ADDRESS QUALITY

Joe Lubenow

Lubenow and Associates

Chair, PostCom Postal Operations Committee

PostCom Letter Mail Summit

Presented at MTAC

18 May 2006

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DIMENSIONS OF ADDRESS QUALITY

• Move Update • Address Accuracy• Address Presentation On Mail Piece

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PHASES OF ADDRESS QUALITY

• Address Acquisition• Parsing: Address Elements• Address Standardization• Address Matching• Database Storage• Address Data Transmission

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R2006-1 ADDRESS CORRECTIONS

• Manual corrections– Now 75 cents, proposed 50 cents

• Electronic corrections– Now 21 cents– Proposed 6 cents (First-Class), 25 cents (other)

• Automated corrections (letters only)– First-Class, first two per address free, additional 5 cents– Standard Mail, first two 2 cents, additional 15 cents– 4-state bar code required under One Code ACS– Additional address quality requirements to be specified

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R2006-1 SELECTED RATE DIFFERENTIALS

• First-Class presorted letters 40 cents• First-Class automation letters at worst 34.6 cents• Additional ounce differential another 4.5 cents per

ounce for automation versus presorted• First-Class presorted cards 24.1 cents• First-Class automated card at worst 22.2 cents

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R2006-1 SELECTED RATE DIFFERENTIALS

• Standard Mail nonautomation letters vs. automation letters– Mixed AADC 29.2 cents versus 25.2 cents

– AADC 28.7 cents versus 24.2 cents

– 3-digit automation 23.5 cents (not for nonautomation)

– 5-digit automation 21.9 cents (not for nonautomation)

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2002 FEDERAL REGISTER NOTICE

• Would extend move update requirements beyond First-Class to other classes

• Not included in R2006-1

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AUGUST 2007 CASS REQUIREMENT

• CASS currently has a Delivery Point Validation (DPV) option• DPV is becoming mandatory in August 2007• National average 95% ZIP+4, 90% DPV according to USPS• Full DPV match requires complete and correct addresses• But July 2007 requirement is only for correct addresses in

terms of primary numbers• So incomplete addresses with missing apartment and suite

numbers are still OK• That is the main reason for failure to make a full DPV match• So a 5% shortfall in DPV may mean a 2% loss of automation

discounts

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AUGUST 2007 CASS REQUIREMENT

• Naturally, your results may differ and testing is required• If your ZIP+4 rate is 93% and your full DPV match rate is

85%, your shortfall could be 4%• If your ZIP+4 rate is 97% and your full DPV match rate is

95%, your shortfall could be 1%• Some mailers can suppress DPV match failures as they may

do with ZIP+4 match failures• Some cannot do this for various reasons• This remedy should not be adopted without testing as DPV

match failures may be deliverable

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MTAC WORK GROUP #97BEST PRACTICES IN ADDRESS QUALITY

• Report is available on USPS Web site• Recommends a new approach to address quality• Not line by line, but element by element• <1401 N Main St> has four address elements• Store parsed address elements and assemble them to create

address block• Store dates of address hygiene performance• Vendors have yet to fully support this approach• See Address Data Interchange Specification (ADIS) from

IDEAlliance (www.idealliance.org) for an example• This approach is used in UPU S42 international addressing

standard

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ADDRESS QUALITY AND THE 4-STATE CODE

• The 4-state bar code will be available for limited application in September on letter mail

• Used for OneCode ACS and OneCode Confirm• Combines information from Postnet and Planet code• Can identify mailer, mailpiece, and address uniquely• Could be used to receive address element corrections• Could be used to guarantee complete and correct

addresses allowing postal verification without statistical risk

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R2006-1 UAA COST STUDY

• By Christensen Associates• First study since 1999• Studies Undeliverable As Addressed (UAA) Mail• Studies Personal Knowledge Required (PKR) Mail• Outgrowth of USPS/industry Product Redesign• Based on 2004 (pre-PARS) environment

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R2006-1 UAA COST STUDY: KEY POINTS

• Jack Potter in 2005: cut UAA in half by 2010• UAA is 10 billion pieces and $1.8 billion • R2006-1 starts with 2004 pre-PARS environment• PARS rollout calculated through 2008• 2008 is R2006-1 test year• 2008 is also date of full PARS implementation for

letters

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R2006-1 UAA COST STUDY: KEY NUMBERS

2004

• Forwarding cost: 21.3 cents

• Return cost: 51.3 cents

• Wasted mail cost: 4.4 cents

2008 (projected)

• Forwarding cost: 18.2 cents

• Return cost: 50.6 cents

• Wasted mail cost: 5.3 cents

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R2006-1 UAA COST STUDY: BREAKDOWNOF COSTS

2004 PRE-PARS 2004 WITH PARS 2008 WITH PARS

FORWARD $422 M $319 M $326 M

RETURN $822 M $697 M $727 M

WASTED $270 M $290 M $365 M

CORRECTION $318 M $200 M $221 M

SUBTOTAL $1832 M $1506 M $1639 M

ADMIN/SUPP $24 M not est. not est.

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R2006-1 UAA COST STUDY: KEY RESULTS

• By 2008 UAA is still a projected 10 billion pieces• By 2008 projected UAA cost is $1.6 billion• These results look unspectacular• But let’s look deeper• First: more delivery points• Second: increase in labor and other costs• Third: conservative assumptions on interaction

effects of PARS and other programs on mailers

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R2006-1 UAA COST STUDY: PKR MAIL

• What about PKR mail?• We may think of this as incomplete addresses• It is a likely cause of inconsistent delivery• MITF studies show this as a serious problem• Also it is not affected by PARS, as USPS concedes• So the 2004 figures are not reduced by PARS• The 2008 increased costs are not estimated

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R2006-1 UAA COST STUDY: PKR MAIL

• 2004 PKR pieces are 2,332 M• 2004 PKR costs are $160 M, or 6.9 cents per piece• This is based on sortation rejects, redirects within route and

redirects within station• But this may leave out some factors• What about carrier delivery slowdowns?• PKR mail will have different delivery point barcodes for high

rise apartments and suites• PKR mail may not DPS to a contiguous location in the tray• This could add to the PKR cost totals

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R2006-1 UAA COST STUDY: PKR MAIL

• Apartment and suite numbers are only included in the barcode so far for high rise addresses

• Non high rise MFDU’s need delivery point differentiation• This will at some point be achieved by a Total DPS program• Total DPS is needed for unique delivery point differentiation• This also could add to the PKR cost totals• Finally there will be growth in labor and other costs• This also would increase the PKR costs totals• So it is not unreasonable to expect that total costs of address

quality deficiencies will still exceed $1.8 billion for 2008

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R2006-1 UAA COST STUDY: PKR MAIL

• So what can the USPS do about missing apartment and suite numbers?

• SuiteLink can help for suites• ApartmentLink is technically feasible• At the NPF Jan Caldwell stated that ApartmentLink is not to

be expected because of privacy concerns• So what can the USPS do about missing apartment numbers?• We have contended that there are four main approaches to

this issue:– Inform– Invent– Infer– Incent

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R2006-1 UAA COST STUDY: PKR MAIL

• The USPS cannot be expected to inform mailers about apartment numbers due to privacy concerns

• The USPS cannot be expected to invent substitute virtual apartment numbers due to cost and complexity factors (remember the ill-fated Kelly plan in NYC in the 90’s)

• USPS equipment could infer some apartment numbers, but not when name and address formats vary or when the apartment number is not in private databases

• Therefore it is time for the USPS to incent mailers to obtain and share available apartment numbers

• This can best be done by de-averaging the rates for complete and incomplete addresses

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CONCLUSIONS

• The highest levels of address quality needed to support the maximum system efficiency cannot be achieved through USPS technology alone

• The highest levels of address quality needed to support the maximum system efficiency cannot be achieved through mandated address quality regulation alone or in conjunction with USPS technology

• The highest levels of address quality needed to support the maximum system efficiency can only be achieved by combining technology and regulation with the cooperation of industry and the USPS through work sharing incentives