In recent years, we have also been working more closely with the industry, including the mailing houses that are so important to the postal market. The development of the Strategic Mailing Partnership in 2010 is a prime example of that. Now in its third year, the partnership enables us to collaborate more closely with the mailing house community and tackle issues affecting the industry. This has been a very important development which reflects our commitment to working with our customers.
What is also essential is that Royal Mail ensures that it is paid correctly for the products and services it provides. This is what any other business does. We have invested significantly in new automation to improve the efficiency of our mail sorting operation. We have also improved our procedures for identifying mailings which do not meet specification. This supports our activities to improve the efficiency of our operation.
Royal Mail offers significant discounts linked to mail production specifications, including those relating to the sealing of envelopes. These can have a measurable impact on operating efficiency. Envelopes that are not sealed to specification can cause stoppages in production, which has a significant impact on operating costs.
As I am sure people will understand, it is very difficult for us to maintain substantial discounts based on a specification designed to improve our operational efficiency, if those specifications are not adhered to. We simply would not be realising the savings ourselves which pay for the discounts.
If, during sampling of the mail we receive, we identify that specifications are not met, we do contact the sending customer to make them aware of the situation where operationally possible. Where the customer uses Advertising Mail or Business Mail direct through Royal Mail, the sampling is carried out before we process the mail, which means that the customer can then decide whether to inspect the mailing, have it returned to them or to have it processed at a reduced discount. With regard to mail that enters our network through downstream access: feedback is given to the wholesale customer, which is usually another postal company rather than the sender or producer of the mail.
Following conversations with customers in recent weeks, Royal Mail will be working with the Direct Marketing Association and the Strategic Mailing Partnership to ensure that we improve processes around the compliance to specifications for the benefit of all. We are also reviewing the specifications, including those around the sealing of envelopes.
As a result of this, we have decided that any surcharges on sealing issues will be waived until 15 September 2012. In addition, we have agreed to waive 90% of surcharges on sealing issues retrospective to 26th March 2012.
