supply chain reduction
Sony’s reduction in supply chain
Recently a piece of news which has hit the business circles and is being discussed very much is that Sony is going to reduce 75% of supply chain. Sony will now be relying on 250 of its 1000 current suppliers as a part of short term temporary strategy. Sony is choosing these 250 partners for key products such as digital cameras, smart phones etc. (Bloomberg Business Week, 2014)
The news is being discussed in the business circles heavily. Some are criticizing Sony for this thing, others are just commenting. Apparently, the purpose of this drastic reduction in supply chain seems the acceleration of supply at lower costs and this makes sense when one comes to know that Sony’s Chief Executive officer, Kazou Hirai forecast last month a loss of more than a billion $ to the corporation.
I’ll analyze this decision taken by Sony Corporation in the following lines. Supply chain has a number of categories of risk attached to it. For example, one of the categories of risks attached to supply chain department is disruption. (S Chopra, 2004). Under the category of disruption, there come several things such as natural disasters or catastrophes, labor disputes, war and terrorism etc. (S Chopra, 2004).
In short, all those factors which can physically cause harm to the supply chain come under the category of disruption in the studies of supply chains. Large number of suppliers means the process of supply is more prone to natural disasters whereas on the contrary, a fewer number of suppliers mean the margin of safety for the corporation.
Similarly, the more the number of suppliers, the bigger will be your supply chains but there will be a loss in that too. It is hard to keep check on the larger number of suppliers. For example, if a dispute occurs between the labors and the employer in one of the supply chains, your supply chain process may become considerably slow. This kind of external effect also comes under the category of disruption.
Recently a piece of news which has hit the business circles and is being discussed very much is that Sony is going to reduce 75% of supply chain. Sony will now be relying on 250 of its 1000 current suppliers as a part of short term temporary strategy. Sony is choosing these 250 partners for key products such as digital cameras, smart phones etc. (Bloomberg Business Week, 2014)
The news is being discussed in the business circles heavily. Some are criticizing Sony for this thing, others are just commenting. Apparently, the purpose of this drastic reduction in supply chain seems the acceleration of supply at lower costs and this makes sense when one comes to know that Sony’s Chief Executive officer, Kazou Hirai forecast last month a loss of more than a billion $ to the corporation.
I’ll analyze this decision taken by Sony Corporation in the following lines. Supply chain has a number of categories of risk attached to it. For example, one of the categories of risks attached to supply chain department is disruption. (S Chopra, 2004). Under the category of disruption, there come several things such as natural disasters or catastrophes, labor disputes, war and terrorism etc. (S Chopra, 2004).
In short, all those factors which can physically cause harm to the supply chain come under the category of disruption in the studies of supply chains. Large number of suppliers means the process of supply is more prone to natural disasters whereas on the contrary, a fewer number of suppliers mean the margin of safety for the corporation.
Similarly, the more the number of suppliers, the bigger will be your supply chains but there will be a loss in that too. It is hard to keep check on the larger number of suppliers. For example, if a dispute occurs between the labors and the employer in one of the supply chains, your supply chain process may become considerably slow. This kind of external effect also comes under the category of disruption.
References: Bloomberg Business Week. 19 March, 2014. Chopra, S., & Sodhi, M. S. (2004). Supply-chain breakdown. MIT Sloan management review.