Airplane manufacturer Airbus is turning towards its relationship with suppliers and manufacturers to improve its cash flow. In an exclusive report by Reuters published Friday (Sept. 25), three unnamed sources said the European company is urging its suppliers that provide parts for its A320 jets to reduce their prices by at least 10 percent by the end of the decade. Reports said the alleged efforts are part of Airbus’ strategy to improve cash flow and remain competitive.
[bctt tweet=”3 sources said Airbus is urging its suppliers to reduce prices by at least 10%.”]
Reports noted that Airbus’ venture is similar to efforts seen by rival Boeing, which launched its Partners for Success initiative to reassess supplier relationships. Airbus’ equivalent is its SCOPe+ program, which will not only examine supplier relationships but also reevaluate procurement and plane development.
When it comes to Airbus suppliers, the sources said the company has told its partner firms that in an effort to increase sales volumes and improve the lifespan of the airplane — their best-selling jet, reports said — Airbus has now advised its suppliers that it is time to “review all options” when it comes to supply chain management.
Reuters said documents seen by the newswire, as well as commentary from Airbus suppliers, suggest the company wants suppliers to reduce their prices compared to current levels by 2019. Airbus has confirmed the existence of the SCOPe+ venture but has not released details on it, reports noted.
Airbus is not the only major conglomerate looking to improve cash flow through revising supplier contracts. Last week reports emerged that Walmart is reportedly urging its supplier to cut costs. Other retailers, including Coles and Lowe’s, have had similar situations with their suppliers in recent months.
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