Sony to halve suppliers to slash costs
Company will reduce parts makers from 2500 to 1200 in coming year to help reduce costs
As part of a larger plan to reduce purchasing costs in a weakened economy, Sony has announced that it will reduce its parts suppliers by more than half.
The plan, according to a report by Reuters, is to reduce its suppliers from an estimated 2500 to around 1200 by March 2011. It is just one aspect of CEO Howard Stringer's strategy to reduce its spending by 20 per cent - or about USD 5.3 billion - in the current fiscal year.
Earlier this month, Sony reported a USD 1 billion loss for the fiscal year ending March 31, with its videogame segment reporting an 18 per cent decline in sales.
However, the company reported that the videogame division's operating loss fell by over 50 per cent thanks to a reduction in manufacturing cost of its PlayStation 3 hardware, which sold 10 million units in the previous fiscal year. It is assumed that the streamlining of Sony's supply chain will reduce these costs further.
In addition to the supplier reduction, Sony's cost-cutting plans also include the elimination of approximately 16,000 jobs and a closure of 14 per cent of its manufacturing sites.