The parent company of Coles, Wesfarmers, has announced that over the next five years, it will develop two automated supply centres.
While it is not known exactly how many staff members will lose their jobs as a result of these new hi-tech centres, the large supermarket chain has indicated that it will make provision for between $130-$150 million in the 2019 financial year, to pay for staff redundancies and lease exit costs, as reported in the Business Insider.
Coles has said that it expects to close a number of existing distribution centres over that five-year period.
The company has made an agreement with German-based company Witron Logistic + Informatik BmbH to build the new hi-tech robotic warehouses, which will be housed in New South Wales and Queensland.
Modernise and Lower Costs
Coles Managing Director Steven Cain told Business Insider that the agreement forms part of Coles’ efforts to modernise its supply chain, which delivers more than 1 billion cartons to Coles 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.
“Following a comprehensive review of all options this investment is expected to deliver significant productivity improvements over the medium to long term,” said Wesfarmers managing diretor Rob Scott.
The new automated centres would be paid for out of Coles’ broader capital investment budget of $600-800 million for the 2019 financial year. Although it is unclear as to how much the new centres will cost to build.
Woolworths is essentially doing something similar. They opened a $215 million automated distribution centre earlier this year.
A Split Is Inevitable
This announcement comes as Coles is looking looks to break off from Wesfarmers.
Wesfarmers shareholders will vote on the demerger proposal on 15 November.
Wesfarmers confirmed it plans to retain a 15% share in Coles and a 50% stake in the Flybuys program.
“Eligible shareholders will receive one Coles share for every Wesfarmers share,” a statement said.
The Coles split is expected to be finalised by the end of November.
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