Buyers say privatising Royal Mail would benefit procurement

22 November 2010
UK business post costs set to rise

Royal Mail seeks price rise for bulk business post
Royal Mail makes top 125 in procurement excellence survey

Strikes mean Royal Mail defers procurement capability test

John Lewis shelves Royal Mail

23 November 2010 | Angeline Albert

Buyers have voted for the privatisation of Royal Mail in the SM 100 poll.

Some 59 per cent of procurement professionals think buyers would benefit from a privatised Royal Mail. The poll also showed 41 per cent of poll respondents believe buyers would lose out.

The Postal Services Bill, introduced into the House of Commons in October 2010, will pave the way for Royal Mail’s privatisation. Business secretary Vince Cable said the private sector can own up to 90 per cent of Royal Mail. The government says it needs outside investment and expertise.   

Buyers seem to agree with its privatisation, believing it will improve the customer focus and mean operational inefficiencies will be tackled. John Milne, consultant for Hampco, said: “Greater awareness of costs and revenues will encourage more efficient and effective working methods. I believe that increasing confidence in, and use of, email will lead to drastic reductions in traditional methods of transporting documents. The money saved from not having to support a loss-making Royal Mail should be reinvested in improving electronic networks.”

Gary Moore, procurement performance manager at BAE Systems Insyte, said: “The Royal Mail needs investment now, to have any chance of continuing to provide the service it currently does. That investment isn’t going to come from government (taxpayer) coffers in these straightened times. A move towards privatisation is the only realistic option.”

Some buyers against privatisation said procurement teams would not see a benefit until more players entered the UK market.Others were concerned about prices. Ronan Carter, head of procurement for Europe at Allergan, said: “Costs would go up as the ‘final mile’ (delivery from local mail sorting office to door) is currently loss-making and subsidised by the government. Any private enterprise would increase the price.”

Earlier this month the Royal Mail denied it was enforcing a 20 per cut on suppliers. A spokesman said: “Royal Mail is striving to get the best value for money... and we are asking our suppliers for their ideas and proposals on how we might achieve this.”

Calderbridge, Seascale
£52,518 - £64,233
London (Central), London (Greater)
£60k-£70k p.a. + Bonus (0-10%) + Pension (5%)
GPA Procurement
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates