Dairy Farm-owned Malaysian retail giant GCH Retail has announced plans to invest M$500m (US$145.8m) in building new distribution centres (DCs) in the country, according to local newspaper The Star.
The retailer, which owns the Giant hypermarket, Cold Storage supermarket and Guardian pharmacy chains in Malaysia, has already invested M$290m (US$84.6m) in a major distribution hub in Sepang, which launched last week. Now it is gearing up to spend a further M$260m (US$75.8m) on adding two satellite DCs in the northern and southern regions of Peninsular Malaysia and a dedicated fresh food DC in Simpang Pulai, Perak.
The fresh food DC is expected to open as soon as the third quarter of this year, closely followed by the two satellite DCs in the final quarter of 2010.
GCH Retail said its investments are aimed at slashing its logistics costs and in turn delivering cheaper goods to its retail outlets, which is key to expanding is market share amid the price war dominating the modern trade in Malaysia.
GCH Retail’s CEO John Coyle told The Star that the newly operational Sepang DC slashes logistics costs for its suppliers by centralising all loads and pickups at one location and turning around delivery trucks much more quickly. He added that the DC is fitted with an advanced warehouse management system, which is integrated with the company’s store system to speed up the sorting of goods and prevent “out-of-stock scenarios”.
The new DCs will also strip out middlemen costs from the supply chain, Mr Coyle said, thus further helping the company to lower prices to consumers. “For our fresh food DC in Simpang Pulai, we plan to cut the cost of middlemen by going straight to the farms, with the assistance of government agencies,” he told The Star.
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