In light of the new globalization, many companies have restructured their distribution models. In this regard, many multinational firms are increasingly embracing global supply chain systems. “Global supply chain management involves a company’s worldwide interests and suppliers rather than simply a local or national orientation” (Long, 2003). Therefore, global supply chain is likely to mitigate procurement expenses and purchasing risks.
Since global supply chain encompasses numerous nations, it mostly exhibits myriad challenges which should be handled appropriately. “A company’s real core capability lies in its ability to design and manage the supply chain in order to gain maximum advantage in a market where competitive forces are changing” (Christopher, 2011). This paper examines how Sony Corporation has been approaching its distribution systems through global supply chain.
Sony Company has two perspectives of approaching global supply chain. The first one is about formulating effective business corporation with distributors. This process is often governed by internal guidelines of Sony and the relevant laws. “The other approach relates to production processes and involves providing the necessary support to realize global supply chain from such standpoints as the environment, human rights and labor conditions” (Long, 2003).
Specifically, Sony has extended its supply chain such that its distribution encompasses developing countries. This is meant to widen the market frontiers of Sony products. Procurement activities adopted by Sony Company are fair and transparent. They also endeavor to give equal opportunities to its competitors in the electronics industry. For instance, personal ties, aimed at personal gains cannot be forged by procurement agents dealing with Sony.
“In addition to the quality of the products it delivers to consumers, Sony also ensures appropriate standards throughout its production processes from such standpoints as the environment, human rights and labor conditions” (Sony Corporation, 2010). A suppliers’ hotline has been created to facilitate the reporting of suppliers that contradict compliance policies. The company acts promptly on such reports after they have verified them.
“With the aim of improving processes in the electronics industry supply chain, Sony, as one of the member companies, participate in the establishment of the Electronic Industry Citizenship Coalition (EICC) in 2004” (Sony Corporation, 2010). Moreover, Sony has created a policy that aims at regulating its suppliers conduct. Hence, suppliers of Sony know its expectations, which are in line with the EICC code.
Sony has encountered some constraints in its global chain distribution and they include the following. The global distribution channel of Sony has undergone significant re-modeling. The Yen has also been experiencing steady decline. This has partly impacted profitability of most Sony products.
“In consumer electronics, the company was slow to respond to the vastly popular digital music product entries from Apple, such as the iPod and iPhone” (Sony Corporation, 2010). The same trend has stretched to television products where Samsung is increasingly gaining market dominance.
These distribution challenges have been sorted through evaluating distribution systems. By doing this Sony Corporation has now adopted better strategies of supply chain and production. “The Sony brand also has enormous power within the market, something which other companies have failed to learn in wholesale slashing of supply chain costs” (Sony Corporation, 2010). By closing some plants, Sony Corporation has the chance of mitigating its overall expenditures.
Global supply chain is among the viable distribution channels that companies can think of embracing. However, they need to formulate sound mechanisms of dealing with potential expenses and risks that often accompany global supply chain. Sony is currently grappling with regaining it stability. “Therefore, it will be interesting to observe in the coming years, how Sony will approach its supply chain transformation challenges”. (Sony Corporation, 2010)
Christopher, M. (2011). Logistics and Supply Chain Management. New York: Wiley.
Long, D. (2003). International Logistics: Global Supply Chain Management . New York: Springer.
Sony Corporation. (2010, March 5). Supply Chain Management. Retrieved September 29, 2011, from Corporate Social Responbility: http://www.sony.net/SonyInfo/csr/quality/code/index.html.