A recent Businessweek Bloomberg article, How Vizio Beat Sony in High-Def TV, provides yet another evidence point that excellence in supply chain strategy does matter. The article notes that after just seven years in business, Vizio just surpassed Sony to become the second-largest TV brand in the U.S., and is closing in on number one Samsung. Vizio has accomplished this milestone but acutely understanding how to master its global supply chain to become the low-cost producer of choice by U.S. consumers.
Instead of a conflicting relationship with its suppliers, Vizio offered two of its contract manufacturer’s equity stakes in the company, ensuring an alignment of mutual goal fulfillment. The company also leverages rather large, volume-oriented retailers such as Wal-Mart and Costco to distribute its products to consumers. While the company is private, the Businessweek article notes that Vizio has operating margins of 4% on $2 billion in revenues. That requires a volume focused and highly efficient collection of supply chain processes with little room for snafus or supply glitches. Interesting enough, the company is also planning to diversify its product offerings into Bluetooth headsets, portable TV’s and stereo speakers.
While rival Sony continues to compete on higher features and functions, it must also painfully re-align its supply chain structure. Vizio on the other hand, has demonstrated that competing on one’s supply chain capabilities can be a differentiator in a cost-conscious consumer market.