DMA Post Haste: Towards a speedy reversions solution

Post haste: Towards a speedy reversions solution10.30am Registration & refreshments

11.00am DMA Welcome Chris Combemale, DMA

11.05am Council Manifesto and proposed solutions Howard Matthews, Vice Chair, DMA Mailing House Council

11.25am TNT/DSA proposed solutions Charles Neilson, Group services director, TNT Post

11.45am Present proposed solutions and updated processes Jenny Ledgar, Network Access Director, Royal Mail

12.05pm Interactive Question & Answer session

13.00pm Lunch & Networking

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WelcomeChris Combemale, Executive Director, DMA

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Council manifesto and proposed solutions

Howard Matthews, Vice Chair, DMA Mailing House Council

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DMA Mailing House Council

1. Product specifications cannot be consistently achieved in volume mail production

2. Surcharges are not proportional to either the failure rate or the additional cost incurred

3. Lack of objective evidence of failing to meet

specification

DMA Mailing House Council

4. No process for mail producers to challenge surcharges and no independent adjudication

5. Little or no communication between mail producers and RMW

TNT/DSA proposed solutionsCharles Neilson, Group services director, TNT Post

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Poste Haste: Towards a speedy reversions solution

1st August 2012

Reversions are increasing

• Increase shows increasing focus by Royal Mail

• Not about your mail getting worse!

• About improving processing efficiency and collecting due revenue

• Forcing compliance to specification or changing basis of presentation

NB 2012 figures include sealing reversion charges of which 90% have recently been credited

Contractual position

Customers Royal Mail

Mailing Agents

DSA Providers

Contractual position

Customers Royal Mail

Mailing Agents

DSA Providers

80%

18%

2%

NB Numbers are illustrative only

Contractual position

Customers Royal Mail

Mailing Agents

DSA Providers

80%

18%

2%

34%

66%

NB Numbers are illustrative only

To whom do RM bill surcharges?

• Posting customer– CDA Clients directly– Carrier

• Carriers usually have back to back contracts with their clients and pass on reversion charges in full

• Posting customer sometimes charges the mailing agent for its failure to meet specification

Common Reversion types

– Address Clear zones– Tap test failures– Punctuation– Barcode clear zones– Sealing

• Technically these have failed current spec

• Mail can be sorted and delivered

• Are examples representative or the exception?

What MCF would like to see

Transparency and reliability

• RM to share sampling methodology– Best case with industry so we all know the rules

– Worst case with some trusted third party

– Certainty that rules are followed equally in both Wholesale and Retail mailings

• How else will we know if the process is– Fit for purpose

– Fair and reasonable

What MCF would like to see

Proportionality

• Review of charging structures– Charge proportional to the failure and its

consequences– Not an arbitrary next service charge– Charge levied on

• Only the Items that fail• On some objective cost justified measure

What MCF would like to see

Realistic Trigger Points

• Review of trigger points– What dictates a local or national reversion?– Must take industry capability into account

• 100% compliance not achievable• Specifications cannot require 100% compliance• Fairer tolerance needed

What MCF would like to see

Evidence• Tolerances are being properly measured• That tests are being conducted fairly• That the tests are being applied equally

across channels and providers• That the problems reported result in cost

increases that justify the surcharge• Detailed RP evidence can be provided to

prove reversion

Present proposed solutions and updated processesJenny Ledgar, Network access director, Royal Mail

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Royal Mail Revenue Protection

Stephen Agar - Managing Director, Consumer and Network Access

Jenny Ledgar - Network Access Director, Consumer and Network Access

Tim Cable - Director Products, Royal Mail Retail

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Agenda• Key industry issues & input from the Industry

• Proposed solutions to tackle key issuesMap of where the ‘speed cameras’ are

Full review of OCR and barcode product specification including sealing specification

An interim approach to reversions

• More work to doImproved communication with industry / process for the mail

producer to challenge any surcharge

Revenue protection on site – what are the options?

• Conclusions

• Questions

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Key industry issues

•Proportionality

•Transparency

•Production difficulties with 100% specification requirement

•Communication with the ‘bill payer’ / no opportunity for the mail producer to challenge any surcharge

•Provision of evidence when mail fails specification

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Input from the Industry

•Our customers

•Strategic Mailing Partnership members

•Mailing Presentation Advisory Group members

•DMA

Our thanks to all who have helped develop the following proposed solutions

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Solution – tackling transparency•Map of where the ‘speed cameras’ are

Produce and publish a schedule of attributes that our Revenue Protection teams will focus on, on a 12 month rolling basis

e.g.

Oct-Dec 12 - sealing specificationJan-Mar 13 - flexibilityApr-Jun 13 - specific addressing standardsJul-Sep 13 - dimensions

Note: We reserve the right to revert on any failed attribute of the specification

Share schedule on RMW website, RM technical and via industry groups i.e. SMP

Provide regular update on RMW website, RM technical and via industry groups on key causes of reversions by number and value

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Solution- tackling the product specification•Full review of OCR and Barcode product specification

including sealing specification underway Due to be concluded Sept 12

New sealing tolerance defined and to be shared shortly

A phased reintroduction of sealing reversions between Sept 12 and Jan 13

17th Sept – Oct        revert 20% of any national reversionNov – Dec             revert 50% of any national reversion1st Jan 2013                   full reversion

•Product specifications defined as having a high operational impact or a low operational impact …. see next slide

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High / low impact attributes• Examples of high impact attributes

sealing specificationvisibility of address for OCR; clear route and tag zones for OCR; 2mm clear zone round CBC

• Examples of low impact attributesmail piece meeting specific flexibility requirement; specific width of individual bars of a CBC; delivery address only - Punctuation corresponding to PAF® or all punctuation omittedcountry name must not be usedtype face - recommended fonts to be used (others permitted)

• We reserve the right to switch attributes between low and high impact and vice versa depending on how the attributes perform in our operation. We have focussed on getting this solution developed and approach agreed and therefore, we have not had time to fully test all attributes

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Solution – tackling proportionalityAn interim approach to reversions for OCR/CBC in Retail/Wholesale

 Low volume

detectedMedium volume

detectedHigh volume

detectedAuto

Reversions

Retail

Reversion Policy Defined

Find one container with faulty item/items, levy a fixed charge for container.

Up to 10% of mailing detected

Over 10% of mailing detected

Process needs to be developed

Ops Impact (High)

£25 minimum plus a charge * for each container up to x container. Above x container, non compliance will move to medium volume detected

10% of mailing reverted to next applicable service

100% of mailing reverted to next applicable service

Process needs to be developed

Ops Impact (Low)

10% of mailing surcharged with a fixed unit charge based on a flat fee per item eg range 0.5p – 1.5p

100% of mailing surcharged with a fixed unit charge based on a flat fee per item eg range 0.5p – 1.5p

Process needs to be developed

Wholesale

Reversion Policy Defined

Find one failed container, revert that container to next applicable service

Find failed containers in multiple IMC’s, revert the total segment at those IMCs.

Find failed containers in many IMC’s, revert the entire mailing

Current process maintained for high impact failures

Ops Impact (High)

100% of container is reverted to next applicable service

100% of mail in identified IMC’s reverted to next applicable service

100% of mail reverted to next applicable service

Current process maintained

Ops Impact (Low)

100% of mail in identified IMC’s surcharged with a fixed unit charge based on a flat fee per item eg range 0.5p – 1.5p

100% of mail surcharged with a fixed unit charge based on a flat fee per item eg range 0.5p – 1.5p

Process needs to be developed

Retail/ Wholesale

Rework/Ops Charges

Operational charges* for additional activity undertaken by RM Ops. Retail = additional charges. Wholesale = contractual charges already in place

Retail/ Wholesale

Admin Charge

Fixed Admin charge* to carry out each reversion (tbc)

* to be determined

New or revised

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More work to do……..

Finalise solutions and prepare for launch

Improved communication with industry / process for the mail producer to challenge any surcharge

Revenue protection on site – what options are available?

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In conclusion•You said your issues with our processes were with

Proportionality

Transparency

Production difficulties with 100% specification requirement

Communication with the ‘bill payer’ / no opportunity for the mail producer to challenge any surcharge

Provision of evidence when mail fails specification

•Our proposals provide an interim solution to most.

•Aim to launch 17th Sept

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Any Questions?

Panel discussionChris Combemale, DMAHoward Matthews, DMA Mailing House CouncilCharles Neilson, TNT PostJenny Ledgar, Royal MailStephen Agar, Royal MailTim Cable, Royal Mail

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SummaryChris Combemale, Executive Director, DMA

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Thank you for attending Please join us for lunch and networking

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