Mail chief spells out savings to suppliers

16 November 2006
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16 November 2006 | Steve Bagshaw

Suppliers to Royal Mail Group (RMG) got a glimpse of the future when group procurement director Ninian Wilson brought them together to spell out how vendor relations would contribute to a three-year savings target of £300 million.

In a no-nonsense address to RMG's top 50 suppliers this month, Wilson detailed the transformation planned for the procurement department, including the "five things we are going to stop doing" and "five things we are going to start doing".

"We are going to stop rewarding poor performance. We are going to stop paying more than our competitors for anything - anything!" he stressed, in case there were lingering doubts.

He also outlined an end to "inflation-plus" payment terms. "We will stop bespoking requirements when there is no competitive advantage.

"We have to move to commercial industry specifications," he told the audience. "And we will stop everybody in the business from thinking they own vendor relationships." Wilson then outlined how Royal Mail would proceed. "We will renegotiate all contracts over the next 36 months, whether or not they are due to expire, and reduce the vendor base to 2,000."

Currently this stands at 9,000 having been reduced from 66,000. "We will also introduce vendor performance metrics, and I will publish the top 10 heroes and villains every quarter," he added.

He said there would be a move "from price to cost, which will see joint working to attack costs."

He invited suppliers to offer their views using the "Voice of the Vendor" questionnaire from January.

"But we need you to be honest," he stressed. He also detailed the introduction of performance-based contracting.

SMnov2006

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