achieving transformational change - the royal mail experience
DESCRIPTION
This presentation was given by Ian Jones at a recent APM eventTRANSCRIPT
Achieving transformational change - the Royal Mail experienceIan Jones
Operations Programme Director10th January 2013
Agenda …..
• Why is this transformation important?
• What are we trying to achieve?
• What are the challenges?
• How are we governing this?
• What have we delivered?
• What have we learnt?
But first, some context……
3
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
4
The UK mail operation currently 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 40,500 vehicles, 56 flights and 11 trains
• Today, we employ 137,400 people, operating out of 50 mail sortation centres, 8 regional distribution centres and 1,356 delivery offices
5
Overall postal volumes have been in decline as technology and competition take effect…
m ITEMS
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
19,000
20,000
21,000
2007 2008 2009 2010 2011
20% DECLINE IN 5 YEARS
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Limitedaccess tocapital to
modernise
In addition, several other factors converged in recent years to create a challenging situation….
Marketliberalisation
beforemodernising
Legacypensiondeficit
Intrusiveregulatoryprice andconduct
controlsArtificialsortation
competition
7
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
8
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
9
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
10
• Trays not Bags
• Collections Optimisation
• Digital handheld devices on all collection routes
COLLECTIONS
• Network Optimisation
• Optimised Vehicle Service centre Network
• SAP HR – PSP
• Track & Trace
LOGISTICS & TECHNOLOGY
• Optimise Plant Capacity
• State of the Art Automation
• Enhanced Address Interpretation Infrastructure
PROCESSING
• Use of Automation
• New Delivery Methods
• Digital handheld devices on all delivery routes
• Convenient delivery
DELIVERY
The modernisation portfolio is extensive and covers every aspect of the operational pipeline, e.g....
We have invested £0.5 billion in proven technology supporting a high quality operation
INTEGRATED MAIL PROCESSOR x 138CULLER FACER CANCELLER x 74 LARGE LETTER SORTERS x 27
i LETTER SORTING MACHINES x 69 COMPACT SEQUENCE SORTER x 574
INTEGRATED MAIL PROCESSOR x 138
12
We are almost two thirds of the way through an investment programme worth £0.75 billion to modernise our Mail Centre sortation network…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 layoutsand cost: with modern automation equipment
Reduced logistics and Mail Centre networks
People: Right tools for the job and an enhanced working environment
Enabling £0.2 billion of annual recurring benefits and property disposal proceeds in excess of £0.3 billion
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CLOSEFarnboroughLiverpoolCreweBoltonCoventryNorthamptonMilton Keynes
OPENWarrington South -Midlands
CLOSEWatfordStevenageHemelSouthend
OPENHome – CountiesNorth MedwayMount Pleasant
CLOSEMaidstoneTonbridgeDartfordCanterburyTeesideYorkLondon EastLondon SouthWorcester
CLOSEDarlingtonBradfordHullLeicesterDerbyShrewsburyGloucesterCambridge
CLOSEDoncasterIpswich
CLOSEPortsmouth
Modernising the Mail Centres….….our journey is well advanced
CLOSEPaddington
CLOSEReadingOxfordOldhamStockport
Key: Completed Final Decision Authorised for consultation
2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
69 6864
5957
4840
38 37
We are half-way through a £0.5 billion investment programme in our delivery operation….
1 • Safety Reduce unsafe acts and conditions
2• Quality of Service and Customer Satisfaction
Maintain regulatory Quality of Service and to provide leading customer service to a changing market
3• Methods for a Changing Mail Mix
New equipment enabling staff to carry increased volumes and complete a ‘single journey down the garden path’ to complete delivery of letters and packets
4• Productivity Increases and Cost Reduction
Enabling a cost reduction of £0.2 billion p.a. from the introduction of sequenced mail, outdoor walk planning and new delivery methods
5•People and World Class Mail
Involvement through engagement and training programmes in new methods and expansion of World Class Mail continuous improvement to all units
15
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….
17
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
3
2008 2009 2010 20122011 2013 2014 2015
COLLECTIONS
Visibility & Tracking
PROCESSING
• Materials Handling/Traying
• MC Rationalisation
DELIVERY
Collections Traying Re-engineering
Large Letters Automation
Walk Sequencing National Deployment
LSM Replacement & Single Pass Sorting
Traying– Retail & Wholesale
Delivery Methods Deployment
People Systems Programme
RFID Install to DOs
Collections Activity Georoute Enabled
CFC upgrade and rationalise
RFID to All CSS sites
Address Interpretation
Service Centre Estate Review
Delivery Office Estate Review
Annual Network Review
Parcels Sortation Simplification
•Automation
•Sorting
LOGISTICS
Mail Centre reduction 69 to 37
Regional Distribution Centre Rationalisation
PDAs for All
WORLDCLASS MAIL
Mail Centres & RDCs
Delivery and all of rest of Collection/Logistics
SYSTEMS (OPS)
PDAs for Tracked Plus
Our modernisation activity is at an advanced stage with programmes tracking to time, cost
and quality
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
Dec 2012
Delivery Office Revisions
PDAs on Collections
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Mar 2008 Today
Lost Time Accidents per 100,000 hours 4.11 1.29
Collections Trayed to MC’s 29% 69%
Machines – new, refurbished or upgraded 40 992
Mail Centres closures 0 24
Mail Centres opened 0 5
% Outward Mail Automated 72 94
% Mail Sequenced to Delivery Point 1 78
Delivery Offices Fully Modernised 0 693
Number of PDA Devices 0 48,015
People Employed (000's) 158.9 137.4
Cost of operation £5.4bn £5.0bn
Real savings (including inflation) £0.9bn
1c Quality of Service 85.2% 92.5%
Evidenced by our journey over the past 4 years…
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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
21
We continue to learn as we go….
What’s going well?•Safety and service at the heartof the modernisation
•Clear governance
•Major successes in automationand mail centre rationalisation
What do we need to do better?•This is tough for all of our people
•Ensuring we deliver ‘sticky change’
•Establish momentum in modernising the rest of our delivery operation
22
Summary • Transforming Royal Mail is essential for our future success and ability to deliver the USO
• The Postal Services Act 2011 has been a major enabler
• We are delivering a huge technical programme – but at the core it is a people programme
• We have invested £1.8 billion to date and enabled £0.9 billion of recurring annual benefits
• We have many successes under our belt and are hugely proud of what we have achieved!