Postal Services – Steps to Making Savings

1. Postal Services – Steps to Making Savings 12 October 2010

2. Contents Background Step 1 – Identify your Mail Usage Step 2 – Quick Wins Step 3 – Short to Medium term Step 4 - Medium to Long term Conclusion

3. Background The public sector spends circa £650m p.a. on postal services • CCG - £257m • Local Authorities - £201m • Health £79m • Education £83m • Others £30m Savings of between 9% and 30% achievable through considered purchasing The key to making savings • Challenge long established working practices • Identify where and how more efficient ways of working can be realised • Introduce competition

4. Step 1 – Identify your mail usage Establish how you use mail services • How does this relate to your business requirements? Key Questions: • Is there an integrated communications strategy? • What are you trying to achieve with your postal activity? • Where are your despatch points? • How much mail do you send? • What products and services do you use? • Are you trying to achieve speed or predictability? • What is the level of undelivered mail? • Is postal activity centrally managed? • Are there any statutory or policy requirements? • Do you have senior level buy-in to introduce change?

5. Step 2- Quick Wins Reduce 1st Class Mail output • Switch to 2nd Class (saving 30%) Improve presentation of mail items • Correct addressing format can provide an immediate 12.8% saving Only use letter size envelopes (DL or C5) Saving 37.5% Undertake pre-sortation of mail, where possible. Savings between 4.8% and 16.8% Reduce or eliminate use of Special Delivery Reduce or eliminate use of Business Response Reduce or rationalise use of PO Boxes Reduce or eliminate use of franking machines (Savings of between 5p and 7p per item Compete your mail services

6. Step 3 – Short to Medium Term Develop an integrated communications strategy • Are you using the correct communications media for your target groups? Identify the lowest cost options for intra office, customer and stakeholder communications e.g. e-mail, SMS messaging or telephone Switch to web based services where legally permissable Cleanse address databases • Sending items to the right address first time will produce savings Examine the effectiveness of your bulk mailings • Are electronic or other methods of communications more suitable? Review contract management processes • Proactive rather than reactive Utilise supplier expertise to provide solutions Rationalise mail despatch and delivery points Centralise management and budgetary control of postal services Improve forecasting to take advantage of cheaper products with longer delivery timescales Cross Departmental procurement – aggregation of postal volumes to attract volume related discounts Explore the option of using Hybrid Mail Services

7. Step 4 – Medium to Long Term Statutory or policy requirements – can these be challenged and rewritten to take account of competition and innovation? Consolidating correspondence to same addressee from different Departments Utilise spare capacity of other Departments output handling attracting greater volume related discounts

8. Conclusion If the above steps are taken significant savings are available. Buying Solutions Postal Services team has developed a full Post Specific customer toolkit to assist in identifying and competing your mail requirements. This toolkit has been developed in collaboration with key stakeholders and suppliers. The Postal Services team, viewed as industry experts, is available to assist you.