Presentation given by Peter Horsted of Royal Mail at The Strand Palace Hotel on Wednesday 9th July 2014. APM Event designed for Project & Programme Management (PPM) and Learning & Development professionals within our corporate membership, and other organisations with a strong interest in developing professional standards within their PPM community.

1. Developing
Professionalism
Peter Horsted RPP FAPM
Operations Strategy
Business Manager

2. 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……

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. ‹#›
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

5. ‹#›
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

6. ‹#›
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

7. ‹#›
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

8. 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.

9. ‹#›
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

10. ‹#›
• 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

11. ‹#›
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

12. ‹#›
And achieving a visible change in the way we
deliver mail, creating capacity and capability for
parcels growth…..

13. ...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….

14. ‹#›
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

15. ‹#›
3
2008 2009 2010 20122011 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 RevNTK 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

16. ‹#›
THE START OF
OUR JOURNEY
WITH OUR
PEOPLE

17. ‹#›
Formal Qualification Road Map
Professionalism =
knowledge +
experience + ethics +
leadership
Senior
practitioner /
expert
Practitioner
Foundation
Capabilitylevel
Many standards
Some standards
Few standards
Prince 2
Competence
=
knowledge
+ experience
Knowledge
Assessment
MSP

18. ‹#›
Transaction
Transformation

19. ‹#›

20. ‹#›
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

21. ‹#›
Competence Framework

22. ‹#›
Professional Qualifications & Recognition
• IC
• Prince 2
• APMP
• MSP
• PQ
•RPP
• Application

23. ‹#›
Training Partner

24. ‹#›
We continue to learn as we go….

25. ‹#›
Formal Qualification Road Map
Professionalism
= knowledge +
experience + ethics
+ leadership
Senior
practitioner /
expert
Practitioner
Foundation
Capabilitylevel
Many standards
Some standards
Few standards
IC
APMP
Prince 2
Competence
=
knowledge
+ experience
Knowledge
Assessment
MSP

26. ‹#›
Professional Qualifications & Recognition
• Competency Framework
• Professional Recognition
IC / APMP / RPP
• APM Involvement
SIGS / Regions / Awards / CMLG
• 35hrs CPD
• Royal Mail Group endorsement and
expansion

27. ‹#›
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

28. ‹#›
External recognition for what we are doing with
our people

29. ‹#›
Return on Investment (ROI)

30. ‹#›
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!

31. ‹#›
Summary

32. ‹#›
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

33. ‹#›
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

34. ‹#›

35. ‹#›
Thank you
Any questions?