Sony unveils supplier consolidation plan
Electronics giant plans to cut supply base in half in less than two years
By Dave Hannon -- Purchasing, 5/21/2009 12:17:00 PM EDT
Electronics giant Sony Corp. this week unveiled an ambitious supplier consolidation plan under which the company will reduce its supply base from its current level of 2,500 down to less than half that by March 2011. A Sony spokesperson also told the media that it now has a centralized purchasing organization to negotiate with suppliers.
Sony spokesperson Mami Imada told reporters at a meeting in Tokyo earlier today that in the past, Sony's various business units have negotiated with suppliers individually. Now, Sony has a centralized organization to consolidate and leverage its massive spend with fewer suppliers.
“We plan to purchase parts and supplies as 'Sony group', rather than individual business groups making separate orders,” Imada said. Sony said the efforts will reduce its current $25 billion spend by 20%, according to Reuters.
Sony’s procurement page outlines 10 things it expects from its suppliers, which will likely be critical to suppliers looking to keep contracts with the electronics maker as it consolidates its supply base.
The supplier and spending cuts will reportedly even impact Sony’s gaming division, which in the past had in the past been given more freedom in supplier selection and spending than other divisions. But the silos in the electronics giant are coming down per the order of CEO Howard Stringer.
To aid in those efforts—and the supplier consolidation initiative specifically—Stringer has brought in former IBM executive George Bailey to serve as Sony’s chief transformation officer and senior vice president. According to a company statement, among Bailey’s responsibilities in that role will be to “work closely with cross-functional teams dedicated to supply chain/logistics and common software and technology platforms.”
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