Post on 31-Jan-2018
transcript
Forward‐looking statements
This presentation contains various statements and graphic representations (together, ‘forward‐looking statements’) thatreflect management's current views and projections with respect to future events and financial and operationalperformance. The words ‘target’, ‘objective’, ‘growing’, ‘scope’, ‘platform’, ‘future’, ‘forecast’, ‘expected’, ‘estimated’,‘accelerating’, ‘expanding’, ‘continuing’, ‘potential’, ‘sustainable’ and similar expressions or variations on suchexpressions identify certain of these forward‐looking statements.
Others can be identified from the context in which the statements or graphic representations are made. Theseforward‐looking statements, as well as those included in any other material discussed as part of this presentation,involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond RoyalMail's control and which may cause actual results or performance to differ materially from those expressed or impliedfrom such forward‐looking statements.
All statements (including forward‐looking statements) contained herein are made as of the date of this presentation andRoyal Mail disclaims any obligation to update any forward‐looking statements, whether as a result of new information,future events or results or otherwise. There can be no assurance that forward‐looking statements will prove to beaccurate, as actual results and future events could differ materially from those anticipated in such statements.Accordingly, readers should not place undue reliance on forward‐looking statements due to the inherent uncertaintytherein.
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Agenda
• A journey through our network• Transformation in recent years
• Customer• Cost • Technology
• Future transformation
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Royal Mail handles c.15bn letters and c.1bn parcels a year, 6 days a week to around 30m addresses
A high call rate, coupled with joint delivery of letters and parcels, allows delivery costs to remain highly competitive, even as letters decline
Significant progress made in modernising the network over recent years
Ongoing activity to build parcels capability and reduce cost as letters decline
Improved employee safety and productivity, delivering a high quality of service at reduced cost
We have established a firm foundation on which to drive further improvements in support of our commercial direction
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UK core network – key highlights
Our core network handles c.15 billion letters and c.1 billion parcels a year, delivering to around 30 million addresses, 6 days a week……
Delivery up to 3:00pm town / 4:00pm rural
Inward Processing normally up to
6:00amNational Logistics
Outward Processing normally up to
10:00pmDaily Collections up to 7:30pm
Cross dock at RDCs
DeliveryOffices1,2682
Collection Hubs c.1,100
InternationalHub
Regional Distribution
Centres (RDCs) 6
InternationalHub
Inward Mail Centres
38
Outward Mail Centres
37
Direct journeys
Work BundlingCentres
(UnaddressedMail)
Post Offices c.11,500¹
Post boxes c.115,000
DeliveryPointsc.30m
Upstream
Downstream Access Operators
Local Distribution
Downstream
Businessesc.76,000
HCT and Foot
Shared Van
Rural Delivery
Dedicated Business Delivery
Direct Access Customers
¹ There are c.11,500 Post Offices in the UK, however c.1,200 are mobile Post Offices that transfer their mail to static offices for collection. 2 Circa 500 SPDOs (Scale Payment Delivery Offices, classed as our smallest & rural Delivery Units in the estate) not included; Delivery Units excludes Delivery Offices co‐located with Mail Centres and considers multiple Delivery Offices on one site as a single Delivery Unit
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Example 1 ‐ Posting a First Class letter into a Post Box in Land’s End for next day delivery in John O’Groats ……
The letter arrives in Wick DO
by 9:00am and is sortedand delivered to the customer
by 4:00pm
Letter arrives in Inverness
MC at 3.25am andis sorted to DO level
by 6.10am
2 Lorries and 2 flights overnight via Exeter, EMA and Inverness
Letter sorted at Truro MC
by 8:30pm
Collection from Post Box by 4:00pm, van journey into local collection hub, then onwards to arrive at Truro Mail Centre
by 6:40pm
Cross dock at RDCs
DeliveryOffices1,2681
Collection Hubs c.1,100
InternationalHub
Regional Distribution
Centres (RDCs) 6
InternationalHub
Inward Mail Centres
38
Outward Mail Centres
37
Direct journeys
Work BundlingCentres
(UnaddressedMail)
Post boxes c.115,000
DeliveryPointsc.30m
Downstream Access Operators
Local Distribution HCT and Foot
Shared Van
Rural Delivery
Dedicated Business Delivery
Direct Access Customers
51 Circa 500 SPDOs (Scale Payment Delivery Offices, classed as our smallest & rural Delivery Units in the estate) not included; Delivery Units excludes Delivery Offices co‐located with Mail Centres and considers multiple Delivery Offices on one site as a single Delivery Unit
Example 2 ‐ Downstream access through our network for next day delivery…….
Mail deliveredto the customer
by 3:00pm urban
or by 4:00pm rural
Mail sorted and despatched to
local DO
by 6:00am
Mail arrives into Mail Centre
by 12:30pmOutward Processing
Cross dock at RDCs
DeliveryOffices1,2681
Collection Hubs c.1,100
InternationalHub
Regional Distribution
Centres (RDCs) 6
InternationalHub
Inward Mail Centres
38
Outward Mail Centres
37
Direct journeys
Work BundlingCentres
(UnaddressedMail)
DeliveryPointsc.30m
Local Distribution HCT and Foot
Shared Van
Rural Delivery
Dedicated Business Delivery
Direct Access Customers
Downstream Access Operators
61 Circa 500 SPDOs (Scale Payment Delivery Offices, classed as our smallest & rural Delivery Units in the estate) not included; Delivery Units excludes Delivery Offices co‐located with Mail Centres and considers multiple Delivery Offices on one site as a single Delivery Unit
Regional Distribution
Centres (RDCs) 6
Parcel delivered to the customer
by 4:00pm
Parcel sorted and despatched to
local DO
by 6:30am
Parcel conveyed direct to Mail Centre
by 5:00am
Parcel collected from customer and arrives at
NDC by 11.30pm
Cross dock at RDCs
DeliveryOffices1,2681
Collection Hubs c.1,100
InternationalHub
InternationalHub
Inward Mail Centres
38
Outward Mail Centres
37
Direct journeys
Work BundlingCentres
(UnaddressedMail)
DeliveryPoints>30m
Local Distribution HCT and Foot
Shared Van
Rural Delivery
Dedicated Business Delivery
Next Day Delivery
Option order by 10pm
Direct Access Customers
Example 3 – Online order by 10pm for next day delivery using RM Tracked24 service….
71 Circa 500 SPDOs (Scale Payment Delivery Offices, classed as our smallest & rural Delivery Units in the estate) not included; Delivery Units excludes Delivery Offices co‐located with Mail Centres and considers multiple Delivery Offices on one site as a single Delivery Unit
Royal Mail’s tracked service (T24/T48) is as competitive as any other market offering and we experienced volume growth of 38%1 during 2016‐17……
Customer Order
Order
Order
Customer Warehouse
Regional Distribution Centre
Scan Point
Inward Mail Centre Delivery Office
Delivery Confirmation
TextEmail
Delivered to your Safe Place
Delivered home or To your neighbour
Scan Point
Scan Point
Scan Point
Royal Mail Pipeline
Electronic pre‐advice
Customer electronically advises order
Customer Service Points
1 Includes T24 & T48 products, excluding tracked returns8
The Royal Mail Tracked Returns process is also the most convenient for this growing market…….
33%
67%
Royal Mail
Drop into one of c.11,500 Post Offices
Drop into one of 1,268 Customer Service Points
Further convenience in the form of ‘Labels to Go’ which allows us to print your return label from a simple QR code
1 Internal estimate based on Triangle Management Services/RMG Fulfilment Market Measure (2015); defined as individually addressed parcels and packets, generated and delivered in the UK, weighing up to 30kg, that do not require special handling.
EstimatedShare of returns¹
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We have progressed cost reduction across all elements of cost as the major contributor to the 1% UKPIL cost reduction and the £225m avoided cost
1 Represents core network costs, excluding international conveyance and delivery charges. Also excludes all other UKPIL costs including Parcelforce Worldwide and central overheads and is pre transformation costs. 2 Includes international export and import processing costs.
Almost 70% of UK Core Network costs relate to collection and delivery
Upstream Downstream
Royal Mail Supply Chain
% of Core Network Costs1
c.11% c.13% c.5% c.10% c.57%
Upstream Downstream
Collection Outward Sortation2 Network Inward
Sortation2 Delivery
c.4%
Distribution
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Our costs are c. £5bn p.a.
•All collection routes re‐planned
• Low volume boxes collected on delivery
• c.50,000 boxes now collected on delivery
• c.115,000 pillar boxes•PDAs on all routes
•Mail Centre closure programme complete
•Weekend processing
• Installed first parcels sorter
•83% of letters auto sequenced
•38 Mail Centres • Extended acceptance to 8pm / 11.30pm and over the weekend
•Reduced national network miles
• Introduced double deck trailers (DDTs)
•Reduced estate• Introduced telemetry in vast majority of large fleet / one third of smaller fleet
•6 RDCs•Annual mileage 103 million miles p.a.
• c.1k Double Deck Trailers
•39 flights per day
•New delivery methods complete
•Reduced estate•Reduced routes•New PDAs on all routes
•1,268 Delivery Units (exc SPDOs)2
•100% new delivery methods
• c.60,000 routes •PDAs on all routes
• Extended opening hours
• Technology enabled Customer Service Points
• Safe place / Delivery to neighbour extension
•Click & Drop
• c.80% of letters with Mailmark1
• Two thirds of parcels barcoded
• c.40% of UK have access to parcels collections on Sundays
Transformation is ongoing as we further enhance the customer proposition and reduce our costs….….
What we have achieved
Key Stats(16/17)
1 c.80% of suitable letters now posted with Mailmark indicia, e.g. Bulk Mail. 2 Delivery Units excludes Delivery Offices co‐located with Mail Centres and considers multiple Delivery Offices on one site as a single Delivery Unit
CustomerDeliveryNational LogisticsOutward Processing NetworkProcessingCollections
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We have a positive track record of delivering productivity improvement over recent years…..
85
90
95
100
105
110
115
120
2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
Workload Gross Hours Productivity
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Index
While reducing costs, we are continuing to deliver on our promise to the customers……
• 93.1% First Class regulatory quality of service• 98.9% Second Class regulatory quality of
service• 78 mean score for Business Customer
Satisfaction • Number 1 in customer service2• Number 2 in Money Saving Expert survey of
delivery companies
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Customer Satisfaction Employee Engagement
• Employee engagement score above the IPSOS large organisation norm (57)
• Over 70,000 colleagues involved in the “Big Conversation” with senior leaders
• Low levels of attrition• Ongoing commitment to the best terms and
conditions in the industry
1 IPSOS Mori – Internal presentation Royal Mail Group Employee Survey Overall Results – 05 May 2017. 2As recognised by consumer advocacy website, ‘A Spokesman Said’ in the delivery sector in 2017
•Extend Collections on Delivery
•Reduce collection hubs
•Extend preparation of mail upstream to reduce indoor sortation
•Extend parcels automation
•Pilot next generation large letter automation
•Reduce letters footprint
•Extend acceptance times further
•Extend barcoding on parcels and letters
•Further reduce fleet movement
•Reduce regional distribution
•Extend telemetry use to reduce fuel and maintenance costs
•Grow third party vehicle maintenance
•Reduce indoor workload
•Extend trial of new delivery methods
•Further reduce delivery routes
•Develop and embed new route planning / tracking technology
•Roll out more convenient delivery options
• Introduce more flexible openinghours
•Roll out delivery confirmation ‐standard parcels
•Launch estimated delivery times
Finally, transformation remains ongoing as we further enhance the customer proposition and reduce our costs….
CustomerDeliveryNational LogisticsOutward Processing NetworkProcessingCollections
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We are clear on our purpose and direction