On hearing the news that raw materials' price has been raised by 400 yuan suddenly on June 2nd, the purchasing clerk immediately realized that such a big rise in price would influence raw materials' purchase, the completion of the production plan as well as the sales plan in June severely.
In the afternoon, the managers from the Purchase Department, the Production Department and the Sales Department held an urgent meeting. The conference focused on the unprecedented loss of G-High Carbon. For the unit sales price of Calcined Petroleum Coke in most of the contracts in May was lower than the unit price for the purchase of raw materials in June. In addition, the demand for Calcined Petroleum Coke from G-High Carbon always exceeded the supply and G-High could only store a very small amount of raw materials. So if G-High Carbon fulfills all the sales contracts in June, the company would suffer a great loss.
The three departments had a heated argument. Someone thought the price of raw materials was increased so fast and try to consider the event from the win-win and long-term cooperation's angle, we should increase the price and explain to the customers clearly why we had to do so. However G-High Carbon had many customers from trading companies both inside and outside China, if we raised the price, how could they explain to their end users? While Others thought that as long as our company could stand the pressure, we should fulfill the contract firmly. But if the company could not withstand the pressure, what should we do? Then not only G-High Carbon would suffer a big loss itself, but also nearly hundreds of G-High Carbon’s long-term cooperation customers would lose a good and stable supplier.
Although the three departments all agreed to fulfill the contracts finally, can Ghigh Carbon keep suffering losses like this?
