Sony to reduce the number of suppliers to half

Filed in archive News on May 23, 2009

In a short piece from Kenji Hall written in BusinessWeek, he talks about the recent plans of Sony, giant Japanese electronics company, to cut supply chain costs.

According to Kenji, the tech giant has about 2,500 suppliers, but will reduce that number to 1,200 by March 2011. This effort in to achieve company's objective of part and material cost reduction by 20%.

The motivation for this movements are clear: This year, the electronics unit is expected to post a second consecutive year of losses. The financial crisis has eviscerated global demand for consumer electronics and a strong yen has eroded profits earned overseas. Sony didn't say how the new measures would affect earnings. But if the cuts are deep enough, Sony may be able to restore its electronics business to profitability faster than previously expected—freeing up cash for Stringer to spend on innovative new products.

We should be waiting to see if the initiatives of Japanese companies like Nissan, Toyota and Sony to cut supply chain cost will save their companies or not.