Hitachi plans to save on sourcing

13 February 2009

13 February 2009 | Jake Kanter

Electronics giant Hitachi aims to save ¥300 billion (£2.3 billion) from procurement over the next year.

The Japanese company plans to further centralise its purchasing operations and take advantage of the strong yen by sourcing more materials from overseas.

Hitachi hopes to reach the cost reduction target by March 2010 and the effort is part of a wider group savings plan to improve the company's performance during the global economic downturn.

Hitachi already has an established central procurement department that purchases commodities such as rare metals for all the firm's operations. The company will expand this to include other materials over the next year.

It currently sources about 25 per cent of its goods and services from overseas and will increase this by securing cheaper costs from countries with weaker currencies than Japan.

A spokesman for Hitachi said new purchasing locations are being examined and will be agreed shortly. In addition, the firm will cut spending on promotional events and advertising, and boost use of its shared services divisions, including procurement, distribution and personnel management. The company also wants to reduce its vendors' lead times by "quickly" assessing supply and demand conditions.

This month Hitachi appointed former general manager of procurement Masao Hisada as CEO of its US operations.

SMfeb2009

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