July 10th, 2009 · No Comments

By Tim Sanders
Saving the World at Work
This post originally appeared Sept. 23, 2008

Here’s an excerpt from Saving The World At Work that relates to the value of supporting local companies, even when a global cost cutting opportunity comes up.

The Law of the Long View says if you commit to your partners, you’re committed for the long haul. It’s your job to stick with them even if a short-term reason to change arises.

Too often we treat partners with a what-have-you-done-for-me lately attitude, or a lowest-price-wins-my-business mindset. Such thinking can result in product recalls, disappointed customers, and damage to the company brand.

For example, with its cheap labor, China can often undercut an American competitor, but unlike their Japanese counterparts in decades past, Chinese manufacturers are not accomplishing this feat with quality improvement. Quite the opposite. In 2007, millions of inexpensively made Chinese products, from pet food to toys, were recalled from store shelves due to their low quality and harmful ingredients. Mattel, Sony, Dell, and a host of pet-food companies have paid a penalty for working with such low-cost partners.

On the other hand, ice-cream maker Ben & Jerry’s cofounder Ben Cohen is committed to buying his milk from local dairy farmers. He believes that local farms are critical to sustainable agriculture, a belief codified in the company’s social-responsibility program.

Ben & Jerry’s loyalty was challenged in the late 1980s when industrial-sized farms, often owned by multinational companies, began offering lower wholesale milk prices. Cohen believed such pricing, driven by technological advances, was only a temporary cost advantage. So, remaining loyal to local dairy farmers, he actively helped them catch up with their larger competitors by, among other things, launching an ambitious set of educational programs to aid local farmers in bridging the knowledge/tech gap.

Working with the local farms cost the company a great deal of money in the short run. But it paid off in the long run—Ben & Jerry’s strategy helped the company offer high-quality products and lower average costs by maintaining consistent relationships throughout its supply chain—all because Ben & Jerry’s kept its promises.

Read more from Tim at SandersSays and at the Saving the World at Work site.