According to The Australian Financial Review, Woolworths is set to take the wraps off a new $215 million fully automated distribution centre that promises to deliver a step-change in cost savings and productivity when it goes live in the next year.
The state-of-the-art distribution centre in Dandenong South in Melbourne – which is owned by Charter Hall and leased to Woolworths for 20 years – is close to reaching practical completion and is expected to be fully operational later this calendar year or early in 2019.
Woolworths has yet to release details about the distribution centre, which is the largest in Australia and features the nation's largest solar installation and more than 14 kilometres of conveyors.
However, analysts have started crunching the numbers and believe the facility could save Woolworths at least $45 million in annual operating costs, increasing pressure on rivals Coles, Aldi and Metcash's IGA retailers.
"Woolworths is taking a major step forward on costs with this automated warehouse," one analyst said.
The facility, which sits on a 15.9-hectare site 35 kilometres south-east of the Melbourne CBD, will stock more products than Woolworths' Brisbane and Sydney distribution centres combined and will supply most of Woolworths' stores in Victoria.
The Dandenong facility combines technologies used in the traditional logistics industry and those in manufacturing and postal systems, including multi-storey racking systems, robotics and high-speed conveyor and sorting systems, to sort and distribute stock faster and with much greater accuracy than traditional warehouse technology.
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