Charter Hall Long WALE Hardware Partnership has acquired a $353 million portfolio of six Bunnings stores located in prime metropolitan markets across Australia. The Charter Hall platform now have in excess of $2.4 billion invested in 59 Bunnings stores.
Wesfarmers, the owner of Kmart, Bunnings, Officeworks, online marketplace Catch, and Target has reported a 60 per cent growth in online sales to $2.1 billion this year, reflecting continued shifts in customer shopping preferences to digital, click and collect and contactless options for retail products.
Wesfarmers businesses including Catch.com.au, Officeworks and Bunnings are seeing significant sales as more customers turn to online shopping, amid coronavirus restrictions.
Wesfarmers is undergoing a restructure of its retail brands, focusing efforts on increasing Kmart, Target and Catch digital offerings by leveraging on the recent e-commerce boom. The restructure will include the closure or conversion of up to 167 Target stores.
Discount department store Kmart is turning its stores into makeshift distribution centres as demand for its products continues to soar.
Wesfarmers announced on Monday 30th March that it will sell a 5.2 per cent stake in Coles Group Limited for total pre-tax proceeds of $1 million. Read more
Coles has entered into a Heads of Agreement with Witron Australia, the Australian subsidiary of Witron Logistik + Informatik GmbH (Witron), to develop two new automated ambient distribution centres for Coles over a five-year period. Witron has developed over 50 automated projects for major retailers around the world.
Wesfarmers managing director Rob Scott said the decision to make this investment followed an extensive evaluation process and assessment of global best practice to ensure that the project supports Coles’ strategy over the long term.
“We are pleased to partner with Witron to invest in world-class technology to modernise Coles’ supply chain,” Mr Scott said. “Following a comprehensive review of all options, this investment is expected to deliver significant productivity improvements over the medium to long term.”
Coles managing director Steven Cain said the investment demonstrates Coles’ commitment towards modernising its supply chain, which delivers more than one billion cartons to stores each year, through investment in technology and automation.
“Coles is committed to improving efficiency and stock availability in stores and delivering higher service levels for our customers,” Mr Cain said. “The investment we are making in this technology is expected to lower supply chain costs, provide safer working environments and enhance our business competitiveness.”
The total investment required to develop the two new automated ambient distribution centres will be managed within Coles’ overall capital expenditure budget by applying its established capital allocation processes and return hurdles. Future capital expenditure requirements associated with this investment were taken into account in determining the appropriate level of net debt for Coles as a standalone company, and the investment is supported by the incoming Coles Board.
The 2019 financial year capital expenditure associated with this project is included in Coles’ net capital expenditure guidance of $600 million to $800 million. Coles expects to recognise provisions of approximately $130 million to $150 million before tax in the 2019 financial year, relating to redundancies and lease exit costs for a number of existing distribution centres that will be closed over a five year period.
The Supreme Court of Western Australia has ordered a meeting (Scheme Meeting) of Wesfarmers shareholders be convened to vote on a scheme of arrangement for the proposed demerger of Coles.
If the demerger proceeds Wesfarmers shareholders will retain their Wesfarmers shares. Eligible shareholders will be entitled to receive one Coles share for every Wesfarmers share held at the demerger record date.
Wesfarmers chairman Michael Chaney said: “Demerging Coles enhances Wesfarmers’ prospects of delivering satisfactory returns to shareholders by shifting our investment weighting and focus towards businesses with higher future earnings growth prospects,” Mr Chaney said.
“Following a successful turnaround since it was acquired by Wesfarmers in 2007, Coles is once again a leading Australian retailer, well positioned to grow as a defensive business with strong investment characteristics.”
- Demerger of Coles to reposition the Group’s portfolio and set up both Wesfarmers and Coles for future success.
- Wesfarmers to retain 15 per cent of Coles and 50 per cent of flybuys.
- Eligible shareholders will receive one Coles share for every Wesfarmers share.
- Wesfarmers Board recommends shareholders vote in favour of the demerger of Coles.
- The Independent Expert, Grant Samuel & Associates, has concluded the demerger proposal is in the best interests of Wesfarmers shareholders.
- Shareholder vote scheduled for Thursday, 15 November 2018, with demerger to be completed in November 2018, subject to shareholder, court and regulatory approvals.
Wesfarmers following the proposed demerger
Wesfarmers managing director Rob Scott said the demerger represented a significant repositioning of the group’s portfolio and would set up Wesfarmers for success over the next decade.
“The demerger will reposition the group’s portfolio to target a higher capital weighting towards businesses with strong future earnings growth prospects,” Mr Scott said. “After the demerger, Wesfarmers will have a portfolio of cash generative businesses, with strong returns on capital, good momentum and leading positions in their respective markets.”
“Maintaining a strategic stake in Coles provides an important connection with Wesfarmers to reinforce opportunities to collaborate in the data, digital and loyalty areas. flybuys will be better able to realise its potential as a leading loyalty company through the ongoing support and investment of both Coles and Wesfarmers and by leveraging the broader networks of the Wesfarmers Group, including the existing partnerships with Kmart and Target,” Mr Scott said.
This year marks the 13th anniversary of the Gartner Supply Chain Top 25 — an annual recognition of achievement and advancement of supply chain capabilities.
Here are the highlights of the Gartner Asia/Pacific top nine companies.
No. 1 — Lenovo (No. 24 in Gartner’s Global Supply Chain Ranking)
Lenovo moves up to the No. 1 spot within the Asia/Pacific region for 2017 as the Chinese high-tech company continues as a leader in the mature PC market, selling four devices every second.
Investments in digital capabilities, such as predictive analytics, are paying off, allowing the business to simulate threats and opportunities while driving forecast accuracy improvements and optimising inventory holdings. Coupled with a mature S&OP process and a shift from traditional product-centric to more customer-oriented quality measures, the business is on a strong footing for continuing success.
Upstream, Lenovo is implementing an enterprise-grade visibility and risk management tool to improve performance in sourcing, manufacturing and logistics. While it has increased ownership of factories over the past several years and is using network optimisation to drive capacity utilisation across business units. Lenovo is also investing in smart manufacturing, including automation, toward a goal of having the most advanced factories in the PC industry.
No. 2 — Samsung Electronics (No. 25 in Gartner’s Global Supply Chain Ranking)
Samsung takes the second spot on the Asia/Pacific list in 2017 down from No. 1 in 2016. The Korean consumer electronics giant also dropped significantly in the global rankings this year from No. 8 to No. 25 on the back of governance failures that lead to the much publicised quality issues with the Galaxy Note 7 smartphone batteries.
While the resulting product recall was a blow to the brand’s reputation, a continued long-term focus on core fundamentals, such as supply chain agility, supplier/customer integration and end-to-end value chain collaboration, has helped maintain a strong peer vote and enabled it to solidify the No. 2 spot. A lower-than-average CSR score of 4 out of 10 is an improvement opportunity for it to regain its leader status in the region.
No. 3 — Huawei (No. 26 in Gartner’s Global Supply Chain Ranking)
Chinese multinational Huawei moves up two places from last year to No. 3, driven by enviable growth in recent years, sporting a 31.3% three-year average revenue growth rate, as it climbed to No. 3 in the global smartphone market. Strong customer partnerships, digital supply chains and smart factories had been the key drivers of the Huawei supply chain capability improvements. In addition, a strong focus on sustainability reflected in Huawei developing more energy-efficient products with minimal environmental impacts, while reducing carbon emission and conflict materials across its global supply chain. Longer term, and in conjunction with its strategy to become a major global player, Huawei has also developed a vision that embraces the goal of being a responsible value-driven organisation. Pursuing strong growth and customer orientation through cost innovation and risk mitigation in collaboration with suppliers and customers, the company also strived to improve cybersecurity of its products.
No. 4 — Toyota (No. 31 in Gartner’s Global Supply Chain Ranking)
As the only business to have placed in the top 10 within the Asia/Pacific region every year since 2007, Toyota is an extremely consistent performer. The business has a strong track record of investing in new digital technologies with significant deployment of robotics and autonomous guided vehicles across its manufacturing facilities. New investments in innovative technologies are being made through the Toyota Research Institute (TRI), which has recently partnered with MIT to investigate how blockchain technology can be used to securely share and monetise businesses and individual driving information. The TRI also recently established a $100 million fund, called Toyota AI Ventures, to provide early-stage financing to startups focused on key technologies, including artificial intelligence, robotics and autonomous mobility. A number of notable investments in new manufacturing capacity are also being made, such as the development of a new $1 billion facility in Guanajuato, Mexico and $300 million investment into its existing Burnaston plant in the UK.
No. 5 — Bridgestone (No. 51 in Gartner’s Global Supply Chain Ranking)
A new entrant to the Top 25 for 2017, Japanese auto parts manufacturer Bridgestone has come in at No. 5 on the Asia/Pacific list and No. 51 overall.
A range of initiatives and technology investments focused on integrating the supply chain planning functions (production planning, distribution planning and transport planning) in recent years has allowed the Japanese auto parts manufacturer to substantially improve overall visibility of available products to end customers. This improved supply chain integration is now proving to drive higher levels of customer satisfaction while simultaneously reducing overall supply costs.
Bridgestone also impressed on the CSR front by taking an end-to-end view of its impact on the environment. For example, Bridgestone estimates that around 90% the CO2 emissions produced by tyres actually occur after they have been fitted to the vehicle, and have invested in a range of technologies including “ologic” to optimise tire design. The result is reduced aerodynamic and rolling resistance that improves the fuel economy of the vehicle itself. This proactive and comprehensive approach to its CSR policies helped it score a 9.00 in that portion of the rating.
This Chinese manufacturer jumped one position in its ranking among Asia/Pacific supply chains, while advancing 13 places overall compared to 2016 rankings — supported by strong three-year revenue growth. A winner of a Gartner Chainnovator Award 2017, Haier has been investing strongly in transforming its supply chain through digitalisation. Haier’s “Interconnected Factory” seeks to improve customer experience through integrating demand into supply chain and factory processes — by developing an end-to-end ecosystem that promotes a shift from mass production to mass individualisation. A part of Haier’s supply chain success has also come through its successful strategy of globalisation and developing R&D, design and production capabilities closer to market.
However, with a CSR score which currently stands at 2.00 — the lowest among the group — the company has opportunities to improve its CSR activities.
No. 7 — Wesfarmers (No. 59 in Gartner’s Global Supply Chain Ranking)
A new entry to the list at No. 7 is Wesfarmers, a retail-industrial conglomerate with significant Australian focused operations across a variety of retail segments, from grocery to department stores, home improvements and office supplies. The business operates dedicated supply chains across its various brands that support over 4,000 retail locations.
Recent investments in the KUKA robotic system within Wesfarmers grocery-focused business, Coles, are a proof point of its focus on optimising and digitising its supply chain capabilities. Its Officeworks brand has leveraged its “every channel” strategy that focuses on integrating physical and online channels to become a true unified commerce leader. Headwinds do lie ahead for the business, with Amazon and other international players building or expanding their Australian operations while Wesfarmers attempts to integrate its recent acquisition of U.K. home improvements retailer, Homebase.
No. 8 — Woolworths (No. 75 in Gartner’s Global Supply Chain Ranking)
Australian grocery giant, Woolworths, dropped four places in Asia/Pacific, and a substantial 37 places on the global ranking in 2017. Low scores across the areas of revenue growth and ROA have severely impacted its placement in this year’s list.
Woolworths is taking a back-to-basics approach and focusing on value chain collaboration and improving supply through the brokering of longer-term supplier relationships. If it can combine this with previous investments in demand sensing capabilities, it should be in a strong position to comprehend the rapidly changing consumer environment and make informed trade-off decisions to optimise the flow of goods in and out of its network in the future.
Woolworths also continues to push hard toward its CSR targets across three main pillars — people, planet and prosperity. Lofty 2020 targets, such as employing 40% women in the executive and senior management teams, zero food waste going to landfill, net zero deforestation for high impact commodities such as palm oil and timber and dedicating 1% of earnings (three-year rolling average of EBIT) to community programs, have seen it achieve a score of 9.00 for its CSR policies in this year’s evaluation.
No. 9 — Sony (No. 103 in Gartner’s Global Supply Chain Ranking)
Sony, the Japanese conglomerate moved up one position in the Asia/Pacific list and eight positions in the global list from 2016. The company continues to face economic headwinds and its three-year revenue growth slowed significantly compared to last year. It improved its ROA marginally, while maintaining its CSR score. Sony showed its commitment toward CSR by implementing EICC framework to monitor compliance in its electronics manufacturing sites in and outside of Japan. The company has set targets for reducing environmental impact of logistics through a series of measures, including lightweight and compact product design, and optimising shipping efficiency.
Supplier risk assessment and compliance to Sony Supply Chain Code of Conduct is an essential part of Sony’s strategy to ensure supply reliability. On the other hand, process automation helps the company respond to the markets quickly, which is also supported by a centralised inventory management system.
TWU NSW Secretary Michael Aird has told Coles to stop buying off their responsibilities as major transport clients by donating to politicians in Canberra and instead take responsibility for their lethal economic squeeze on truck drivers that is leading to hundreds of truck crash related deaths on Australian roads each year.
Mr Aird was speaking after a convoy of trucks and more than 100 transport workers disrupted Coles' two largest Distribution Centres in Sydney at Smeaton Grange and Eastern Creek. Candidate for the Federal electorate of Banks Chris Gambian also signed a pledge refusing to accept any donations from Coles or Wesfarmers until they put commodity safety ahead of corporate bonuses.
"We acknowledge that some members of the community were affected by this action, but mothers, fathers, sons and daughters are being killed on our roads and we need bring to attention the scale of the crisis," Mr Aird said.
"Money that should be going to truck drivers to help them maintain their vehicles and sustain their families is instead going into the pockets of the Coles Managing Director and his senior executives as bonuses for driving down transport costs and making our roads unsafe.
"This is leading to chaos and tragedy on our roads and in our commodities, with hundreds of fatal truck crashes each year."
Mr Aird said Coles' attempts to avoid their responsibilities have extended to multimillion dollar lobbying operations in Canberra, with $2.1 million donated to the Liberal Party in recent years and an extensive backroom lobbying presence.
"This is a company that chooses to spend millions lobbying in Canberra to abolish laws designed to save lives rather than step up and acknowledge their responsibility to our community. This is the ultimate example of the big-end of town thinking they can buy their way out of any problem," Mr Aird said.
"We are proud that politicians like Chris Gambian are willing to stand with their communities and transport workers by pledging not to take any donations from Coles of Wesfarmers until Coles puts community safety ahead of their profits and executive bonuses."
Chris Gambian said, "Safe rates should be a bipartisan issue: it is important for our truck drivers, their families, and every Australian family that we have safe roads. I call on all candidates in the seat of Banks to make this same pledge."
Truck driver Mark Smallwood said that truck drivers were under immense pressure to push the limits on fatigue, speed and truck maintenance because of the lethal squeeze by companies like Coles.
"The pressure is very real because often it's the difference between keeping a contract and not being able to feed your kids," Mr Smallwood said.
"Truck drivers shouldn't have to risk their lives, and the lives of others on the road, to meet Coles' impossible demands.
"I'm lucky enough to work for a decent company but I know I share the road with hundreds of drivers who are exhausted, overloaded and speeding. This is what leads to crashes."
Mr Aird said that March had been a horror month on Australian roads.
"Already this month, 20 people have been killed in truck crashes across Australia -that's 20 people who will never come home to their families, friends and communities," Mr Aird said.
"If we are serious about ending this carnage then we need to tackle the root cause of the crashes: relentless pressure from clients forcing drivers to speed, drive long hours and delay essential maintenance."
Sydney-based private equity group Gresham Partners, controlled by Wesfarmers, is spending about $200 million on six family-owned transport and logistics businesses around the country, which it will consolidate into a larger outfit to be called Silk Logistics.
The money is a combination of equity and debt, raised from a number of un-named banks. Former BP logistics executive Bob Welsh is said to take the helm of the new group.
"It’s a mid-market play and we have third-party clients like Toll Holdings and Linfox," Gresham private equity chief Roy McKelvie is reported to have said by The Australian newspaper.
"It’s a sector where people are always doing mergers and acquisitions and there is low cost of entry – it’s quite dynamic.
"We are putting them all together to make them more efficient and offer better services to our clients."
Mr McKelvie would not reveal how much debt was being used to fund the latest acquisitions but said he was pleased that the banks were still supporting mid-market deals.