May 17, 2020

Sony's supply chain hit hard by Japan disaster

Supply Chain
Supply Chain Problems
Supply Chain Woes
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Freddie Pierce
2 min
First quarter losses for Sony top 15 billion yen as the electronics supply chain struggles to recover from March’s earthquake
Japans automotive industry may be on the road to supply chain recovery, but the electronics industry still has a ways to go. Sony reported a 15.5 billi...

Japan’s automotive industry may be on the road to supply chain recovery, but the electronics industry still has a ways to go.

Sony reported a 15.5 billion yen (U.S. $199 million) loss in its first quarter, with the March earthquake and tsunami causing supply chain disruptions and PlayStation hacking leading to a decrease in consumer confidence. Softer television sales and a strong yen also helped lead to Sony’s loss.

 The first quarter of 2010 saw profits of 25.7 billion yen, which is a huge year-on-year dip for the electronics manufacturer. Sony lowered its profit forecast for the fiscal year by 25 percent in lieu of the supply chain troubles.

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The Japan disaster constrained Sony’s supply chain and lowered production of electronic components across the board, but the company is still projecting to recover faster than it initially forecasted.

"The impact from the quake was substantial in the first quarter, but the supply chain has bounced back rapidly, so from the second quarter onward we expect things to brighten considerably," Sony Chief Financial Officer Masaru Kato said in a statement.

Adding to Sony’s tough situation was Nintendo’s announcement that it will drop the price of its 3DS game system from $249.99 to $169.99 to better compete with Sony’s line of gaming devices and mobile devices.

 The electronics supply chain will hopefully be in a better position to handle the next disaster, as companies around the globe have taken a harder look at better risk-management practices.

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Jun 10, 2021

Will Public Procurement Budgets Increase in 2021?

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Procurement
budgets
strategies
3 min
Often overlooked, government procurement professionals will play a critical role in helping communities, and local businesses recover from the pandemic

Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less. 

According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”. 

Small, Local Suppliers Take Charge

Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals. 

These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects. 

Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity. 

Post-Pandemic Funding Swells Procurement Budgets 

And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns. 

Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.

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