Scandinavian Airlines has asked its suppliers to reduce their prices by 10 percent in an effort to cut costs.
Vendors were asked to play their part in helping to turn the company's finances around after it suffered a fall in earnings at the start of the year, affected by the rising cost of jet fuel. They learned about the initiative in a letter from chief procurement officer Patrik Knutsson.
"We're under pressure because of rising fuel costs and talking to our supply base in the need to make reductions," he says. "One of our goals is to co-ordinate and consolidate the number of suppliers."
He says the company would honor existing contracts and would not be enforcing the reductions on vendors. It hopes to strengthen relationships with suppliers who cooperate and contribute to the price reductions.
Source: Supply Management, http://www.supplymanagement.com