Continuous improvements to the SPAR distribution networks
Case volume performance
All of the South African distribution centres showed positive volume growth with double digit increases being reported by the North Rand and the Eastern Cape distribution centres.
Inland consolidation centre progress
Our inland consolidation project experienced some delays due to systems integration challenges. We are set to centralise about 5 500 slow-moving stock-keeping units into one warehouse that will serve the South Rand, North Rand and Lowveld distribution centres. This will free up space in the three distribution centres to introduce new lines and reduce their stock levels, enabling them to become more agile and efficient. In addition, North Rand will be able to increase the number of fast-moving full pallet lines over the short to medium term.
Cold chain management
Parallel to the inland consolidation project, we continue to improve our cold chain environments with sophisticated technology and the design of temperature-controlled zones. These include dehumidifier and smart reporting interface mechanisms to monitor refrigeration plant performance in real time.
Reducing the use of plastic
Our efforts to reduce the use of plastic, to transition to packaging that offers improved recycling options, and to save water, are discussed in detail in the sections on our material relationships and in our South African operational report. We are proud of the leadership role our distribution centres took in addressing some of South Africa’s most pressing environmental challenges.
Our pipeline for expansion
Our plans to establish a distribution centre in the West Rand and expand our facilities in the Eastern Cape remain subject to improved demand levels and rising economic confidence.
Investing for the future
In Ireland we are investing in the Value Centre Cash and Carry network. BWG Foodservice remains one of the fastest-growing areas of the BWG business, and will benefit significantly from the Corrib Food acquisition. Corrib Foods will continue to operate as a stand-alone business for the next 12 months.
The Londis acquisition, completed in 2015, has proven to be a resounding success. The original projections that underpinned this acquisition were achieved and surpassed. Cost savings were delivered ahead of the planned milestone dates and each business case synergy was exceeded.
Efficiency and cost saving initiatives
Our investment in a chilled warehouse facility in the national distribution centre in Kilcarbery is delivering significant efficiency and service benefits. It provides a pick-to-zero operation for chilled foods and fresh produce throughout the year, and has a 98% service level to retailers.
In Switzerland we have seen a steady increase in profitability over the past 18 months. Although our 2018 results are not yet at the desired level, the rapid improvements show good promise.
Cash generation improved significantly, owing to improved profitability and reductions in inventory – where redundant stock and slow movers are in the process of being eliminated or reduced. Category management was critical as was a recent clean-up of our non-food goods offering in TopCC.
Revenue is under pressure due to strategic store closures in 2017, but this was mitigated by expanding into the French-speaking area of Switzerland in May 2018. This is a new supply channel for our distribution centre in St Gallen, with 41 stores forming part of the agreement.