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Transforming procurement and supply chain operations

Royal Mail case study


The Challenge
Royal Mail Group has encountered increasing commercial and competitive pressures since deregulation in a growing market and is now worth over £20bn. Their operations are supported by a hugely complex supply chain, logistics and procurement functions.

The objective of the Group Procurement Director, Ninian Wilson, is “3 in 3” - to be one of the top three procurement departments in three years

The solution
We were asked to assist Royal Mail with an end-to-end supply chain diagnostic and an implementation programme to support the “3 in 3” vision.

This diagnostic identified a number of procurement and supply chain opportunities, and as such, an aggressive savings target of £31 million to be realised in only 6 months became our focus.

In order to achieve this stretch target, we brought together expertise from across our broad range of disciplines, including rapid cost reduction, logistics and distribution optimisation, strategic sourcing, tax and accounting alignment, change and communications and programme management.

What has been achieved?

  • Within the first four months of the project, over £23 million of benefits had already been delivered to Royal Mail.
  • Total forecasted benefits are set to reach over £45 million – exceeding the target benefits level originally set by £14 million

Procurement Transformation delivery and results

  • The team designed, built and tested the new Royal Mail e-Sourcing platform and its contract management functionality
  • Developed and implemented a Procurement Quality Assurance framework defined by supporting documentation
  • Delivered £14.4million of benefits through wave sourcing
  • Supported a comprehensive recruitment programme, outlining Royal Mail’s people development strategy and learning needs

Supply Chain Optimisation delivery and results:

  • Reduced working capital, inventory and obsolescence levels
  • Developed a modular, web-based asset audit and tracking tool for delivery assets
  • Realigned accounting processes and returned significant items of inventory to the balance sheet
  • Comprehensively identified engineering spares stock holding 
  • Developed and deployed risk management models at pilot level

The successful outcomes delivered from the project were due to a combination of hard work and teamwork between Royal Mail and Deloitte, and a commitment to pragmatic and innovative solutions which create actual bottom line value.

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