Page last updated at 06:34 GMT, Thursday, 21 May 2009 07:34 UK

Sony to halve number of suppliers

A customer checks Japanese electronics giant Sony's Bravia brand LCD TVs at an electronics shop in Tokyo
Consumer demand for electronics is falling

Japanese electronics firm Sony plans to halve the number of its suppliers and reduce purchasing costs by 20% over two years, as part of restructuring plans.

Cutting procurement costs is aimed at saving 500bn yen ($5.3bn; £3.3bn).

The move comes on top of huge job losses and previously announced measures to trim 300bn yen of costs.

The firm posted its first annual loss in 14 years during the 12 months to March - a sign that consumers were tightening their belts.

As well as the economic downturn denting consumer spending, the fall in electronics prices has also hit firms such as Sony.

Falling prices

Until now suppliers have had separate contracts with Sony outlets.

But the firm aims to move to a centralised procurement system, to enable it to negotiate cheaper prices from suppliers.

The number of suppliers will fall from around 2,500 to 1,200 as part of the move.

"The prices of digital home appliances have been declining by 15% to 20% every year lately," said the firm's spokesperson Mami Imada.

"Unless we cut costs we cannot hope to survive the price competition."



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