Woolworths’ New Automated Distribution Centre On-Track for Opening

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By Published On: April 24, 20180 Comments

Woolworths’ new state-of-the-art distribution centre, which is worth $215 million, is on track to open its doors late this year or in early 2019.

Featuring more than 14-kilometres of conveyors, the centre is rumoured to be the largest in Australia and is expected to feature the nation’s most extensive solar installation.

The new distribution centre is located in Dandenong South in Melbourne’s south-east and has been leased to Woolworths by fund management specialists, Charter Hall for the next 20-years.

According to analysts, the automated distribution centre could save Woolworths as much as $45 million in operational costs.

“Woolworths is taking a major step forward on costs with this automated warehouse,” one analyst told the Australian Financial Review.

It’s believed the new facility will supply most of the supermarket giant’s Victorian stores, storing more products than Woolworths’ existing distribution centres in Brisbane and Sydney combined.

Operating 24 hours a day, seven days a week, the automated distribution centre will utilise technology from the traditional logistics industry, as well as from manufacturing and postal systems. Among these items will be robotics and high-speed sorting systems and multi-storey racking, all of which are expected to allow Woolworths’ facility to sort and distribute stock faster and with greater accuracy than its other centres have in the past.

Cutting Labour and Energy Costs

Analysts believe that Woolworths’ new distribution centre will dramatically reduce the businesses labour costs. It’s expected the new centre will only require a fraction of the staff that are currently employed at Woolworths’ Broadmeadows distribution centre in Melbourne, with only about 100 people needed to ensure the centre’s successful operation.

The supermarket chain could also potentially employ fewer people in-store, as all stock leaving the warehouse is expected to be loaded into trucks in the right sequence, arriving into stores already sorted.

“If the goods come in already largely sorted so they can be pushed out to the right aisle … you could save a significant proportion of the people at the back of the store.“Woolworths hasn’t talked this up … but they could save four people per store,” analysts say.

These labour savings, as well as a reduction in energy costs thanks to the centre’s extensive solar power installation could result in extra revenue for the business, which analysts say is something the supermarket’s main competitors, such as Coles, Aldi and IGA will need to think about moving forward.

According to Woolworths’ distribution centre design manager, Michael Lucas, the facility might need to go through thorough testing for as long as 18-months prior to opening.

“It is the largest single investment in infrastructure in Woolworths’ history and it is expected to deliver significant safety, efficiency, and productivity,” Lucas said.

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