Tim Brown talks to Gail Roberts and Martyn Smith about the processes and developments within one of Britain’s greatest industrial legacies, The Royal Mint.
Perhaps more than any other product, currency makes an important contribution to the very fabric of society and exudes prestige in its manufacture. The prevalence of coin usage around the globe means that the process of literally making money is big business.
The Royal Mint is a government-owned company and was officially vested as The Royal Mint Ltd on December 31, 2010. Committed to providing a financial return to the UK government, last year it turned over more than £172m with a total operating profit of £3.6m.
The Royal Mint is the world’s leading export mint, making coins and medals for around 60 countries every year and employs over 800 people. However, The Royal Mint’s first responsibility is to make and distribute United Kingdom coins and it has an exclusive contract to do so from HM Treasury, as well as official medals for the MOD.
Ministry of Defence Police oversee the security of the 35-acre site, which operates round-the-clock for 52 weeks a year. The Royal Mint can produce 90 million coins and blanks a week, a total of close to five billion coins a year. The scale and continued growth of the operation has meant the site has frequently undergone improvement and development. Over the last 24 months the business has undergone some of its most significant changes in recent history.
Supply and demands
A great number of the changes have taken place in the area of procurement and supply which has culminated in the development of a new supplier initiative and awards programme. Head of supply chain at The Royal Mint, Gail Roberts, has overseen many of these strategic transformations which she says have mainly been driven by a desire “to maximise value”.
Ms Roberts joined The Royal Mint in 2009 and, in the two years since, has worked to increase the contribution and control of the supply chain department.
By increasing the skills and understanding of her staff as well as developing a clearer set of criteria for supplier management, Roberts has assisted The Royal Mint in improving the efficiency of both its purchasing and operating strategy.
“If you look at standard purchasing models,” says Roberts, “best practice’ tends to dictate that 80 per cent or more of purchasing activity should be of a strategic nature delivering ‘best value’. Circa 20 per cent should be tactical delivery. However, this ratio can vary depending on the business and commodities purchased. Two years ago at the Royal Mint that ratio was probably inverted.”
Talking through exactly how this transformation was achieved, Roberts explains, “I have changed the focus of the team and implemented a development programme that embraces a more strategic and category management approach. The team now understand at all levels the commodities they purchase and the markets they operate in. They are far better informed and more able to establish a platform on which they can attain and manage ‘best value’. They understand the importance of engaging with stakeholders at all levels across the business, and are able to offer commercial acumen wherever revenue is expended”.
Looking back over the last two years of change Roberts reflects: “Purchasing was quite disseminated when I joined and extremely decentralised in terms of controls. The first 12-months in the role was very much about understanding the capability, skills and development of the Supply Chain team, it was about implementing and building a structure that was able to facilitate, encourage and support both the individuals and team growth.” “The infrastructure and system changes have now allowed us to take back full control of all revenue expended and through a consultative approach offer best practice procurement solutions, improving efficiencies and bottom line results,” says Roberts. “Once the structure began to take shape we were able to better engage with the wider business, our stakeholders and our key supply partners in a more strategic manner.”
Olympic endeavour
In December 2010, the London Organising Committee of the Olympic Games and Paralympic Games (LOCOG) announced that the Royal Mint would be responsible for the production of 4,700 victory medals for the London 2012 Olympic and Paralympic Games.
The gold, silver and bronze medals, which are awarded to athletes in the London 2012 Victory Ceremonies watched by a worldwide audience, have been designed by a UK-based artist. The contract between LOCOG and the Royal Mint was signed following a competitive tender process, with the opportunity originally advertised on the business opportunities portal CompeteFor.
For the first time in its 1,100 year long history the Royal Mint is releasing a series of coins, designed by members of the British public, into nationwide circulation. Depicting the power and passion of the world’s greatest sporting event, the 50p coins showcase each of the 29 Olympic and Paralympic sports to be contested during London 2012.
Almost 30,000 designs were submitted to the Royal Mint following the launch of a public competition in January 2009. After months of debate and consultation the final 29 coin designs were chosen anonymously by a panel made up of independent experts, representatives of the Royal Mint, London 2012 and the International Olympic Committee. The winning designs feature images of all the official Olympic sports of London 2012 such as Athletics, Gymnastics, Sailing and Swimming, as well as Paralympic sports such as Boccia and Goalball.
From the speed of the Velodrome to the excitement of the athletics track, from the grace of beam, bars and vault to the sweat of the coxless fours, the drama of each sport has been captured on millions of coins released into pockets and purses across the UK. There are also uncirculated collector options available via the Olympic product range.
In 2010, The Royal Mint introduced its ‘Working Together’ supplier relationship management programme to take this progress forward in a more concerted manner. The initiative is based around open communication, clear objectives and strategic alignment with all the key stakeholders in the Supply Chain both internal and external. Through a number of workshops, The Royal Mint has clearly outlined its expectations, in meeting the business objectives in the short, medium and long term to its supply base and has where appropriate offered to share and support in any technological development as necessary. “In the current economic climate, many commercial operations have price as their number one priority,” says Roberts. “Whilst price is and will continue to be important, we on the other hand are very much interested in the ‘long game’. Total acquisition cost, sustainability and continuity of supply are key.”
The Working Together programme has a number of facets including: ensuring security of supply; achieving a competitive price; ensuring best practice; social and ethical responsibility; and environmental compliance. Through this initiative The Royal Mint through actively encourages its suppliers to adopt and align themselves to best practice in terms of sustainability and ethical sourcing. The Mint leads from the front on these issues setting a demanding example.
The Supply Chain department at the Royal mint is now seen very much as the linchpin for the management of all supplier relationships. The department is responsible for providing commercial support from concept through to implementation and beyond. Previously, the Supply Chain team had been engaged very much in a processing capacity.
Changes are not over and done with however. Like any continuous improvement programme Roberts considers this to be an ongoing task and continues to introduce specific expertise, infrastructure, systems and technological advancements. Roberts comments: “through the people development programme, there are now firm roles which are accountable and responsible for engaging fully with the business, roles that understand and, interpret the needs of the business and through robust category management techniques bring concepts & ideas to the table that offer customer solutions that ‘delight’.
The Royal Mint – then and now
Steeped in history, The Royal Mint originated more than a millennia ago during the reign of Alfred the Great. In 1279 The Royal Mint, was housed at the Tower of London , and remained there for 500 years. By the 16th Century this was the sole site for the production of coins in the realm.
In readiness for the introduction of the decimal coinage, The Royal Mint moved away from London to its current headquarters in Llantrisant, South Wales. The first phase was opened by Queen Elizabeth II on 17 December 1968, and production gradually shifted to the new site over the next seven years until the last coin, a gold sovereign, was struck in London in November 1975.
The institution of The Royal Mint is symbolised by a modern logo. The design is a depiction of the crowned Royal Arms surrounded by a repeating pattern, the inspiration for which was found in the Tudor rose design of the first gold sovereign struck in 1489.
The success of the Working Together programme 2010/11 prompted the inaugural Royal Mint supplier awards on June 30, 2011. Recognition was given to suppliers that had helped the Royal Mint take a step closer to achieving its own business objectives while also celebrating the achievements of the suppliers themselves.
Introducing the awards, Gail Roberts, head of Supply Chain and procurement, said: “I have hosted many events of this kind but none have made me feel as proud as I do now because of the sheer scale of the transformation and journey we have undertaken as a business and a Supply Chain team. Suppliers are integral to the success of this journey. We still have some way to go, but this is about recognising our achievements to date.”
Zenith Print and Packaging was named Supplier of the Year for the outstanding achievements in all of the categories within the Working Together programme. Other winners included:
- Cliden Consultants, Contractor of the Year award
- TATA Steels, Most Innovative award
- Cooksons/Sempsa, Working in Partnership award
- Zenith Print & Packaging, Best annual performance (Direct Materials) award
- The Royal Mail, Best annual performance (Indirect Materials) award.
Adam Lawrence, chief executive of the Royal Mint, said: “The Royal Mint is the world’s leading export mint, but our aspiration is to continue growing as a business bringing real benefit to Britain’s manufacturing economy and the local area in which we operate. Our suppliers are our partners in this and we firmly believe that a strong Supply Chain can add real value to businesses such as ours. It therefore gives me great pleasure to formally recognise the achievements of our best suppliers through the awards programme.”
The award ceremony took place at the Vale Hotel in South Wales, close to the Royal Mint’s own home in Llantrsiant and followed a charity golf tournament attended by Royal Mint employees and suppliers. The awards programme will be replicated on an annual basis.
The Working Together programme is about driving value, ensuring we attain the best product for the price paid and is a platform for injecting innovation into the company. The establishment of an awards scheme is a demonstration of the progress which the company feels it has made both in these areas and in the engagement and conditioning of its Supply Chain. There has been a strong focus on ensuring understanding and compliance with good corporate and social responsibility throughout the Supply Chain and The Royal Mint is certainly leading from the front.
A Royal requirement
The Royal Wedding, earlier this year, saw a number of projects undertaken by The Royal Mint. Most impressively perhaps was the creation of forty 22 carat gold ‘kilo’ coins, featuring a traditional portrait of Prince William and Miss Catherine Middleton. Made from a kilogram of solid gold and selling for £40,000, it is the first time in the Royal Mint’s 1,000 year history that kilo coins have been made to celebrate a Royal Wedding day, making them amongst the most expensive, rare and exclusive items to commemorate a Royal Wedding.
Each kilo coin is 10 centimetres in diameter, nearly four and a half times the size of a standard £1 coin. Produced individually and finished by hand, the Alderney coins have a face value of £1,000, which is five hundred times greater than the highest value coin in circulation – the £2 coin.
In addition, 200 pure silver kilo coins have also been produced, selling for £1,650, the silver kilos also have a diameter of 10 centimetres. With such limited numbers of each being produced, they are destined to be added to the collections of royal enthusiasts around the world, by those looking to commemorate the special day with a genuinely remarkable souvenir.
The only official UK coin being struck to commemorate the wedding of Prince William to Miss Catherine Middleton went into production in March at the Royal Mint. Approved by the Royal Household and the Government, the coin features relaxed, modern portraits of the couple, an approach also evident in the informal use of their names and the date of the wedding circulating their portraits. The obverse bears a portrait of Prince William’s grandmother, The Queen.
The coin has been designed by Mark Richards, Fellow of the Royal Society of British Sculptors, following an invitation- only tender process involving a handful of British sculptors. His submission was selected by the Royal Mint Advisory Committee, a panel made up of experts in art, design, history and heraldry, chaired at the time of the decision by Sir Christopher Frayling, former Rector of the Royal College of Art.
In addition to the coin to commemorate the royal wedding, The Royal Mint also produced a £5 Alderney coin commemorating the engagement of Prince William to Catherine Middleton. It is the first Royal Engagement coin ever to be produced in the long history of the Royal Mint.
Roles and responsibilities
The Royal Mint is under strict directives to be compliant in regard to ethical and sustainable standards set down for procuring goods and services. Compliance with ethical sourcing of materials has been an extremely important goal for The Royal Mint and it has recently undertaken to have the commitment to this endeavour officially recognised.
In 2010 the Royal Mint achieved the SGS accreditation SA8000 which is the ‘gold’ standard and a globally recognised accreditation of ethical and social responsibility. The Royal Mint was the first mint in the world, and one of the largest manufacturers in Europe, to achieve SA8000 accreditation. Social Accountability 8000 is the primary ethical standard through which organisations can demonstrate their commitment to social responsibility.
The accreditation offers proof of The Royal Mint’s code of practice for good labour conditions and allows consumers to be confident that the goods they are buying have been produced in accordance with a recognised set of international standards. The Royal Mint in turn encourages its key supply partners to also fully embrace this standard and recognised the achievement of two of its key partners as recipients of this standard at the 2011 awards dinner.
The Royal Mint is also dedicated to the protection of the environment. It has recently expanded its manufacturing capacity with the design, construction and implementation of two new Nickel-Plating Plants which were opened by the Chancellor of the Exchequer and Master of The Royal Mint, the Rt Hon George Osborne MP, in March 2011. The company considers these plants to be critical to its future growth plans, particularly with the growth of its aRMour range of plated coin products which deliver many customer benefits including lower lifetime cost and improved durability.
The process adopted to make plated coins requires the use of a number of chemicals which can be potentially harmful to the environment. The Royal Mint has always and will continue to take its environmental obligations seriously and as part of the capital investment undertaken in 2010 the company invested in and is at completion stage of the installation of a new effluent treatment plant, one that uses best available technology and is able to support its increased production capacity from two new nickel plating lines. The combined cost and investment of the project was £16.5m.The bold new project marks an acceleration in the Royal Mint’s five-year growth plan – a decision it has made to capitalise on significant opportunities in the nickel plated coin marketplace both at home and abroad. The new treatment plant, which is expected to be fully operational in the coming few weeks according to The Royal Mint will significantly reduce the amount of effluent discharged and will allow for an important increase in recycling. The construction represents The Royal Mint’s most significant investment in over 40 years.
“We are extremely vigilant with regards to the environment and have already been awarded recognition from widely recognised bodies for our new effluent treatment plant,” says Roberts. “We are registered to tier 1 level as per the Control of Major Accident Hazards Regulations which means we are managed extremely vigilantly on how we receive, store and process chemicals on and off site. We are audited by the highest authorities in the management and disposal of chemicals and part of what the new effluent plant allows us to do is control the use, recyclability and disposal of those chemicals utilised in a far more efficient way.
The Royal Mint at a glance
Location: Llantrisant, Wales
Revenue: £172.8m
Profit: £3.6m
Employees: over 800
Industry: Coins and medals
Customers: Supplies coins, blanks and medals to around 60 countries every year.
Points of interest: The Royal Mint can produce 90 million coins and blanks a week. Recently The Royal Mint held their own supplier awards to develop their supplier relationships, which included entries and attendance from over 40 companies predominately from the UK, Europe, US and China.
History: The Royal Mint originated more 1000 years ago during the reign of Alfred the Great and from 1279 The Royal Mint was housed in the Tower of London. The Royal Mint moved to its current headquarters in Llantrisant, South Wales in 1968 in preparation for the move to decimal coinage.
Operating to potential
The Operational Excellence programmes at the Royal mint have, according to the company’s annual report, delivered great results by shortening customer lead times and improving visibility of production output. The Royal Mint have two operational excellence teams: one in circulatory coins and one in commemorative coins.
The UK circulatory coin contract performance was exceptional with the company achieving its Ministerial target of 99% on time delivery. According to The Royal Mint, its service to its commemorative coin customers has also improved over the last couple of years with the team demonstrating it is capable of performing under pressure during peak periods and increased volumes while delivering high level support to its customers. The delivery of coins for circulation overseas is still an area where the company expects to make considerable improvement and will be a key focus point over the next year.
Off the back of the Working Together programme, The Royal Mint has also introduced a new streamlined ordering system which it refers to as the ‘Ping’ system. Where orders for raw materials were once labour and administratively intensive, stocks are now managed on min/max footprint and ordering is fully automated. Steel consumption, for example, is communicated in ‘real time’ to the supply base and managed logistically in 25t replenishment batches.
According to Roberts, the benefit of this system is that physical deliveries now reflect the operational requirements every time which improves, stock management, cash flow, invoice accuracy and insures prompt payments. The system was trialled initially with our steel suppliers and the plan is to implement across our entire commodity supply base. Without the SRM (supplier relationship management) programme, this initiative would have been far more difficult to achieve.”
The company’s CEO, Adam Lawrence, has made clear that he wants The Royal Mint to continue to be the world leader and through innovation in business processes as well as production processes, The Royal Mint is certainly making every effort to be the best in everything it does. Its dedication to its suppliers has been matched only by demonstrated commitment to development on site. Its inward investment in its new nickel plating plant as well as its effluent treatment facility has already garnered important recognition and further expansion is planned. With over 1000 years of expertise and production experience housed on site, The Royal Mint is certainly class leading.
