Coles to automate distribution centres

Wesfarmers has unveiled plans for its supermarket giant Coles to modernise and automate its supply chain over the next five years, saving millions by consolidating its distribution centre base and cutting jobs.

The conglomerate has entered into a proposed agreement with German automation company Witron Logistik + Informatik to develop two new automated ambient distribution centres for the supermarket chain.

Witron supplies automated storage and picking solutions for warehouses, including cranes, conveyors and software.

“Following a comprehensive review of all options this investment is expected to deliver significant productivity improvements over the medium to long term,” Wesfarmers managing director Robe Scott said in financial filings today.

The incoming board of directors for Coles support the plan, with the new distribution centres to be funded through the business’ capital expenditure budget.

Westfarmers is planning to split Coles into a standalone company by the end of November this year pending court approval.

Guidance for Coles’ net capital expenditure in the 2019 financial year is expected to sit between $600 million and $800 million.

The company also expects provisions of between $130 million and $150 million before tax in FY19 relating to redundancies and lease exit costs for a number of its existing distribution centres that will be closed in the next five years.

Coles managing director Steven Cain added that the increases in efficiency will help the company deliver the more than one billion cartons of groceries and goods to its stores each year.

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