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Supplier relationship management 'vital in bankruptcies'

An expert has outlined the importance of supplier relationship management during bankruptcies.

26 January 2012

Supplier relationship management is particularly important during bankruptcies, it has been said, indicating the utility of negotiation strategies.

This is according to Paul Teague, US contributing editor for Procurement Leaders, who wrote on a blog for the organisation that the current situation with American Airlines is a "case in point".

When the company announced it had filed for Chapter 11 bankruptcy protection in late November, many specialists believed this was overdue, he claimed, noting "all American's domestic legacy competitors had filed years ago and are now operating at lower costs".

Suppliers to American Airlines can expect the company to renegotiate and renew any existing contracts and will be paid everything they were owed before the filing when the group exits bankruptcy, American Airline's vice-president of purchasing and transportation John MacLean told Mr Teague.

However, the supply base will support the carrier, as the airline was responsible for nurturing many of these companies and had assisted them through their own financial difficulties.

The bankruptcy also revealed the "importance of the procurement function within the corporation", Mr Teague declared.

US Airways recently confirmed it is considering bidding for American Airlines.

Posted by Ken Hayes

Source: Prcurement Leaders blog, January 16th

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