Pos Malaysia’s Group CEO Charles Brewer spends most of his days out and about in the field, either asking questions, listening or rolling up his sleeves and doing the job. Over the last 14 months the team at Pos Malaysia have been working hard on their transformation programme. And while there is still much to be done, they are already showing positive signs. In Q2 2022 Pos Malaysia delivered its first profit in 15 consecutive quarters.
Following his presentation on Pos Malaysia’s transformation at WMX Asia in Thailand, we speak to Charles Brewer to find out more.
How did Pos Malaysia develop its strategy?
Like many postal operators around the world, our challenges and our opportunities are not unique. We are seeing declining mail volumes, increasing parcel volume, challenges with culture, service, systems and processes and a customer base who is less in love with us than they were.
Before developing the strategy, we spent plenty of time in the field talking and critically listening to employee and customer feedback. We identified a long list of pressing issues and opportunities.
On the back of those insights and in discussion with other key stakeholders (its board, seven unions and regulators) Pos Malaysia developed a three-phase plan.
Can you tell me the key aspects of the plan?
The first phase of the plan ‘back to black’ was focused on getting the foundation right, and in particular ensuring they had the right team of experts, the right service level for mail and parcel, addressing the low-hanging cost opportunities and working on having the right customer mix. Our aim was to be bold and brave – you can’t possibly succeed if you don’t have the basics right.
The second phase of the plan ‘Transform the core’ which we are focused on this year, is all about building a sustainable operating company. Having got the ‘basics’ generally heading in the right direction, we now need to push on and transform our business from being a mail company that also delivers parcels, to becoming a fully capable parcels delivery company, that also delivers mail.
The third phase of the plan was Pos Malaysia 2.0 as mail volumes continue to decline and parcel yields are low we have identified a number of new opportunities to generate future profits.
Can you tell me about some of the opportunities?
Pos Malaysia 2.0 is focused on 4 opportunity areas; 1) Retail, 2) International, 3) E-commerce Fulfilment and 4) Data Monetisation.
Pos Malaysia sits on the largest retail footprint in the country, with more than 3.2 million square foot of built-up space and the Pos Malaysia team aim to pilot a proof-of-concept new store in Q4. The new concept will be anchored on health (doctor, pharmacy, etc) and will leverage F&B, Convenience, Fashion and of course the existing traditional post and parcel products.
Whilst Pos Malaysia already has an existing mail, direct entry and transhipment international product line, shortly they will pilot a deferred international product, using a white label digital product and aim it at those customers looking for a slightly slower service than an integrator and at a lower price point.
With the reduction in mail volumes and continued consolidation of mail and parcel, Pos Malaysia has unused warehouse space and will use this for B2B, B2B and D2C brands looking to place product closer to customers.
Early stage exploration of how Pos Malaysia can leverage its data externally.
What’s going well?
The team have done an amazing job!
Very quickly the Pos Malaysia team ‘fixed the basics’, and as an example moving the next day delivery performance from 48% in August 2021 to a market leading 95.7% in August 2022. It also reintroduced live customer service, provide delivery and pick-up seven days a week, extend the operating hours of the more than 657 retail points, improve the yield, redesign the commercial function, remove cost and improve productivity.
As part of transform the core, Pos Malaysia has developed and is in mid-rollout of a fully immersive and interactive cultural transformation program, critical to the success of its transformation.
At the same time, and as part of a fresh look, it is refreshing the brand, uniform and associated assets – winning hearts internally as much as externally.
What’s not going so well?
Most of the plan is on track and you can see from the project plans and results it is delivering, but time is not a friend. Postal operators globally need to move fast.
There is little I would have done differently. I would just want to be even more brave, even bolder and a lot faster. Our competitors are moving at lightspeed and every day lost is a day you can’t get back.
Of course, there are tailwinds and headwinds, and one does need to stay agile and ready to course-correct.
You too can affect a turnaround at your post – here are Pos Malaysia’s top tips
Build on your Post’s rich history
All Posts have rich histories, and your transformation plan ought to recognise the significant pride and passion your employees and customers will have. Leverage your history, leverage the bits you want to keep going forward. Be sure to celebrate every success and celebrate it internally as well as externally.
Transformation and turnaround requires hands-on leadership
During the transformation you and your team need to be highly visible, truly engaging with your frontline and customers regularly. This allows you to understand the issues, opportunities and whether the transformation is delivering.
Admittedly, the culture of almost all Posts is hierarchical and administrative. If you really want to engage your employees in the growth of your Post, you will need to tear down that hierarchy. Get rid of the special perks and symbols that imply that some are more special than others.
Of course, and in part it is signposting, making sure the frontline team feel that we are all in this together but more importantly you will learn much more on the ground than you will in the board room. Your employees and customers know exactly what is right and what is wrong with your business, so ask and listen to them.
The Right People in the Right Management Positions:
Where you can, de-layer and flatten the organisation to bring your management team closer to the customers and frontline employees.
When I came into Pos Malaysia I reduced the headquarters staff by 30% using voluntary early retirement and buy-outs. I also brought in people who are experts and who specialized in their fields (for example IT, marketing, etc).
Trust is a function of the product and the brand:
Pos Malaysia developed a refreshed brand approach across three building blocks – Brand Trust, Brand Love and Brand Loyalty.
Aside from the obvious and expected impact on the customer, the refreshed approach has also refreshed the love of Pos Malaysia for its employees.
It doesn’t have to cost lots, use the available social media platforms to promote and celebrate what you do – Instagram, Twitter, Facebook and LinkedIn – are where your employees and customers are. Tell your story there.
Customer mix and yields were a big opportunity for the Pos Malaysia team, ask yourself do you have the right customers as customers, are you charging all the accessorial fees you should be, don’t carry loss makers,
Similarly, these days we play in a very competitive space, don’t wait for customers to come to you – go out and ask for the business.
Recognise that nothing is more important than cash flow – start by managing costs but also focus on sales.
Nothing is more important to a successful turnaround than cash. Good managers constantly ask tough questions that get their financial officers talking to division and functional heads.
Are purchase orders being cut or contracts signed that aren’t reflected in the operations or capital budget? Do we have good sales targets? Are sales on plan? Has the marketing department decided on a receivables-dating program to stimulate sales? What’s the financial condition of our big customers?
To become more self-sufficient, every Post should ensure that they focus on the cost reduction targets.
Go after the low-hanging fruit first and then continually lower the cost of every step of the operation process, for example are you running two networks for mail and parcel and if so merge and merge fast, review purchase spent from largest to smallest, look at linehaul, last mile, overhead.
Simplistically, review every single dollar spent and look to reduce by 30% or more.
Culture eats strategy for breakfast:
Pos Malaysia also knows that people need to have a clear understanding of their role as a company and in society.
Any well-run organisation needs a clear definition of its Purpose, Promise and Values – using ideas that are very easy for all employees to understand and with which they can align their choices and actions.
Publicise the strategy to everyone, track your progress, tell everybody and celebrate your achievements
Celebrate, celebrate, celebrate! Transformation is tough, so make sure to celebrate every success internally and externally.