Royal Mail plans roll-out of SRM system

4 February 2013

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4 February 2013 | Andy Allen

Royal Mail Group plans to roll out its supplier relationship management (SRM) system to a greater network of providers this year.

The company, which has 7,500 UK-based vendors and an annual procurement spend of £2.4 billion, introduced the system in April 2012. So far, the postal provider's 50 largest suppliers have been enrolled in the system, which tracks contract performance and relationship management activity, as well as risk.

Royal Mail said in its Corporate Responsibility Report for 2011-2012 that the system had identified 46 supply chain risks in that period.

“Most of these risks were rated as ‘unlikely’ or ‘very unlikely’ to occur. A dozen were judged as ‘amber’, which indicates a higher level of likelihood and are being managed appropriately,” the report said.

It added: “The new SRM system works by creating a dashboard for each supplier. This combines contractual commitments alongside more relationship-based activity judged by methods such as perception surveys and risk assessments.”

Training and supplier engagement programmes will run throughout the year to help roll out the system.

New key performance indicators and service level agreements have also been introduced at the company. Supplier performance is measured on a monthly basis and reported to the Chief Executive Committee every quarter.

The company also said it had developed a new supplier code of conduct in 2011-2012 and continued with an audit process to ensure compliance with its responsible procurement policy.

Suppliers are encouraged to improve social, environmental and ethical performance through membership of the Supplier Ethical Data Exchange (Sedex).

In September 2012, the group’s procurement team won the CIPS International Purchasing Project of the Year award at the CIPS Supply Management Awards for its role in working with a Chinese supplier to help the company expand its share of the China-to-Europe parcels business.

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