Speakers from Tinder Swindler and Biohacking to Microsoft and Google Working Together to Bridge the Gap
In the perpetual search for cost and efficiency savings there is one area that has only recently appeared in the business world’s sights – saving on postal costs. Until 2003, the only postal service available to all of us was that provided by Royal Mail, which had a 100 per cent monopoly of letter post – an arrangement that had been in place for more than 350 years. As a customer, you had no choice of mail operator, and there was very little - if any - scope to negotiate, either on price or on the type or quality of service you wanted.
Open market
In 2003, things began to change. Postcomm, the independent regulator set up by Government through the Postal Services Act 2000, opened the market for bulk mail. From that year, competing licensed operators were allowed to offer alternative services to customers sending more than 4,000 items of bulk mail at a time. Effective competition began in practice in 2004, when the first access agreement was signed by Royal Mail and new postal operator UK Mail. Then, on January 1 2006, the UK's mail market was fully liberalised. Any operator licensed by Postcomm can now collect and deliver any mail for any customer.
The effect of competition
Eighteen operators are now licensed and are beginning to offer a range of services. Many business customers are already benefiting from lower prices and greater choice, and also from better quality of service from Royal Mail, which has been prompted by the threat of competition to raise its game. Indeed Royal Mail has dramatically improved service quality for all its customers, so small business and residential customers are indirectly reaping some benefits from the introduction of competition. In the third quarter of 2006 the company easily exceeded its targets for 1st and 2nd class mail, which is in marked contrast to its rather dismal performance only two years ago.
In October 2006, Postcomm market research among business customers revealed that they perceive service quality to be high across Royal Mail and its new competitors, and that is as a result of competition:
Access agreements
Our research also found that mail carried through Royal Mail’s access agreements increased dramatically during the year. Under access arrangements, an operator pays Royal Mail to have its postmen and women deliver their letters to recipients’ letterboxes. The usual arrangement is that a rival operator picks up mail in bulk from its business customers, then transports it to the appropriate ‘downstream’ mail centre in Royal Mail’s network, also sorting it if necessary. From that point, delivery is taken over by Royal Mail.
Typically, Royal Mail’s access service charges are around 13p per letter weighing up to 60 grams, so they still get the lion’s share of the revenue (typically about 16p per item) from this mail. Although there is only a small margin left for the new postal operators, they make their money by operating a highly efficient and customer-focused upstream service – often undercutting Royal Mail – and offering added value services such as later collection times and the tracking of mailbags in their care.
Royal Mail made 1.2 billion access deliveries last year, compared to 87 million the year before. Access now accounts for more than 10 per cent of Royal Mail’s total volume. That is why you may have noticed that, instead of the usual Royal Mail insignia or stamp, envelopes are beginning to arrive on your doormat marked with the insignia of TNT, DHL, UK Mail, and other postal companies.
Businesses send 87 per cent of mail in the UK, with domestic mail accounting for the remaining 13 per cent. Mail sent from businesses to customers – such as telephone bills, bank statements and advertising direct mail – is the largest segment, making up 60 per cent of mail volumes. The largest 500 companies account for 50 per cent of mail volumes, making the UK a highly concentrated postal market. Most of the new operators have targeted this big business end of the market, though they are starting to offer services to much smaller businesses too.
What this could mean for Government business
What all this adds up to is something that business and government mailrooms have not had before: a choice. With that comes the potential to secure better value for money. Although the fully open market is only a year old and Royal Mail still has a highly dominant position in the addressed letters market, we have found that competition has already prompted major business mailers to look more closely at their mail costs and to take advantage of the choices now available to them. Some have reduced their costs by using innovative products introduced since the market was opened. Compared with last year, twice as many businesses switched to Royal Mail’s top three competitors during 2005/6, while the proportion of businesses using other competitors was four times higher.
The UK government sector makes up a substantial chunk of the UK mail market. Increasingly, it is focusing on improving efficiency and we expect more government departments to explore competitive mail offerings. According to Improving the Efficiency of Postal Services in the Public Sector, a report by the National Audit Office (NAO), the public sector spends almost £650 million a year on post. Of this, around £250 million is spent by central government departments.
More efficient management and purchasing of postal services by the public sector could save an estimated £31 million a year by 2008/09, the NAO says, and many of these savings can be made quickly and cheaply by such measures as using non-urgent mail services, competitive tendering, reducing undeliverable mail and switching to more efficient mail products.
How can your organisation benefit?
The NAO estimates that government could save £8.5 million annually by 2008/09 through switching to alternative postal suppliers. But making savings on your post does not have to involve switching to another operator. Many public service organisations can make substantial savings by making simple changes within their own offices. The NAO suggests you start by asking a few questions:
Help at hand
The NAO has put this and lots of other advice into a booklet: A guide to better postal services procurement, which can be downloaded from the NAO website at www.nao.org.uk/publications/index.htm
Another source of information for public sector organisations is the Office of Government Commerce Buying Solutions (OGCBS). It has just introduced a postal services framework which enables public sector organisations to check out services offered by a number of licensed mail companies, including Royal Mail, and identify their best options.
In a separate Postal Sector Market Report, OGCBS examines Royal Mail as the main supplier in the sector along with other licensed suppliers and provides information on their background, ownership and the services they offer. The OGCBS website address is www.ogcbuyingsolutions.gov.uk
Lastly, there is our own Postcomm website, http://www.psc.gov.uk where you will find a list and contact details of all the operators we have licensed. All are sources of valuable information for would-be cost cutters. After studying them, use the information you have gained to talk about prices and services with your mail supplier or suppliers. Now that you have a choice, you should be able to negotiate a service that suits your business better, or a lower price – or both!
Speakers from Tinder Swindler and Biohacking to Microsoft and Google Working Together to Bridge the Gap
Upcycled Medical is pioneering the recycled textile industry. The company, launched by Linda Ball in 2017, started with the desire to make an environmentally friendly cap in the sports market. To meet the expectations and the requirements of the sports sector they were able to successfully develop a cap with 65% upcycled plastic and 35% organic cotton. After their initial success, they wondered if it would be possible to create a 100% upcycled textile, made from part marine and part landfill plastic, which would put a huge dent in the growing pollution problem.
Adveco, the commercial hot water specialist, announces the launch of live metering of domestic ho
Researchers at the University of Nottingham have recently been awarded a £6 million grant from the Engineering and Physical Sciences Research Council (EPSRC) in order to develop a toolkit for 3D printing. HB spoke to Ricky Wildman, Professor in Chemical Engineering at The University of Nottingham
NHS Golden Jubilee has recently performed its 1,000th robotic orthopaedic joint replacement - HB looks at the hospital’s robotics programme