Wesfarmers to accelerate Coles efficiency strategy


In-house load planning trials and route optimisation aimed at reducing supply chain costs

August 15, 2013

Driving down supply chain and distribution centre (DC) costs remains at the forefront of efficiency efforts at Coles, a presentation from owner Wesfarmers shows.

The annual results presentation, for a year that saw group net profits up 6 per cent to $2.26 billion, states that in-house load planning trials and route optimisation initiatives are underway at Coles premises.

Efficiency efforts appear to be paying off, with cartons per load rising from about 20 per cent since 2010 and cost per carton falling about 15 per cent since 2010.

Earnings
for Coles, which is the target of an
ongoing
Transport Workers Union (TWU) campaign aimed at its transport policies,
grew 13.1 per cent to $1.53 billion.

"The transformation of Coles’ supply chain continued during the year and included further progress on automated inventory replenishment, in-house load planning and better optimisation of fast as slow moving product flows," Wesfarmers says.

This is set to take a step up.

"The success of the turnaround strategy over the last five years has provided a solid platform as Coles transitions to its second wave of transformation to take advantage of opportunities in store renewal, supply chain transformation and continued improvements in operating efficiencies," it adds.

Despite that, the group, one of the country’s biggest users of road transport, saw its "freight and other related expenses" column burst through the billion dollar mark, settling at $1.021 billion from $946 million.

Commercial motor insurance makes up 24 per cent of Lumley Insurance, part of the group’s Insurance division.

There was no breakdown of Lumley’s performance, though the group does include motor-related lines as displaying "further increases in premium rates and strong growth in volumes".

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