The Royal Mail delivers 82 million items almost every day of the year to 30 million addresses.
Many of these deliveries have the further pressure of being guaranteed to arrive at another business by a certain time.
In this pressure-cooker environment, the role of the fleet operation is vital to the success of mail deliveries. Breakdowns and vehicle shortages mean customers don’t get their post.
With such a mass of deliveries, Royal Mail has a fleet that is suitably enormous, with 33,000 vehicles responsible for ensuring the millions of letters and parcels are despatched daily.
The heart of the Royal Mail operation lies in Chesterfield, the home of the organisation’s Vehicle Services division.
Paul Gatti, head of commercial fleet for vehicle services at Royal Mail, has been responsible for seismic changes in the way the fleet is run recently as it gears up for a future role with more competition and ever more demanding customers.
At the centre of the changes has been the way it uses technology to manage the fleet. Gatti said: ‘We have taken the Vehicle Services division from being a provider of vehicles to a professional fleet management organisation. It is without doubt a quantum leap for the business.’
The quantum leap in question is the new fleet management system introduced in May 2003, under the rather grand project title Maximus FleetFocus M4.
Such was the scale of the task, it took until November 2003 to complete, but less than a year later, the Royal Mail managed to streamline costs and increase operational efficiency across its vehicle fleet and throughout its network of more than 50 workshops.
The group put plenty of legwork into ensuring the switch from its original system, called VWMS (Vehicle Workshop Management System), to FleetFocus M4 was a success.
Using the new system, Royal Mail is able to manage vehicles including service, maintenance and repair (SMR), breakdown, warranty and driver details through a single programme.
It enables the group to plan when vehicles are in for service and repair and make vehicles available to replace delivery vehicles which are going into the workshop. Royal Mail executives responsible for the vehicle fleet have been to several Maximus User Conferences in the United States where they have shared fleet best practices and system benefits experiences, which ensured a seamless transfer was achieved.
Under the old system, Royal Mail divisions all operated under separate management systems with more than 20 systems in total being used by the group.
The new system was provided by Maximus, a US-based company which specialises in asset management solutions. Its parent company has more than 5,000 employees and the Assets Solutions Division, including the UK, specialises in fleet management systems.
The division employs more than 50 staff and has more than 600 customers covering seven million vehicles.
Martin Greaves, managing director at Maximus, said: ‘The fleet operation and the fleet register at Royal Mail were fragmented and were operating on various systems in various locations. The task was to bring everything together under one all encompassing fleet management system.
‘The implementation of the FleetFocus M4 system was one of the biggest and most demanding implementations that Maximus had ever undertaken, completed on time and within budget.’
What this means is that the Royal Mail now has fewer vehicles due to the restructuring of its distribution network to improve efficiency, flexibility and performance. Vehicles play a vital part in the quality of our service because our business is about delivering the mail and the availability of roadworthy vehicles is key to this.
Each time a vehicle is not available through a breakdown or an accident, there is the potential to affect the operation but, without carrying lots of spare vehicles and associated costs, this is a balancing act.
Using the system to recognise trends in terms of vehicle faults and driver error can allow corrective action by pre-emptive maintenance, bringing issues to the attention of manufacturers and driver training and education.’
The system has allowed Royal Mail to take some of the pressure off its workshop staff, as it gives more control over warranty details and enables storerooms and parts purchasing departments to work more efficiently.
Gatti said: ‘We are now also better able to understand our actual costs and assess our charging policies.
‘There are so many aspects to managing a fleet operation, but we are getting to grips with them all.
‘We receive reports not only about breakdowns but which vehicle breakdowns have had an impact on the quality of our service.
‘The information from the system is identifying why breakdowns are occurring, and which vehicles are giving us the most problems. We are then using this information, gained through the system, to address issues before they cause breakdowns on similar vehicles or we go back to the manufacturers and discuss the problems with them.’
New system proves a cash saver
THE financial benefit of choosing a new management system is testimony to Royal Mail’s success.
Gatti explained: ‘It was a major decision for us to invest in this new system but we are delighted by the results not only from the perspective of improvements in operational efficiency but also financially.’
Although Gatti was unable to release exact financial figures, he said that the group had saved tens of thousands of pounds in the past year alone.
Nick Bridle, fleet control manager at the Royal Mail, manages the fleet for the western territory from Chester to the south coast.
He is responsible for 10,000 Royal Mail vehicles in this territory, plus managing the account for BT vehicles that are maintained in Royal Mail workshops.
He said: ‘The fleet management system has helped us to become more professional and more customer focused. Although the majority of our customers are internal, we treat them just like our external customers.
‘We provide them with a clear indication of where we can see cost appraisal opportunities are possible and define, then monitor, corrective actions.
‘The workshops are really pleased with it, compared to the old VMWS system. It is easier to use and to access and much more reliable.’
Before the new system was introduced, Phil O’Gorman, general manager of vehicle services at Royal Mail, said complaints from system users were high.
He said: ‘Since the implementation of the new system I have not received one complaint. It is unbelievable. We are no longer confused about data between 20 systems as we get just one set of data. I know if we are on track or off track with our various business drivers. We now have total control.’
Improvements are a continuous process
ROYAL Mail is keen to continue improving the management of the fleet and is already considering new changes to its management systems.
The current system is PC-based but Gatti said he would eventually like to move over to a web-based application.
Gatti explained: ‘An upgrade to Maximus’ web-based M5 system is in the pipeline but not for a year or two. It is part of our future roadmap as we look to utilise the internet and integrate other web applications to provide our business further benefit. ‘M5 being web-based would be a great solution for us, as it would be so easily deployed, we would not need to touch our existing PCs.
‘We could also go with the M5 functionality tomorrow quite comfortably as this is very similar to M4, and the majority of our staff are competent using the internet.’
However, Gatti would like to extend the system to cover additional aspects of the Royal Mail fleet in the future.
This could include the full vehicle acquisition budgetary cycle, as well as job scheduling in terms of support and availability.
The fleet’s role is part of a wider success story. Just over two years ago, the business was losing £1 million a day, but last year it revealed it has turned this round into a profit of £1 million a day.
Its last financial update showed it was delivering nine out of every 10 first class letters on time.
Second class deliveries are also doing well, achieving 98.6% of their target delivery times, above the benchmark figure of 98.5%.
With expectations of annual profits of £400 million, every Royal Mail staff member is heading for a performance bonus.
The firm has vowed to continue with its modernisation and reform programmes and it needs to, as the market prepares to liberalise in 2007.
Thousands of companies already deliver parcels and there are now four firms which do business letter deliveries.
While Royal Mail still has 99.7% of the market for delivery of letters, from April 2007 most people will be able to choose who they post their letters with.
Royal Mail’s fleet will play a vital part in ensuring that the service retains its dominant position in future.