Sony deepening ties with top suppliers to speed development
TOKYO -- Sony is aiming to speed up development of its products by enhancing ties with the top tier of its parts suppliers.
The consumer electronics giant currently buys parts from around 1,000 companies. It plans to work more closely with the top quarter of these suppliers worldwide, dealing with them on a preferential basis to purchase cutting-edge components in larger volumes and increase efficiency.
Sony is said to spend almost 2 trillion yen ($19.5 billion) a year on parts procurement. But rivals Samsung Electronics and Apple reportedly shell out more than double that amount, and bulk orders give them precedence in receiving high-performance components.
To get back in the game, Sony intends to form strategic partnerships with suppliers in order to bring innovative products to market ahead of its rivals. By exchanging information with suppliers from the product planning stage, the Japanese firm hopes to regain the development prowess that created such iconic products as the Walkman.
Sony's procurement overhaul will cover components that play a key role in how smartphones, digital cameras, game machines and other electronics products perform. It plans to select two or three major global suppliers for each of 10 or so core components, such as wireless communication parts, sensors, chips and display panels. They will likely include Qualcomm and Taiwan's MediaTek for smartphone chips, Murata Mfg. for multilayer ceramic capacitors used to smooth electric current in smartphones, and Taiwan's AU Optronics for LCD panels.
Depending on the component, the size of the orders Sony places with a strategic partner could double from current levels.
Back in fiscal 2009, the firm's procurement headquarters started handling all parts purchasing for electronic products. It reduced the number of suppliers from 2,500 in fiscal 2008 to 1,000 in fiscal 2013.
The previous drawdown was meant to reduce costs, but the main objective this time around is to beat rivals to the punch in cutting-edge parts. It will likely try to shorten the typical two-year development period for new products by three to six months.
Sony also aims to save nearly 10 billions yen through bulk purchasing.