Sony's Supply Chain Management Strategies: Best Practices Essay

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Sony's Supply Chain Management Strategies:

Best Practices in High Tech Supply Chains

The strategic series of systems, processes and programs that enable any company to exceed customer expectations on a consistent basis and be profitable is the performance of their supply chains. The synchronization of supply chains ensures that customers will have a consistent positive experience when purchasing from a company, and this holds true for both Business-to-Business (B2B) and Business-to-Consumer (B2C) companies (Cirtita, Glaser-Segura, 2012) . For those companies that compete in industries that have very rapid product lifecycles and supply chains that must support very rapid shifts in product and service strategy, the challenges are multiplied (Li, Lin, 2006). Sony Corporation is one of the most-recognized brands globally in consumer and industrial electronics. The many supply chain best practices that Sony has developed over decades of intensive effort and study have given them the ability to compete in five core business segments on a global scale (Sony Investor Relations, 2012). These five business segments include financial services, games, home and personal electronics, motion pictures and entertainment and nearly a dozen other ancillary businesses. What unifies the Sony value chain across these diverse businesses is their strong focus on supply chain performance and optimization (Sony Investor Relations, 2012). The value chain of Sony is so engrained into supply chain performance that it is common for the senior managers of supply chain planning, supply chain management, optimization and 3rd party logistics to regularly manage the new product development and introduction (NPDI) teams and processes. The intent of this analysis is to evaluate how Sony has transformed its supply chain into a potent differentiator that fuels their formidable record of internal innovation and global sales success. With nearly 70% of global revenues emanating from foreign markets, Japanese-based Sony has had to become agile and very adept at managing complex supply chains on a global scale.

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The company has been able to successfully transform its supply chain into a formidable competitive strength at a strategic level globally.

How Sony Has Transformed Its Supply Chain

Into A Global Competitive Advantage

The series of industries that Sony competes in are known for their very rapid product development cycles, short lifecycles, and highly synchronized supply chains that are critical for products to be profitable. All of these factors are what has elevated supply chains to such a strategic role in the industry, and why Sony ahs continued to invest exceptionally heavily into optimizing their own. With 70% of their total revenues being generated outside Japan, Sony has also had to master advanced supply chain concepts including how to initiate and maintain Vendor Managed Inventory (VMI), Sales & Operations Planning (S&OP) and the development and fine-tuning of globally-based demand driven supply networks (DDSN). Sony also relies on contract manufacturing for its most rapidly churning products including memory modules and memory enhancement products across all product lines. The contract manufacturing aspects of their business are also predicated on using VMI-based platforms originally designed for their personal computer and high-end camera businesses. The need for having a very high level of supplier coordination and synchronization has made Sony adopt advanced Internet-based supply chain management and collaboration platforms as well. These have allowed the company to coordinate with suppliers on new product development literally on a 24/7 basis as many of their suppliers are in diverse time zone locations. Through a series of reorganizations that occurred throughout the 2007 -- 2012 timeframe Sony has created an organizational structure that replicates the core functions of a value chain model. Figure 1, Organizational Concept Chart of Businesses, Sony Corporation graphically illustrates how the company is organized as of May, 2012.

Figure 1: Organizational Concept Chart of Businesses, Sony Corporation.....

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