The top ten customers totalling some 40% of the revenue did not have a contract, neither any basic terms and conditions and the prices in the system were input based on what the SVP sales said….troubled waters, fisherman’s gain.
Some people believe that shareholders do not care what happens internally in the company provided they get benefits. Volkswagen shareholders are not thinking the same. The share price fell 46% at the onset of the scandal and nearly a year later has only recovered a 20%
Once the contracts were in place…..Prices were updated in the system so invoices were accurate and there were no delays in their payment. This boosted the cash flow and ultimately benefited shareholders. Operations could plan in advance the service and quality levels required for these customers, so they were able to respond efficiently. This meant no more extra hours, no more bottlenecks or emergencies in operations. This ultimately benefited shareholders.
There are still some people that believe there is nothing wrong with no having any contracts in place. Maybe because they are the only fishermen?