CASE STUDY / ROYAL MAIL
TECHNOLOGY
Contract management delivers sustainable results for Royal Mail Empowering stakeholders in contract management has helped Royal Mail gain visibility of supplier compliance, sustainability and performance. By engaging business units from the start, the technology platform lays the foundations for SRM.
Royal Mail has existed in one form or other for 500 years. While this longevity helps it understand how to sustain operations in the long term, it has been subject to rapid change in the last five years. The UK postal service, originally established in 1516, spends about £2.3 billion across 5,000 external suppliers. After centuries of public ownership, the service was privatised in 2013. Following the move, the organisation embarked on a strategy to gain greater visibility of supplier performance through better contract management, laying the foundations for organisation-wide supplier relationship management. Although organisations most often choose to apply SRM to gain value, through innovation, process improvement or savings, Royal Mail has found it a challenge to scale past a handful of suppliers. So instead of pitching for the ultimate SRM goal, the procurement organisation first decided to build stronger foundations and improve how it managed suppliers’ performance against their contracts.
management in the hands of those working closely with suppliers around the clock. Because the programme would apply to a large number of suppliers and contract managers, it was rolled out in three waves, learning from each phase as it progressed, says Helen Wilber, Royal Mail SRM programme lead. The procurement team set out a training programme: Contract Management Essentials, to ensure contract owners were working from the same level of knowledge. Face-to-face workshops took place in London and Chesterfield, which the business supported with Skype training. The training resulted in the added benefit of creating a contract management community across all business units. Rob Cooksley CPO says “Suppliers are an extension of our organisation. How they behave and operate is important to us. As CPO, I need to ensure across all our key supply chains we are delivering first class value for the business and protecting it from risk. The Contract Management Essentials programme has given me confidence that we are achieving that for our business.”
comparable across the business, including value for money, quality of work and the health of the relationship. The programme was managed by one full-time equivalent role, and a part-time strategic manager, with support from procurement, stakeholders and State of Flux. Legal, compliance and risk teams also contributed. “Contract management was not new to us: there were pockets of good practice, but not all areas were doing it consistently,” she says. In addition, the standard measures and easy access to data made oversight of key contracts easier for the executive team. For the first time, they were able to compare suppliers with each other and get a fact-based, objective view, she says.
“Suppliers know they are being tracked and measured against one another and that is driving their performance. It has been well received by suppliers. Because we are tracking them, and they have access to the portal, they can use it to understand their performance by pulling down data each month,” she says.
Suppliers: an extension of the organisation
Royal Mail’s CPO presented the proposal to the organisation’s risk management committee, to make the case that better contract management would improve oversight, ensure compliance with regulatory and corporate social responsibility obligations and reduce value leakage. The risk committee gave the programme the go-ahead in 2016. Procurement led it but retained the operating model that hands over day-to-day management of contracts and collection of data to the business units. Royal Mail runs 24-hour operations, so it made sense to leave contract
A community of contract managers
“No one had created a contract-management community that cut across our operations, from fleet management to HR before. It’s good to see learning work across business units,” Wilber says. In terms of technology, Royal Mail deployed the contract management module from State of Flux’s Statess solution. The procurement team developed a common score-card structure to help make supplier performance measures
Greater visibility of compliance
Other benefits include tracking supplier compliance with Royal Mail’s security standards, anti-bribery policy and monitoring compliance with 2018’s General Data Protection Regulation for suppliers that process Royal Mail data. The system also helps monitor supplier performance against the Royal Mail Responsible Procurement Code which sets out expectations for corporate social
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STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
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