Successful outcome of a company-wide supply chain transformation

Australia presents unique logistical challenges due to its geography and infrastructure: “We are a nation of less than 30 million people spread across a landmass the size of Europe,” explains Matt Swindells, Chief Operations and Supply Chain Officer at Australian food retailer Coles. The result: vast distances, extended transport times, and decentralized production sites. Fresh produce is almost entirely sourced locally: “96 percent of our fresh fruit and vegetables are grown in Australia, and by law, fresh meat must be domestically produced.”

This stands in contrast to a rapidly evolving and multifaceted consumer market: “We still have the largest Greek community outside of Athens, and the largest migration flow has shifted from British to Chinese and now Indian.” This diversity brings new demands in terms of assortment, availability, and responsiveness.

Moreover, the pandemic has permanently reshaped the online business. “E-Commerce is no longer a supplementary channel - it’s a core part of our business,” according to Matt Swindells. Today, online penetration in the Australian grocery retail sector has reached nearly 12 percent and continues to grow. Coles offers next-day delivery, click&collect, and one-hour express delivery: “The customer chooses the channel - we have to serve it.”

This results in a complex set of requirements: “More customer touch points, broader assortments, more promotional activity - and at the same time - rising expectations for service and quality.” Swindells and his team had to rise to the challenge. 

Most advanced distribution centers in the Southern Hemisphere

The journey began in 2019, when Coles awarded WITRON the contract to design, implement, and service two highly automated distribution centers (ADCs) in Redbank (near Brisbane, Queensland) and Kemps Creek (near Sydney, New South Wales). Each facility spans approx. 66,000 square meters and ranks among the most innovative and high-performing ADCs in the Southern Hemisphere. “Strictly speaking, these aren’t logistics centers - but rather factories that build densely packed, store-friendly pallets with near-zero error rates,” Matt Swindells proudly states. “But this project was about much more than just technology. It was about rethinking logistics, transforming the entire internal and external supply chain, fostering new forms of collaboration, and elevating Coles’ logistics to a new level - for the benefit of our customers and employees.”

Coles and WITRON were both breaking new ground - Coles with its first major automation initiative, and WITRON with its debut as lifetime partner with overall responsibility ‘Down Under’. During the expansion into Australia, WITRON’s leadership drew on the company’s intercultural diversity, assembling an international team that quickly connected with their Australian counterparts. And it worked. “The collaboration was truly special. We had never invited a project partner to an internal Coles dinner before - but the WITRON team became part of our family from day one,” Matt Swindells recalls. “Coles was looking for the best supplier because we are committed to long-term, strategic partnerships. Already during our first visit to Germany, we sensed that WITRON fosters a truly unique corporate culture—one that left a lasting impression on us and aligns remarkably well with our own values: experience, know-how, expertise, hands-on mentality, keeping promises, delivering results.”

OPM, AIO, and CPS pick 19,000 different items

Back to technology: Each distribution center processes around 5,000 pallets daily from hundreds of suppliers. In total, approx. 19,000 different retail SKUs are stored, picked, and shipped. More than 90 percent of the total volume is handled fully automatically - from receiving to dispatch. Picking is carried out using WITRON’s OPM (Order Picking Machinery), AIO (All-in-One Order Fulfillment), and CPS (Car Picking System) solutions. A fully automated shipping buffer ensures that customer pallets are available in the shipping area just in time for delivery to the right stores and along the correct routes. A dedicated WITRON On-Site team ensures 24/7 availability of all material flow processes, IT systems, and mechanical components.

“What we developed and integrated in Brisbane and Sydney was a particular challenge in terms of scale and throughput,” says Johannes Meißner, Technical Managing Director at WITRON. The goal was to find a solution that - despite the scale of the project – would meet all targets for cost-effectiveness, efficiency, flexibility, sustainability, occupational safety, and system integration. “That’s why it was essential to think in terms of standardized, well-structured, and transparent processes.” He particularly emphasizes: “The key lies in the precise control and orchestration of all these processes and elements - and our contribution to such a fully automated logistics platform with maximum availability.”

1.6 billion sales units picked annually

Each week, Coles picks more than four million shipping-ready units per ADC - consolidated, sorted, and store-friendly packed onto pallets or into totes - destined for more than 200 stores in the regions served by the distribution centers. This equates to 32 million products sold in stores. Over the course of a year, that amounts to 1.6 billion sales units per ADC. “These distribution centers have given us a tremendous competitive advantage. It is a solution that allows us to continue growing while ensuring maximum customer service,” says Matt Swindells. 

A good retailer also knows how to promote - and promotions have a direct impact on logistics. “We have up to 6,000 promotions running at the same time, many of which change weekly,” explains Matt Swindells. This dynamic environment causes the ABC classification of individual items to shift within days. “A product can change from very slow-moving to extremely fast-moving - especially in categories like Health & Beauty.” In the past, this was almost impossible to manage, but today, the new and flexible structure enables rapid response times, centralized storage, and high frequency.

For Matt Swindells, one thing is clear: “An automated warehouse does not merely serve as a conventional distribution hub - it is an industrial production system.” Processes must be strategically anticipated, systems aligned with one another, and all stakeholders actively involved. After all: “The outputs are only as good as the inputs. Weak links in the individual chain immediately affect overall performance. That is why it was crucial for us to pursue optimizations not only within the warehouse, but across all processes throughout the entire supply chain,”

An example: “Initially, we optimized for maximum truck utilization, placing less emphasis on store-friendly palletizing. Feedback from the stores came quickly - and we adapted. We responded to the specific needs of store operators and their customers, which was easy to implement thanks to the capabilities of the logistics modules in use.” The new ADCs were deliberately designed as a company-wide transformation: “Basically, this was a Coles-wide initiative,” says Matt Swindells. All departments - from commercial to transport, right down to the end consumer - were integrated: “We are talking about meticulous planning over several months.” And it paid off: “Our teams can see that we can successfully implement large-scale projects - and that elevates the entire organization to a new level.”

ASCLA Award: Proud of the achievements

The results speak for themselves: “We have reduced both inbound and outbound truck movements. At the same time, we have increased delivery frequency for slow-moving items. Added to this are reduced lead times and improved inventory management,” explains Matt Swindells. What makes him particularly proud? “Thanks to automation, our employees have to lift and carry less. That is round 18 million kilograms per week,” emphasizes the manager. In recognition of their entrepreneurial courage and the successful implementation of the project, Coles and WITRON were jointly honored with the prestigious Australian ASCLA Award by the Supply Chain and Logistics Association of Australia. The award ceremony is considered the most important logistics event in the country. 

Flexible, dynamic networks

The foundation has been laid – now the focus shifts to further integration. Coles is pursuing a control tower approach: “We are connecting the WITRON system, transport management, store design, and workforce control on a single data layer.” The goal is to create flexible, dynamic networks optimized for factors such as customer behavior, weather conditions, demand patterns, and cost structures.

“AI isn’t the difficult part”, Matt Swindells points out. “The real challenge is building the structural assets. Once you have those - as we do now - you can scale with AI.” 

Order for additional site in Melbourne has been awarded

Following the economic success of the Brisbane and Sydney projects, the order for a third site has already been awarded. A new dry goods ADC with a weekly capacity of more than 4.5 million cases - potentially even 5 million - is being built in Melbourne. Once again, Coles is relying on proven solutions: OPM, AIO, CPS, and the automated shipping buffer. “This facility will be even larger than those in Brisbane and Sydney,” says Matt Swindells - “but we have assigned the best people to it - and WITRON remains our trusted partner. Together, we maintain a partnership at the highest level.”

“The supply chain project has exceeded all expectations - on every level,” summarizes Matt Swindells. Cost-effectiveness, efficiency, availability, sustainability, and growth. “And beyond that: The pride within our organization in having successfully tackled such a demanding challenge together with our project partner.” 

Corresponding podcast: Successful outcome of a company-wide supply chain transformation