Recently a friend received a comment on his website accusing him of being a commie because he had suggested that industry in the US could gain a lot by collaborating more, where it makes sense, than by fanatical competition in everything.
For instance, in the US we have three, well really 2.5 automobile manufacturers, but 20 different thicknesses of steel made for the auto industry. In Japan, the auto industry got together and collaborated to make only six thicknesses, but with a tiny population, there are seven major car manufacturers, meaning the market is more, not less competitive.
Make no mistake, they collaborate where it makes sense, but compete like crazy for our dollars.
Even France does too!
In France, the cheese industry collaborated with the government to create a system that allows them to ship cheese to the docks on the East Coast from anywhere in France for less than it costs to ship within the US. The whole industry, big and small producers benefit.
At first it was by subsidy, but in time the volume grew to where they could command those prices without the subsidies. Last time I looked, admittedly a while ago, it was only about 10 cents a pound from farm in France to the docks on the East Coast, and that helps explain how they have been able to compete against our industry pound per pound on price, and gather shelf space.
Californians do it!
In California, in the Silicon Valley, there were two bakers. Each sold white cakes and chocolate cakes and each battled fiercely to sell in the same marketplace.
Yet, one had the equipment to make white cakes and the other to make chocolate. So rather than they both have to purchase double equipment, the white cake bakery made the chocolate cake bakery’s white cakes and vice versa, and lo and behold, by keeping the overall investment needed to stay in business down, they were able to price competitively, allowing their customers to sell more cake, and the category grew.
Focusing on what you are good at and letting others do what you are not has been around since well before outsourcing.
Why not you?
The dairy industry has a long history of collaborative efforts, in particular in marketing, through state marketing boards, even if enforced through the checkoff system (an outgrowth of having to promote dairy without creating a monopoly, which is against antitrust law, for you young pups who may not know your history.)
Haven’t most cheese companies been helped by those collaborative marketing efforts? After all, it is better to fight to catch fish in a big pond than a little one. By collaborating in what makes sense you can grow your market faster, and better, and less expensively than you can by yourself, isn’t that so? So cooperation is good for business.
So if collaborating works, why doesn’t our industry apply it to improving processes across our industry. Some areas I can think of off the top of my head include:
• Sanitary milking standards, in particular in working with dairy farmers to help them reach true sanitary milking standards, particularly in areas like older, non AAA equipment, 100 percent use of fore-stripping, improving how feed crops are harvested to minimize any unwanted things getting into the silage.
• Working together with the government to come up with better, quicker methods for monitoring the more difficult bacteria, in the animals, before it gets into the milk, like Campylobacter jejuni, the nasty little bug found particularly in raw milk, thereby eliminating a good chunk of the risk posed by raw milk. After all, raw milk producers are farmers and like most farmers are an ornery bunch that are difficult to control. Sitting back and saying ”not in my backyard” won’t help much when milk and cheese sales plummet due to an outbreak. A little invested by everyone, in this case political muscle to get the gov to pony up and provide the research, could make the food supply safer and help grow the market worldwide.
• Working together to find a way to improve the handling of products once they leave the docks, as the majority of foodborne illness happens in post-process handling. While it may not be our direct responsibility, it sure hits us in the wallet when it happens.
• Finding a way to lower freight costs, for everyone, big and small, so we can compete with the French on prices…
• Stop sending people to China to teach them how to make cheese!
And like the marketing boards, it can be done in a way that doesn’t spell monopoly. In fact, collaborating is better for capitalism than communism. If people were allowed to collaborate with each other in communistic societies, they would quickly figure out that making money is more fun.
I am sure if you stop and think there are many ways in which the industry could collaborate more, in what makes sense. Send me your ideas and I’ll post them in this column.
Dan Strongin runs a training and consulting company focused on delivering affordable online solutions to everyday business problems, including his udemy course: Understand Your Business, Earn More Money. Dan can be reached via email at firstname.lastname@example.org or by phone at (408) 512-1086, or you can visit and blog or get discounts on his courses on his site: http://www.managenaturally.com.
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