Thursday May 21, 11:17 AM
Sony to slash suppliers by half to cut costs
TOKYO (AFP) - Japan's Sony Corp., facing a second year of losses, said Thursday that it would cut its number of suppliers by more than half to reduce procurement cost by 5.3 billion dollars a year.
The media-electronics giant, which recently announced its first annual loss in 14 years, will keep about 1,200 suppliers from the current network of 2,500, a company spokeswoman said.
"We plan to purchase parts and supplies as 'Sony (Munich: 853687 - news) group', rather than individual business groups making separate orders," she said.
"By reducing the number of suppliers, orders to individual suppliers should increase. This should allow us to negotiate lower prices," she said.
Chief executive Howard Stringer, who became Sony's first foreign chief in 2005, is under pressure to turn around the company as it heads for its first back-to-back annual losses since it was listed on the stock market in 1958.
Sony logged a net loss of 98.9 billion yen (1.0 billion dollars) in the fiscal year to March and expects to end this year 120 billion yen in the red.
It aims to cut procurement cost by 500 billion yen, or about 20 percent, in the current fiscal year amid fierce price competition, the spokeswoman said.
"If the prices of the final products fall, we must also find ways to reduce production cost," she said.
Sony is cutting 16,000 jobs and axing about 10 percent of its manufacturing plants as part of efforts to reduce costs by 300 billion yen a year.
The company has had a difficult few years in the face of tough competition from rival products such as Apple (NASDAQ: AAPL - news) 's iPod and Nintendo's Wii.
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