Meetings are one-day gatherings that provide an intimate setting for providers to interact with corporate users. SIG's Regionals provide education and local networking for members and invited non-member corporate users. Tuesday, April 28th – New York City Thursday, April 30th – Chicago Wednesday, May 20th – Toronto Register at www.sourcinginterests.org For more information, call 530-582-8600

3. Joseph Freeman, CMDSM, MQC, AQS, ECMP James P. Mullan, CMDSM, EMCM, MQC, CSSGB April 21, 2009 Neutralizing the U.S. Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals Should Know to Help Control the Cost of Mail

4. Speakers Joe Freeman, CMDSM, MQC, AQS, ECMP Joe is a Business Solutions Architect with over 20 years of experience managing planning, and implementing large and complex mail center operations in Fortune 1000 companies. He is a leader in the Mail Systems Management Association (MSMA) where he currently serves as the NY Chapter President. James P. Mullan, CMDSM, EMCM, MQC Jim is a National Operations Manager at Océ responsible for overseeing complex client mail operations. His 35 years of experience includes mail process management, mail automation, shipping & receiving, disaster recovery planning, distribution, and fulfillment. Jim currently serves as Executive Vice President of the GNY MSMA. He also served as Chairman on the CMDSM Study Guide Committee.

5. About Océ Business Services, Inc. Division of Océ N.V. – 131 years, € 3.0B Onsite Document Process Outsourced Services Life-cycle document process approach Mail, Print, Scan, Records, eDiscovery – physical and electronic Six Sigma based methodology US, Canada, Europe Philippines processing center – legal coding, indexing Global revenue ~ €427M, 8,000 employees 1,250 client sites 95% client retention rate IAOP Top 100 Global Outsource provider 2007, 2008, 2009 Black Book of Outsourcing #1 DPO Provider 2007, 2008 Socia-Gelbmann Top eDiscovery Provider Copyright © 2009 IAOP. All Rights Reserved. Océ N.V. Venlo Hdqr

6. Agenda The USPS Shape Based Pricing of 2007 Strategies to overcome price increase Top mail consuming functions Implementable tactics to control mail cost Mail Center technology and cost analysis

7. U.S. Postal Service Reform Act- Dec 9, 2007 Provided the ability for the government to re-write the rules regarding postal rate increases Old practice: timely and costly – utilized a series of rate inquiries, hearings and requests, then approval meetings and CFR updates New procedure – evaluate Postal cost on an annual basis and increase prices in line with cost of living

8. USPS Shape-based Rate Change US Postal Service rate restructuring took effect May 14, 2007 New rates are based on weight and shape $ + $ Previous Now

9. USPS Rate Change Major increase in costs for non-conforming pieces Decrease in costs for conforming pieces 2 oz flat +54.0% 63¢ 97¢ 63 ¢ 59¢ 2 oz letter - 7.9% 63 ¢ $1.30 2 oz parcel +106.3%

10. What shape is it?

11. Poll Question #1 Do you know what your total cost of mail is? Yes No

12. 5 Strategies to reduce mail cost Change shape to avoid cost increase Review, challenge Mail Class or Service needed Use automation (intelligent bar code) Change, update, mail piece / document design Database (house list update, cleanse, update, CASS, etc)

13. Strategies – Shape Change shape to avoid cost increase Fold Package Group / Combine Flat-size to letter-size envelope Save 38 ¢ 2-oz example 97¢ 59¢

14. Strategies – Class / Service When, How, Where Review, assess, and challenge mail class requirements Review, assess, and challenge mail service requirements Co. Location 1 Co. Location 2 Field Office Mail Center Bureau pre-sort (automated) Direct USPS Group to package/pouch Multiple Mail Options Customer Home Example Mail Center

15. Strategies - Automate New Intelligent Mail Barcode (IMB) What it is … Benefits of IMB How to use the IMB Detailed specs at www.ribbs.usps.gov

16. Strategies – Change, update mail piece and/or document design/format Document design can made a big difference 2 page to 1 – print duplex, cut paper in half Letter size v. flat size Send and return address window envelope Variable data, 1 to 1, document composition Simple formats can reduce number of pages Decrease margin Decrease font Variable data and document composition tools may combine 2 documents/mailings into 1 Trans Promo Package can make a difference Padded to card board to avoid over ¾ inch

17. Strategies – Database Return mail facts Total cost of re-mail estimated at $3 per mail piece 18% of outgoing mail pieces have something wrong with the address 2% of all mail is returned Return in corporate mail can be up to 20% House list hygiene 17% of consumers and businesses move every year Use mail center to update databases and prevent re-mail USPS data services CASS ACS – Address Correction Service DPV Delivery Point Validation Fast Forward

18. High Mail Consumption Activities Customer Service Sales & Marketing Field offices / Distribution Centers Shared Service Center Accounting/Finance, HR, Logistics, Training Processing Centers (print production) Headquarter or Regional Offices

19. Poll question #2 Has your company implemented changes to take advantage of the postal discounts offered under the shape-based pricing method? Yes No Don’t know / not sure

20. Mail cost reduction tactics Letter - reduce thickness to < ¼ inch 6” x 9.5” + = $1.14 Flat Rate 10 sheets folded in half < ¼ thick + = $0.59 Letter Rate Reduce envelope thickness save 40%! 6 Pages 6 Pages 6 Pages 6 Pages 10 sheets tri-folded 20lb. stock > ¼” thick 4” x 9.5” From To For every 10,000 pieces save = $5,100

21. Mail cost reduction tactics Category - change from FLAT to Letter + = $1.14 + = $0.59 10” x 13” Flat Change size category by folding save 49%! From To 9 sheets folded in half 6” x 9.5” For every 10,000 pieces save = $5,500 6 Pages 6 Pages 6 Pages 6 Pages 6 Pages 9 Sheets mailed flat

22. Mail cost reduction tactics Automation - IMB 2 oz. letter 1 oz. letter 33.4¢ 45.9 ¢ Automated 21% Savings 20% Savings Based on 3-digit sort Not Automated 59 ¢ 42 ¢ Automate and save 20%! Automation requires a minimum volume of 200 mail pieces

23. Mail cost reduction tactics Duplex print reduces weight and thickness by 50% 10 Pg document Double side print, 5 sheets Weight reduced by 1 oz. Mail category – letter (bi-folded) Cost $0.42 6” x 9.5” 10 Pg document single side print, 10 sheets If tri-fold thickness >1/4 = flat Or Flat Mail category – flat Cost $1.14 10 Pg document single side print, 10 sheets Mail category – letter (bi-folded) Cost $0.59 Bi-fold, change shape save 49% 6” x 9.5” Duplex print, reduce weight, (help the environment) + Bi-fold, change shape save 63% 9” x 13” or 4” x 9.5” thickness >1/4”

24. Mail cost reduction tactics General Address for Success – address validation Design to shape-based standard Combine (consolidate) mailings (House holding) Mind Your Packaging Contain Certified Mail Costs Track and Control Postage

25. Getting Cost of Mail Data USPS mail accounting tools Postage tracking by Departments Mail classes Timeframe Rate Shop Carrier systems and reports Mail process performance management tools such as Océ MAX

26. Conclusion The USPS shape-based pricing requires attention until organizations migrate from the old ways of mailing to the new The strategies discusses will help reduce costs immediately but they require implementing change Procurement professional can help reduce the cost of mail by working with the mail center and business units to help implement the strategies and tactics throughout the organization

27. Thank You! Q & A Joe Freeman [email_address] Jim Mullan [email_address] ADVANCING TO A HIGHER LEVEL Business Services www.obs-innovation.com

28. Upcoming SIG Events SIG Webinar Series- every Tuesday Register at www.sourcinginterests.org NEW DATE: Thursday, April 23, 2009 - Winning Tools and Techniques for Sourcing in a Down Market Presented By: Denali Consulting April 28, 2009 - An Integrated View of Supplier Risk: Protecting your Company’s Results and Reputation Presented By: Hiperos LLC May 5, 2009 - Untapped Savings Opportunity: An Innovative Approach to Rapidly Reduce Costs Presented By: ICG Commerce and The Hackett Group SIG Global Leadership Summit, Loews Coronado Bay, Coronado, Calif. October 20 – 23, 2009 Upcoming Regional Meetings Regional Meetings are one-day gatherings that provide an intimate setting for providers to interact with corporate users. SIG's Regionals provide education and local networking for members and invited non-member corporate users. Tuesday, April 28th – New York City Thursday, April 30th – Chicago Wednesday, May 20th – Toronto Register at www.sourcinginterests.org For more information, call 530-582-8600

29. Since 1991, the Sourcing Interests Group (SIG) has provided forums for networking, relationship building, knowledge sharing and education in a non-commercial environment. SIG, a recognized industry-leading, membership-based organization, helps members to achieve improved business results, sooner, at a lower cost and with reduced risk across the spectrum of outsourcing, offshoring, insourcing, procurement and shared services. SIG members are from both the user and provider communities drawn from Fortune 500 companies. For more information go to www.sourcinginterests.org Thank you for attending Océ Business Services, Inc. presentation of: Neutralizing the US Postal Rate Increase: Strategies and Tactics Procurement and Sourcing Professionals Should Know to Help Control the Cost of Mail