Coles looks to warehouse automation

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  • Plant & Equipment

Productivity improvements forecast but job losses feared

Coles

Australian supermarket giant Coles has entered into an agreement to build two new automated ambient distribution centres (DCs) as part of a strategy to modernise its supply chain and improve its bottom line.

In a partnership with Witron Australia, which specialises in development of dynamic warehouse and order picking systems, the project will span a five-year period.

Coles managing director Steven Cain says the brand delivers more than one billion cartons to stores each year, and investment in technology and automation will make the process more efficient in the long term.

"Coles is committed to improving efficiency and stock availability in stores and delivering higher service levels for our customers," Cain says in a statement.

"The investment we are making in this technology is expected to lower supply chain costs, provide safer working environments and enhance our business competitiveness."

Coles says the total investment required within its overall capital expenditure budget, which in 2019 is set at $600 million to $800 million.

The investment takes into account the appropriate level of net debt for Coles as a standalone company, given its impending demerger from Wesfarmers, and the investment is supported by the incoming Coles board, according to the statement.

Coles says it "expects to recognise provisions of approximately $130 million to $150 million before tax in the 2019 financial year, relating to redundancies and lease exit costs for a number of existing distribution centres that will be closed over a five-year period".

UNCERTAINTY

The latter statement has created angst amongst Coles employees and unions, with NSW local newspaper Crockwell Gazette reporting that the Ducks Lane facility in Goulburn would be one of five to close by 2023.

With one new DC mooted for Queensland and one for NSW on greenfield sites, some 250 to 300 Goulburn workers, including 60 Linfox drivers, face job losses unless redeployment or alternatives are found.

Unions are planning to meet with Coles distribution centre management to negotiate solutions for its members, the newspaper reports.

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