Sony specifically, Sony Disc Manufacturing (SDM),the Optical Disc Division has concentrated in recent years on building a reputation as a strong supply chain leader in the delivery of its products and services.
If success in the electronics industry were defined as, say, market share in console games or in name recognition, you would likely find Sony at or near the top of the list. But what if you were to look beyond products at supply chain innovation and leadership? You might be surprised to learn that by almost any measure, Sony would earn a spot on that list as well. Sony—specifically, Sony Disc Manufacturing (SDM),the Optical Disc Division—has concentrated in recent years on building a reputation as a strong supply chain leader in the delivery of its products and services.
What has led to Sony Disc Manufacturing's success in managing its supply chain? We believe our success can be traced directly to our ability to drive standardization and automation through out all aspects of the supply chain—and then leverage it to produce a competitive advantage.
Sony Disc Manufacturing, which is now the world's largest manufacturer of CDs and DVDs, competes in the optical media industry against more than 200 optical media manufacturers worldwide. It's no secret that products in this industry have extremely short lifecycles and that the industry itself operates in a continuous state of flux (think of the way the DVD format is rapidly taking over as the industry standard versus the CD format, for example). That being the case, you might expect that SDM would be anxious to hand off as many tasks as possible to third-party providers—especially in the commodity area of CD production, where prices are always dropping. However, Sony Disc Manufacturing has strategically chosen to make optical media manufacturing and distribution our core competency with key products like DVD-Video, PlayStation, DVD-ROM, SACD, CD Audio and CD-ROM. In fact , SDM has become a third-party provider itself, marketing its distribution expertise to clients in other industries.
Up to standards
As product lifecycles become more and more compressed, we believe the best way for SDM to maintain our leadership position is to standardize, automate and continuously refine our core supply chain processes. One way is by striving to set the standards that will drive the industry as early as possible in the products' lifecycle and set up standardized processes with the goal of becoming the low-cost provider.
If we can find a way to standardize our equipment and leverage all of our media products, we can drive costs down further. SDM integrates the majority of its own manufacturing and distribution equipment. Sony's Disc Technology group manufactures the equipment for our optical disc molding machines and Sony engineers design and integrate our complex communication systems for SDM's core operating equipment, like our automated storage and retrieval systems. We strive to integrate our systems using proven components from known manufacturers and then create standardization within our process. In essence we have built core com petencies around manufacturing design that enable us to be both fast and flexible. This, in turn, allows us to be a just-in-time (JIT) producer on relatively complex processes, with inventories at minimal (or zero) levels.
At the same time, Sony Disc Manufacturing is also a firm believer in automation. In our experience, automation both reduces costs and improves quality. In addition, automation helps shorten cycle time and decrease process variability. Many of our high-volume long-lead time competitors operate in the Far East, where labor is notoriously cheap. We would not be able to compete with them if we depended heavily on direct labor.
For example, we have automated the final product pack-out of PlayStation games. When we entered the game market, there was no standardization with regard to case pack counts or sizes. Early on we pushed for retailers to set standards for master and inner pack carton sizes. Today, PlayStation games go to the retailers in master cartons of 12. Each master carton contains three inner packs of four games each. Each of the inner packs is labeled for direct distribution (as is the master carton). The entire pack-out and palletization process is fully automated by robots and then routed to distribution. This ensures that we never break an inner carton for distribution. This year, SDM will manufacture and distribute more than 150 million PlayStation software units with this process.
Getting some leverage
Some companies work hard to recover their assets; at Sony Disc Manufacturing, we concentrate on leveraging our assets—our physical assets, our systems infrastructure and our people. Here's what we've accomplished to date:
Physical Assets. Sony Disc Manufacturing has made a strategic decision not only to manufacture and distribute Sony products, but also to open up SDM 's internal business infrastructure to offer non-Sony clients access to our state-of- the-art supply chain. Today SDM has m ore than 200 third-party customers that leverage our low-cost, high-quality, high-throughput infrastructure. This added volume helps drive down costs for both SDM and our clients even further. When we add our third-party clients' freight volume to our own, for example, we are able to negotiate additional freight discounts. This not only drives our own costs down, but also allows us to pass the savings along to our third-party clients.
Systems. Sony Disc Manufacturing relies heavily on the use of our Oracle enterprise resource planning (ERP) planning systems to drive our business. We have also tied our i2 and Catalyst planning systems tightly together with a custom client order management system sitting within Oracle. Coupling our frontend advance planning with our back-end automated processes allows us to align supply and demand in near real time and helps us accommodate changing market demands. By carefully and strategically integrating and leveraging around our Oracle platform, we have full visibility and can optimize all activities within the supply chain.
People. Sony Disc Manufacturing strives to hire and retain the best and brightest people in our field. At SDM, we place high value on technically skilled workers and strong emphasis on continuous training and skill improvement. We provide multiple educational assistance and career development programs. Without a skilled workforce, we can't solve problems effectively and remain at the foref ront of our market . Even in today's cost-driven environment, significant investments are still being made to enhance the skill sets of our employees. We believe that this will give us a competitive advantage and increased loyalty in our workforce.
For Sony Disc Manufacturing, the keys to success are fourfold: standardize the market early; automate to lower costs; leverage all possible assets and volumes—even those of our suppliers and clients; and hire, retain and continuously improve our workforce. These may sound like simple—even unoriginal—steps. But it's hard to argue with the division's success in the cutthroat electronics optical media market. And harder still to dismiss a music and game business that is now setting the standard for the thirdparty distribution industry as well.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."