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Coles looks to lower costs by revamping supply chain

Reported by Tim McArthur, The Motley Fool.
Monday, July 8, 2013
Topics in this article:
Asx,Metcash,Wesfarmers,Woolworths
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The Age has reported on a confidential tender document it has obtained. The document supposedly details a plan by Coles, which is owned by Wesfarmers (ASX: WES), to restructure the current Coles Express petrol station and liquor store supply chains.

Through a change in the relationship and processes between Coles, suppliers and field agents (also known as reps), Coles believes it can improve efficiencies and of course improve the bottom line. It appears that the changes could come at a significant cost for field agents.

Given the tighter operations at Woolworths (ASX: WOW) and Metcash (ASX: MTS), Wesfarmers’ purchase of Coles was always going to involve significant restructuring. This has led to Coles receiving a lot of attention from investors given the potential to strip costs out of the business.

Foolish takeaway

Management has surpassed many investors’ expectations with what has been achieved in terms of profit growth at Coles. Given the past success, shareholders will likely be confident that management can improve returns within the Coles Express and liquor businesses as well.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

01/11/2014 01:13Sydney, Australia. 1 November,2014
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