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Over these past months I’ve penned a number of Supply Chain Matters commentaries concerning Sony Corporation‘s massive restructuring across its electronics related global supply chains. In the last commentary in early February, we noted how this company had cut costs by $3.63 billion USD in a relatively short period of time. Sony closed 20% of its manufacturing plants, eliminated 20,000 jobs and targeted additional supply chain cost reductions. The most interesting part of this story thus far has been that most of these radical cuts, by Sony management’s own admission, have been primarily driven from top-down management directives. There was a further acknowledgement that no business processes or system changes have been involved to this point.
An article in yesterday’s Wall Street Journal (paid subscription may be required) reflects yet another supply chain challenge. Sony announced that its television business, which has lost money for six straight years, will shift to an aggressive attack mode in the coming fiscal year in order to recapture lost market share to Samsung and LG Electronics. How aggressive? The article notes about a 70% ramp-up in production, to exceed 25 million units in the upcoming fiscal year. Once more, the company wants to gain the upper hand in the emerging 3-D television segment, thus one can further speculate that the planned ramp-up will include a lot of new 3-D models to make their market introduction.
The WSJ article specifically cites Yoshihisa Ishida, the architect of Sony’s prior supply chain cost cutting efforts, as the person who will lead this new ramp-up challenge in the television business. He is described in the article as a no-nonsense cost-cutter who ran Sony’s personal computer business.
In previous commentary, I noted that the real work of supply chain transformation still remains a work-in-process for Sony. I must now admit, that might have been a heck of an understatement, given these new ramp-up challenges.
I once worked for a very talented CIO in charge of all U.S. IT operations who was challenged by the existing senior management to reduce overall IT costs by at least 25%, and at the same time insure that existing up-time KPI’s remained in the high nineties. He communicated that challenge to his senior management peers as the following: What you are really asking us to do is the equivalent of attempting to change one of the engines of a 747 aircraft while it is still flying. Somehow, that same phrase came back to me when I reflected on Sony’s new challenges.
Mr. Ishida and his supply chain team indeed have a significant challenge in light of the need to complete a supply chain restructuring while insuring that the television business meets very aggressive market ramp-up goals. One would hope that this team can quickly address business process and system changes, particularly in the area of broad supply chain visibility and responsiveness. This is a story that the supply chain community as a whole should keep eyes upon.
If you were asked, what advice would you provide to Sony’s SCM management team?