Developing Professionalism

Peter Horsted RPP FAPM

Operations Strategy Business Manager

Agenda…..

•Where did we start o The Challenges along the way

•Where are we now o We continue to learn as we go

•The journey continues

•Summary

•Any burning questions

but first, some context……

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After 400 years of existence, Royal Mail continues to have a major presence across the UK and Europe…...

Our letters and parcels business - covering the ‘one-price-goes-anywhere’ UK universal service

Our pan-European parcels business employing over 14,500 employees across 42 countries

Our growing UK based express parcels business, delivering around 150,000 parcels a day

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Our core UK operation* delivers 54m letters and 4m parcels to 29m addresses daily! • We collect from 115,300 post

boxes, 10,700 post offices and 79,700 business customers six-days-a-week

• We operate 24 hours a day using a network of around 40k vehicles, 56 flights and 11 trains

• Today, we employ around 137k people, operating out of 39 mail sortation centres, 8 regional distribution centres and 1,356 delivery offices

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By March 2010, the prospects for the company looked pretty bleak…..

Group revenues were in decline, £120m less than 2009, due to the recession and the structural decline in our core volumes

The IT network and capability represented a huge risk to business continuity

Cash was flowing out, not in!

2%

£213m

£

£

The cost response was too slow, with the company unable to reduce costs at the same pace as revenues were falling. Unsustainable operating losses were the result

0% £

The network continued to lag behind other postal operators in terms of automation and efficiency. This required significant financial investment to address changing mix and falling volumes

Our pension deficit had ballooned to over £9bn, with the pension trustee threatening tough action £ £9bn

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The Postal Services Act 2011 provided a level playing field…..

®

Historic pension deficit to Government

Private investment

Post Office in public or mutual ownership

New regulator and regulation

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Strategic Plan: To become the best delivery and marketing mail business in the UK….

• Providing everyone with a safe working environment

• Delivering what we promise to customers

• Offering robust products and contracts at the right price

• Modernising operations and cutting costs across all of the business

• Engaging our people

• Obtaining the freedom to compete

• Restructuring the balance sheet (pension and debt)

• Attracting private capital for investment

• Managing our reputation

• Building a new Union partnership

• Providing premier delivery services (parcel and letter)

• Developing media services

• Innovating to develop new services for businesses and consumers

We need to… and simultaneously… to allow us to….

Drive profitable growth

Build a commercial future

Be brilliant at the basics

…and generate sustainable positive cash flows

Final version Strictly confidential

The Operations strategy will

Reduce our cost base.

Meet efficiency targets, deliver

strong operational performance

and increase flexibility.

Achieve customer and service

targets.

Support transition to a future focused

network

Simplify & standardise methods, embed core

standards, reduce

performance variability

and provide a platform for

continuous improvement

Embed Agenda for Growth and new ways of working.

Drive collaborative

behaviour to enable more

flexible, faster and more

efficient Royal Mail

Make Royal Mail be easier to do business with, deliver

enhanced customer experience

and services, enable future

commercial opportunities and

support growth in Parcels

revenues

Embed culture change.

Operations will look feel and act different.

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UK parcels market continues to grow

• Currently worth £5.8 billion a year

• Growth to continue as consumer shopping habits change

• Parcels account for nearly half the money we make as a Group

• Highly competitive, with multiple players

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• Optimised collection routing

• Use of digital handheld devices

• Migration from bags to tray

MAIL COLLECTIONS

• Optimised Network

• Optimised Vehicle Maintenance

• Enterprise systems such as SAP HR

• Track & Trace

LOGISTICS & TECHNOLOGY

• State of the Art Automation

• Optimised Plant Capacity

• Address Interpretation Technology

• Standardised processes

MAIL SORTATION

• Automation • New Delivery

Methods • Digital

handheld devices

• Improved customer experience

MAIL DELIVERY

The modernisation portfolio is extensive and covers every aspect of the operational pipeline…. Modernising daily collections from 115k

Boxes / 11k POs / 80k Businesses Reducing Mail Centre estate from 69 to

37 enabled by improved automation Modernising 1356 Delivery Offices and 66k

Delivery routes serving 29m addresses Including maximising the efficiency of 40k

vehicles, 56 daily flights and 11 trains

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We are over two thirds of the way through an investment programme to modernise our Mail Centre sortation network, closing 34 plants so far, 18 since March 2012…. Key design principles:

Safety: Safe ways of working with common standards

Quality: Optimal locations meeting quality of service requirements and delivering standardised performance

Efficiency Highly efficient, standardised layouts and cost: with modern automation equipment

Reduced logistics and Mail Centre networks

People: Right tools for the job and an enhanced working environment

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And achieving a visible change in the way we deliver mail, creating capacity and capability for parcels growth…..

...delivering seamless change on this scale, whilst maintaining a high quality ‘business-as-usual’ service to the UK public every day

Our single biggest challenge to date….

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Supporting the transformation through skilled resource and robust governance….

• Projects aligned to programmes • Reporting into a centralised PMO with satellites • Working to a standard governance model • Supported by a strong leadership and engagement focus • Enabled by a peak of over 1,000 internal programme, project

and change leadership professionals plus multiple suppliers

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3

2008 2009 2010 2012 2011 2013 2014 2015

COLLECTIONS

Visibility & Tracking

PROCESSING

•Materials Handling/Traying

•MC Rationalisation

DELIVERY

Collection Traying & Front end Phase 1

Flats Automation

Walk Sequencing National Deployment

LSM Replacement & Single Pass Sorting

Traying– retail wholesale

Delivery Methods Deployment

People Systems Programme

RFID Install 300 DOs

Collections best practice at 683 hubs.

CFC upgrade and rationalise

RFID to MPUs

AI (MEARS)

Service Centre Review – Phase I reduction 157 to 97

Delivery revisions repeated to achieve top 10% goal

Delivery Office reduction (1350 to c. 1270 by March 2013, thereafter through Delivery Design)

NTK Rev NTK Rev NTK Rev NTK Rev NTK Rev NTK Rev NTK Rev

Parcels Sortation

•Automation

•Sorting

LOGISTICS

Mail Centre reduction 68 to 33

RDC Rationalisation

PDAs

WORLD CLASS MAIL

Mail Centres & RDCs

Delivery and all of rest of Collection/Logistics

SYSTEMS (OPS)

Customer product migration

WCM On-going

PDAs for Tracked Plus

Collection revisions repeated to achieve top 10% goal

WCM On-going

The Core Period of Modernisation is 2010-2013

Parcels Automation

Safety

Industrial relations

Improving customer

interaction

Deliver what we promise

People engagemen

t

Automating mail

processing

Reduce delivery & collection costs

New delivery methods

Mail Centre efficiency

World Class Mail

Optimise networks

and logistics

Upgrade our IT estate Corporate

Responsibility and

Sustainability

Reduce delivery & collection

costs

July 2014

Delivery Office Revisions

PDAs on Collections

Enterprise Intelligent Barcode

Supply Chain Visibility

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THE START OF OUR JOURNEY

WITH OUR PEOPLE

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Formal Qualification Road Map

Professionalism = knowledge +

experience + ethics + leadership

Senior practitioner /

expert

Practitioner

Foundation

Ca

pa

bil

ity

le

ve

l

Many standards

Some standards

Few standards

Prince 2

Competence

=

knowledge

+ experience

Knowledge

Assessment

MSP

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Transaction

Transformation

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5 dimensions of professionalism

A framework or methodology which defines the processes and practices for the organisation

A competence framework to map levels of knowledge and experience at appropriate levels

Qualifications to provide developmental opportunities and recognition of competence at appropriate levels

A continuing professional development scheme that broadens horizons and builds understanding through sharing of good practice

Recognition that true professionals should be accountable for their actions and adhere to a code of ethics and professional conduct

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Competence Framework

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Professional Qualifications & Recognition

• IC

• Prince 2

• APMP

• MSP

• PQ

•RPP

• Application

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Training Partner

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We continue to learn as we go….

‹#›

Formal Qualification Road Map

Professionalism = knowledge +

experience + ethics + leadership

Senior practitioner /

expert

Practitioner

Foundation

Ca

pa

bil

ity

le

ve

l

Many standards

Some standards

Few standards

IC

APMP

Prince 2

Competence

=

knowledge

+ experience

Knowledge

Assessment

MSP

‹#›

Professional Qualifications & Recognition

• Competency Framework

• Professional Recognition IC / APMP / RPP

• APM Involvement SIGS / Regions / Awards / CMLG

• 35hrs CPD

• Royal Mail Group endorsement and expansion

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Plus external recognition for the Programme continues to grow…. Winner of the Association for Project Safety Awards 2012:

• CDM Co-ordinator of the Year Award • Regional Health & Safety Award

Finalist for 3 major Association for Project Management Awards 2012:

• Programme of the Year

• Shell HSSE Award

• Project of the Year Runner-up for the Constructing Excellence Awards for London and the South East 2012:

• Project of the Year, Client of the Year and Outstanding Customer Satisfaction

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External recognition for what we are doing with our people

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Return on Investment (ROI)

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The Future • RPP

• Further alignment of competency framework

• Apprentice Scheme

• APM Corporate Accreditation

• Direct Involvement

• CMLG

• Change Management

• Put our money, time and effort where our mouth is!

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Summary

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Transforming

delivery PDAs for all

Transforming parcels IT

Acting

Commercially

Parcelforce expansion

Parcels automation

Simplifying

services

Barcoding all parcels

Further expansion

Our Business Challenges

Customers Technology Automation & Growth

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Strategic Plan: To become the best delivery and marketing mail business in the UK….

• Providing everyone with a safe working environment

• Delivering what we promise to customers

• Offering robust products and contracts at the right price

• Modernising operations and cutting costs across all of the business

• Engaging our people

• Obtaining the freedom to compete

• Restructuring the balance sheet (pension and debt)

• Attracting private capital for investment

• Managing our reputation

• Building a new Union partnership

• Providing premier delivery services (parcel and letter)

• Developing media services

• Innovating to develop new services for businesses and consumers

We need to… and simultaneously… to allow us to….

Drive profitable growth

Build a commercial future

Be brilliant at the basics

…and generate sustainable positive cash flows

‹#›

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Thank you Any questions?