Australian retailer Coles Myer has unveiled plans to overhaul its supply and distribution systems, in a move aimed at cutting costs and increasing profits.

The supermarket operator said it had targeted net benefits of A$425m (US$289.5m) a year from 2007/08, after spending $604m over five years, reported Reuters.

Chief executive John Fletcher said the supply chain benefits would help the company achieve its net profit forecast of $800m by fiscal 2006, compared to its fiscal 2003 result of $455m.

Coles Myer plans to invest in technological improvements that will allow it to decreased the amount of time it holds inventory, thereby reducing warehouse requirements. The company said it would also spend money on technology that will automatically order items when stock at a store is running low.

Rival Woolworths has already saved $1.7bn so far over four years, by initiating a similar programme. The company has spent $1bn on the technology upgrades.