The Reject Shop has selected Toyota Tsusho logistics as third-party operator of its new Victorian distribution centre, in a bid to ‘improve operational efficiencies.’

The new Victorian distribution centre is currently under construction and expected to commence operating in early 2017. Located at Truganina on Melbourne’s western fringes, the new facility will have a footprint of 35,000sqm with all operations at the current facility at Tullamarine shifting to the new centre.

“The decision to pursue an outsourced operating model is a further element of our overall strategy to improve operational efficiency across the business and to reduce our CODB and improve our supply chain performance,” said The Reject Shop MD, Ross Sudano.

“It will also help to ensure our supply chain is more nimble, and give us greater flexibility and capacity for future expansion.”

The discount retailer said the measure would give an operational cost saving of $2 million for FY2018.

Outsourcing the DC operations will result in one-off redundancy costs of approximately $7.3 million. “It is important to acknowledge the significant efforts of the team at our Tullamarine DC, which have delivered ongoing support for our expanding operations,” said Sudano. “While further improvements to those delivered did present a credible alternative proposal, the benefits of the outsourcing proposal were too compelling to ignore.”

All entitlements for impacted employees will be met by the company from operating funds and existing financial facilities.

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