« PreviousContinue »
There is hardly an important policy of the manufacturer that is not affected in one way or another by the producer's confidence. When it comes to the matter of securing raw material, the idea that price is the whole thing is entirely erroneous, because it is seldom the case that any ordinary price will not sooner or later be met by a competitor.
But, entirely aside from the matter of supply, it is not feasible for a plant to deal constantly with a large group of producers and give satisfaction without enjoying their confidence in a liberal degree.
Likewise, the producer profits in a similar way. He is the seller, and the seller always benefits if he has the confidence of the buyer. Can the manufacturer always be sure of the grade of the raw material; can he pay more than competition requires during a favorable season and feel sure that the producer will not withdraw his patronage later should the price fall somewhat below competition? The answers to such questions necessarily have a significant bearing upon the price that the producer receives.
Confidence, therefore, is directly involved in the profitableness of the business of both manufacturer and producer. Their success and progress depend primarily upon it. Certainly, then, nothing should be left undone by either that will aid in establishing it. Moreover, it is not difficult to secure when each realizes how his own best interests are served; that he actually makes more money by conducting his business according to the principles that establish confidence than in any other way.
The dairy industry of America needs more understanding and more confidence, not only between the manufacturer and producer, but between all groups.
TYPES OF MANUFACTURING ORGANIZATION.
Much attention on the whole is given to the type of manufacturing organization, and confusion sometimes arises because of too much emphasis upon the type of organization and too little upon the principles that guide its operation.
There are three essentials that an efficient manufacturing organization must possess. They are: capital, skill, and fair policies. Any organization supplying these merits the confidence and the support of the producer.
The three general types of manufacturing organization that exist in the United States are as follows:
First. A company in which the producer owns none of the stock. Second. A company composed entirely of producers.
Third. A company composed of producers, factory operators, and others who supply additional capital.
It is of course not the intention here to discuss the merits of the different types of organization other than as they have a bearing upon the subject of this paper. As stated above, the usefulness of the organization to the producers does not necessarily depend upon its type. There are those of all types that are highly efficient and successful; that deserve and secure the producers' full confidence and support. There are others of all types that are failures. In every case success or failure depends upon the facilities available for the work to be done and upon the character of the management.
That the producer should participate in the ownership of the plant is most desirable. In this way he has an opportunity to share in its management and its earnings. The plant, in turn, has better opportunities to secure his confidence, and more assurance, therefore, of his support.
That the producer, however, should exclude all others from participation is by no means established. Sometimes more capital is required than the producers can spare from their farms and adequate capital is essential to the success of every plant. But even where outside capital is not needed, the factory management and the factory operators are quite as essential to the success of the plant, as are the producers. Is it not good business, therefore, that all have the privilege of participating in the ownership?
The plant management and the operators after all are the manufacturers, and the same reasons that make it desirable that the producer participate in the ownership apply also to those who operate the plant.
Plants can succeed, of course, without the operators' participating in the ownership, as they can without that of the producers. With the participation of both, however, a greater incentive is created to make the plant efficient and establish better relations between the manufacturer and producer.
Recognizing this, some companies offer, on easy terms to their patrons and to their employees in good standing, the opportunity to share in the ownership of the business. This policy is quite in line with some of the more advanced ideas of industrial relations. It is nothing less than a type of cooperation, through which the producer, the plant operator and the possessor of needed capital participate on an equal footing in the plant ownership, its management and its earnings. Such a plan strengthens the relationship between all groups, and contributes to the development of the industry as a whole.
It is quite erroneous to conclude, however, that full cooperation can not be secured, except through some form of joint ownership, valuable as it may be. Such cooperation can be secured if all understand their problems and their own best interests.
After all, the essential thing is full whole-hearted cooperation, and the method by which it is secured is of secondary importance.
The opportunity to conduct a business is afforded by the community and deserves something in return. Such opportunity carries with it an obligation, the fulfillment of which is not only a matter of justice, but also a matter of good business.
In the usual course of business the manufacturer forms intimate relations with the producers. If he is established in their confidence he has an opportunity to exercise considerable influence with them concerning not only their joint problems, but all matters that pertain to dairy development.
The manufacturer's first concern naturally is with such matters as volume and quality, and the establishing of full cooperation in dealing with them. Too often he gets the idea, however, that this is as far as his responsibility goes; that such matters as adequate feed supply and herd improvement are of no immediate concern to him. One single reflection will dispel this idea. The producer must be successful. If he is not, sooner or later the manufacturer fails.
In many cases the producer can increase his net earnings hundreds of per cent by herd improvement, better feeding, and the like. In doing everything in his power to aid in bringing about such improvement, the manufacturer is working not alone for the producer, but for himself as well. Such efforts constitute nothing more than sound, constructive business; that kind of business which is helpful to every individual affected by it; that kind of business that will make any industry grow; that kind of business that deserves and inevitably secures that understanding and confidence so vital to proper relations between all associated business groups.
It is not only his duty, then, as a manufacturer to join actively in every effort for dairy development, it is his opportunity to insure the future of the business he controls and to make it constantly more useful and more successful. But it is even more than this; it is his opportunity also, through aiding in general development, to render a service to the community at large in return for the privilege it has afforded him.
Business that is sound and permanent is no longer a blood-thirsty humanity-destroying agency. Instead, it is a useful, humanityserving institution, beneficial to all who are affected by it.
The manufacturer and the producer of milk products are nothing more than partners in a service which, if rendered well, assures them leward.
Upon the producer falls the service of furnishing the world with an abundance of a food that man can not do without; of sharing in the protection of that food, and of preserving the fertility of the soil from which it comes, in order that future generations may not be robbed of the opportunity to be fed and clothed. For this service, well rendered, the methods of commerce must be such as to insure to him returns that are commensurate with the investment he carries, the labor he performs, and the responsibility he assumes.
The manufacturer, in turn, is equally a factor in this usefulness. Upon him falls the service of efficient manufacture and distribution, of carrying the products forward in the best condition to the consumer, and of carrying back to the producer that liberal share of the returns that fair dealing and good business both demand. Upon him also falls the service of doing justice to the capital with which he is entrusted.
The manufacturer, then, serves the consumer, the producer, and the investor. He is a trustee for all; that one may have food, another employment, and still another legitimate returns on his capital. His field is full of opportunity, his position one of trust, and he dare not abuse that trust if he values highly his business. He, too, must receive just returns for his efforts.
The manufacturer and producer, then, work hand in hand in the rendering of a great service. They can not work against each other without lessening their usefulness and doing harm to themselves. The modern idea that business growth is promoted by assisting others rather than by destroying others was never more forcefully typified than in the true relation between the producer and manufacturer of milk products.
In this relationship there is still room for improvement, for better understanding, more confidence, and more cooperation. Such improvement is gradually taking place and will come more rapidly with a fuller realization that the larger purpose of it all is service, performed in supplying man with an essential of life and health and happiness; and with a fuller realization too, that the rendering of such service constitutes, after all, the soundest form of modern business.
Chairman ScoVILLEE. I have been asked to make an announcement. The committee in charge has noticed, with perhaps a little apprehension, that within the last 48 hours we have been together there has been too much of a tendency on the part of our foreign delegates to flock together. Obviously, if they and we are to obtain the maximum result from this conference we must mingle together.
To our American delegates I want to say it is our fault, not theirs. We must endeavor to break up this combination and to see that we meet them and that they meet us. To our foreign friends may I say, will you please consider every man who has one of these badges on as your guide. That is especially so when you start to move between here and Syracuse. We are at your disposal. Anything we can do to make your visit more instructive as well as more convenient and comfortable it is naturally our duty to do and it will be our pleasure to perform. Please mix up and see if we can't all get together for the next few days. [Applause.]
The next speaker represents a very modern phase of our presentday life. We heard this morning from an expert economist eriployed by one of the largest banks in America. This afternoon we are going to have the pleasure of listening to an economist employed by what is perhaps the largest manufacturing concern in the United States, turnover considered.
It is very significant that these large institutions find it necessary to study the theory of their business in order that their practice may run true and 'they employ these experts who are qualified to see that their policy is directed along the right lines. In making the selection, Messrs. Swift & Co. employed a man who had been prufessor of agricultural economics in the University of Minnesota and professor of business administration at Yale. That was certainly a very happy combination for a concern like Swift, and I have great pleasure in introducing to you Dr. L. D. H. Weld, who is manager of the commercial research department of Swift & Co., of Chicago. [Applause.]
FUNDAMENTAL ASPECTS OF DAIRY MARKETING.
Louis Dwight HARVELL WELD, Ph. D., manager, commercial research depart
ment, Swift & Co., Chicago, Ill. Mr. Chairman, ladies, and gentlemen : To speak on the fundamental aspects of dairy marketing I am going to speak as an economist rather than as a representative of Swift & Co.
To treat this subject properly, I think it is best to begin at the beginning and to see how the present marketing system in general has developed. It has two very important characteristics. First, it has developed that marketing is done through a system of middlemen; and, second, that it has been in the hands of individual companies—of private corporations. Individual initiative has been the compelling force in the developing of the present distributing organization.
There has been much loose talk about middlemen in the marketing system. It has been said that there are too many middlemen, that the marketing system is cumbersome and altogether too costly, that goods should be marketed direct from producer to consumer, etc. You don't hear these things said quite so much to-day as you did a few years ago, because we are getting to have a better understanding of the marketing system and why it has developed. It is coming to be realized, in the first place, that marketing is at best an expensive and intricate process, and that it involves the performance of certain services or functions that are absolutely indispensable in getting goods from the producer to the consumer.
I have always found it worth while to list these functions or these services of the marketing organization. They are:
First. The assembling of products from myriads of farms, from country shipping points to large wholesale markets, etc.
Second. The storage of commodities, for goods have to be stored at various steps all the way from the producer to the consumer.
Third. They have to be financed. Money and capital are tied up in the goods as they are on their way from the producer to the consumer.
Fourth. There is the assumption of risks. Whoever takes ownership of farm products on their way to market incurs the risk of a loss from a fall in price.
Fifth. There is the sorting and grading to be done.
Sixth. There is the selling operation, or the sending out of salesmen to make contracts with buyers.
Seventh. There is transportation. The goods have to be hauled from one place to another by railroad or by truck or by wagon.
The point is that all these services have to be performed, whoever performs them, or how few or how many middlemen are involved. It costs money to perform these services. You can cut out a middleman, yes, but you can't cut out these services that have to be performed or the cost of performing them.
It has been perfectly natural that specialization should have developed in the marketing process just as in manufacturing. In fact, middlemen are specialists in performing these marketing services. In manufacturing you have, for example, in the cotton industry, one mill spinning cotton into yarn, another mill weaving yarn into cloth, another mill taking the cloth and dyeing and finishing it.
Just so in the marketing system--one middleman specializes on assembling goods, another on transportation, another on storage, etc. Most middlemen perform two or three or more of these marketing functions, but there is specialization, nevertheless, and there is a subdivision of the marketing process so that there is a succession of middlemen through which goods have to pass in going from producer to consumer.