The company that will be assessed in this report is Sony Corporation which is a large multinational Japanese conglomerate that manufactures electronic products for the global consumer and professional markets. The corporation which has its headquarters in Tokyo, Japan is one of the world’s largest media conglomerate with revenue of $77.20 billion for the 2010 financial year.
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The main business operations of the company include Sony Electronics, Sony Music, Sony Pictures, Sony Ericsson and Sony Computer Entertainment. Some of the well-known products produced by the company include the PlayStation franchise (PS1, 2 and 3), VAIO laptops, Sony digital cameras and video recorders, Sony compact diskettes, Sony walkmans, television sets, DVDs and video recorders. The company has a total employee base of over 167,900 employees working in the various subsidiaries of the company (Sony 1-8).
Supply Chain Management in Sony
Supply chain management is defined as the integration of a network of suppliers, manufacturers, distribution centres and retailers through which raw materials are acquired, transformed and delivered to their intended customers. Sony has been able to develop its supply chain management strategy which has played a great role in the company’s success within the global market. Sony has designed its assembly plants to produce and supply goods to meet the consumer demand for electronic products. Some well-known examples are the Mexican assembly plants also referred to as maquiladoras located in many of the Mexican cities which have been designed to supply goods to consumers (Kelly and Booth 159).
The company established a Manufacturing Centre in the state of California because the area had all the important components that Sony needed to conduct successful business operations. These components included a successful economy, cheap and available labour and a suitable location that would facilitate the shipment of various components from Japan. To support the operations of the California Manufacturing Centre, Sony decided to establish a facility in Tijuana, Mexico to manage the increasing supply chain management activities of the company. Other assembly plants opened by the company to support its supply chain management activities included a TV assembly plant in Bridgend Wales, a manufacturing plant in Tagajo, Japan, an audio/video product assembly plant in Colmar, France (Kelly and Booth 159).
The goods that supply Sony Corporation have been estimated to be 120,000 hard to find parts and accessories which are used to develop Sony electronic products. The categories of goods that bring business to Sony include computer and peripheral products such as laptops, adaptors, batteries, keyboards, storage media and remote controls. The other category is the camera and camcorder category which offers products and accessories such as tripods, accessory starter kits, carrying cases, digital photo frames, chargers and lenses.
The TV and home entertainment category offer products and accessories such as Sony TV sets, home video and audio equipment, audio, video and universal cables, LCDs, PSP controllers and game consoles, DVD players, telephone adaptors, satellite dishes and antennas. The other category of goods that brings business to Sony is the MP3 and portable electronics category which offers products and services such as portable audio equipment (walkmans, MP3), headphones, speakers, microphones and micro plug accessories (Sony 1-8).
The company has manufacturing facilities and assembly plants in various countries around the world with its major facilities based in Japan. Other continents and countries where Sony Corporation has its operations include Europe (France), Asia (Japan, China and India), the United States (California, New Jersey and San Diego) and South America (Mexico). These countries have been able to support the activities of the main manufacturing plant in Japan by ensuring that the various categories of goods have been produced to meet the demand for electronic products in the global market. The main consumers of Sony’s products are the professional and consumer clients where the professional clients buy Sony products for business or professional purposes while consumers purchase Sony products for personal uses (Reuters 1).
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Supplies that are at Risk
Sony Television Sets
One of the company’s supplies or products that are at risk includes the Sony television set which is facing stiff competition from Samsung Electronics Company which has enjoyed considerable success with its 3D LCD flat screens (Ferrari 2).
Reason for the Risk
The reason that has been given as to why the Sony television sets are experiencing a major challenge in sales is that the television manufacturing unit of the company has been losing a lot of money for the last five consecutive years as a result of poor sales and also a poor volume market leadership. The company has lost most of its sales to Samsung which has been able to gain a larger market share because of the various television sets it supplies to its consumers (Ferrari 2).
The PlayStation 3 which is part of Sony’s home entertainment and gaming products has been experiencing considerable challenges with regards to sales volume since its release. The PlayStation 3 is part of the PSP 1 and 2 game series developed by the company to meet its consumer gaming needs.
Reason for the Risk
The reason that has been attributed for the poor sales volumes made on the PlayStation 3 is intense competition from Microsoft’s Nintendo Wii products and also the Xbox360 which offer gaming options that are similar to PSP3. These products have been outselling Sony’s PSP3 which has made it difficult for the company to gain a considerable market share of gaming consumers (Sabbagh 3).
Supply chain management in Sony Corporation mostly focuses on ensuring that the most appropriate standards have been met throughout the production process. The company focuses its supply chain management efforts on human rights activities, labour conditions within the organization and environmental standards in both the internal and external environments of the organization. The structure of the company’s supply chain includes materials gained from manufacturers used to produce electronic goods and products, parts used in the various assembly plants of the company, primary suppliers of the parts and materials, Sony production lines which are used to design and develop device products and the company’s retail centres which are used to market the products (Sony.net 4).
Because of the global nature of its suppliers, the company has introduced its own set of global standards which can be used to manage its supply chain management activities. It has developed the Green Partner Environmental Quality Approval Program which is meant to ensure that suppliers can maintain the global standards for purchasing electronic parts. The company’s suppliers who have been approved through an audit assessment and have been endorsed as Green Partners can operate on the company’s quality approval program. This ensures that Sony has genuine suppliers of various electronic parts who can provide materials that are authentic (Sony.net 6).
To ensure that its products have been supplied to its various markets around the world, the company has developed a Sony Supplier Code of Conduct which is used to guide suppliers on what materials and parts they should bring to the various processing industries of the company. The Sony Supplier Code of Conduct is meant to ensure that the initiatives of the company’s suppliers have been promoted. The code also ensures that there is the organizational development of the company’s supply chain management activities (Sony. net 15).
While Sony LCD screens have been termed by many market analysts to be on the same level as those of Samsung and LG, they have a relatively poor market share and sales volume when compared to those of Samsung. To deal with the continuing threat of Samsung’s LCD screens, Sony should invest in parts and materials that guarantee quality images and pictures as well as audio features. The Samsung LCD models have a higher brightness ratio that makes the images more clear when compared to the Sony LCD screens. Designing the screens to be brighter and clear will ensure that the LCD screens are on the same level as those for Samsung.
To compete with Microsoft’s Nintendo Wii and Xbox360, Sony should revise the quality of launch games included in the PSP to ensure that it has a better game line up when compared to Microsoft’s products. The developers of the game should also include a system which will support the automatic updating of software to ensure that PlayStation 3 has the best console version of PSP available in the market. Sony should also revise the hardware used to develop the game console to ensure that can match its expenses with its revenues. This will ensure that its retail price can match those for the Nintendo Wii and Xbox360 (Crossley 2).
The study was aimed at assessing and examining the supply chain management activities of Sony Corporation by examining the categories of products that are sold or supplied by the company as well as the countries in which Sony Corporation has its operations in. The study has also examined Sony products which might be at risk and the reasons why they are at risk. It has also offered recommendations which can be used by the company to address these risks.
Crossley, Rob. Kotick slams PS3 for high development costs. 2009. Web.
Ferrari, Bob. Sony’s supply chain challenges. 2009. Web.
Kelly, Louise and Booth, Christopher A.. Dictionary of strategy: strategic management A-Z. Thousand Oaks, California: Sage Publications, 2004.
Reuters. Sony Corporation. N.d. Web.
Sabbagh, Dan. Sony should beware: activism chief is not simply playing games. 2009 Web.
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Sony. Corporate information. N.d. Web.
Sony. Net. Basic approach to CSR in the supply chain. 2010. Web.