Sony halves suppliers on cost-cutting

Sony will halve the number of its suppliers in the next two years and aims to slash procurement costs by 20 per cent this year, the consumer electronics giant said yesterday, stepping up restructuring efforts amid mounting losses.<br /><br />Analysts saw the move as positive. It comes on top of a plan to cut fixed costs by more than 300 billion yen (&pound;2bn). But Sony shares fell more than one per cent along with those of other exporters, hurt by a firmer yen.<br /><br />Sony, which competes with Samsung Electronics in flat TVs and Canon in digital cameras, has been overhauling operations as it expects a second straight year of losses due to weak global demand for consumer electronics goods.<br /><br />The yen&rsquo;s strength is dealing an additional blow to Japanese companies because it cuts into profits earned overseas.<br /><br />A Sony spokeswoman said the company plans to cut its suppliers to about 1,200 from the current 2,500 by March 2011. It will cut costs by increasing the volume of parts and materials purchased from each supplier. Its procurement costs currently total about 2.5 trillion yen.<br /><br />The consolidation of suppliers will include video game subsidiary Sony Computer Entertainment, which has enjoyed considerable freedom in purchasing supplies.