Dutch company Philips has been affected by supply chain and respiratory equipment recalls and other incidents, leading it to plan to lay off 4,000 people worldwide in order to improve its performance. For now, the biggest problem Philips encounters is improving the company's supply chain and alleviating inflationary pressure. Philips's decision was also a helpless move during the economic downturn. Only by reducing operating expenses and simplifying the organizational structure can Philips tide over the difficulties smoothly.
The biggest problem currently encountered by Philips is the triple impact of supply chain tension and inflationary pressure as well as the new crown epidemic. Previously, Philips was deeply involved in equipment recalls, which caused Philips' credibility to drop again and again. The company's operating performance and the stock market continued to decline. After discussions, Philips' senior management decided to reduce the company's operating expenses, simplify the organizational structure, and preserve the company's core operating departments. , adopting global layoffs, this time a total of 4,000 positions will be cut. It is expected that the layoffs will save the company nearly 300 million euros.
Philips’ market value has plummeted since it was fined for recalling some respiratory equipment in 2021, and even the company’s head was replaced after this incident. By the end of August 2022, the company once again announced a recall of previous respiratory equipment. The reason is that the plastic parts in the equipment can release harmful chemicals to the outside in certain specific use environments. Although Philips claims that this recall has nothing to do with previous recalls, the impact is still huge.
Philips is also in a state of emergency in terms of supply chain. Due to the impact of the epidemic, by the third quarter of 2022, Philips' product delivery volume and customer installation business will also be affected by supply chain issues. By the time of the shutdown, the combined losses of the sleep and care businesses had reached 1.3 billion yuan. The company stated that the supply shortage problem is much more serious than expected and will continue to affect sales in the fourth quarter of 2022.
In short, the global layoffs at Philips were also caused by the economic downturn, which was deeply affected by supply chain shortages and the epidemic, and had to reduce expenditures. The company's top priority now is to urgently improve supply chain operations and increase productivity. .