Royal Mail on target to save £300m with SAP

Royal Mail is on course to save £300m over three years through efficiencies created by its SAP-based procurement transformation programme.

Central to the project is SAP supplier relationship management (SRM) software and its E-Procurement module.

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Royal Mail director of performance and transformation, Daniel Cameron, explained to silicon.com that the SAP software has helped the organisation source items much more efficiently and get better deals.

Cameron's group put together the business case for the project around two years ago with the aim of making the Royal Mail's procurement department one of the top three in Western Europe.

Now 18 months into the project, Cameron is confident these ambitious savings targets can still be achieved. He said: "We've been more successful than we expected."

Around half of the savings are expected to come through a reduction on operational expenditure with the rest coming from lower capital expenditure.

The rollout of the e-procurement technology has seen the introduction of small chunks, each of which has been well received, according to Cameron. "As a result we've had a phenomenal user adoption," he said.

Royal Mail already runs its business applications on an SAP backbone and so the decision to use technology from the German business software giant for the procurement project was an obvious one.

Cameron said: "The core is SAP but where we've needed to bolt stuff on the side, we have done. We say unless there's a good reason not to, use SAP."

The e-procurement platform was developed by SRM specialist Frictionless Commerce, which SAP acquired just over two years ago.

Royal Mail also uses the SAP financial application and plans to upgrade to SAP's SRM 7.0 and add a supplier collaboration module in the near future.