Putting all your eggs (and milk) in one basket

"You should not put all your eggs in one basket" is the proverb. But is the proverb always right?

You should not put all your eggs in one basket, says the proverb.

Or, according to Mark Twain, put all your eggs in the one basket and — WATCH THAT BASKET.

I was reminded of both these aphorisms as news of the Chinese Milk Scandal broke. Somewhere in the milk chain somebody added melamine to boost the milk’s apparent protein content (probably to counteract the effect of watering it down) and thus increase its value — with fatal effects.

Once upon a time, in the past I can almost convince myself I remember, people bought milk from the farmer or the local dairy. If the milk didn’t taste right you bought it from a different farmer or dairy. A problem in the milk supply might affect a few hundred customers, and the biggest “risk” (following the introduction of pasteurization) was that the farmer had watered down the milk.

Scroll forward to the current day. Companies don’t buy milk, they buy milk powder, modified milk ingredients, or some other milky product. A problem in the milk supply can literally affect millions of people. Milk is not bought for taste, it is bought for nutritional content from the
lowest bidder.

A lot of figurative eggs have been put into one basket, and the incentives for tampering with that basket are much higher.

The problems of the chinese milk industry (which, of course, have affected all sellers of milk or products with milk derived ingredients even if they were not at fault) are the result.

But the problem isn’t really the milk industry. Remember tainted dog food? Maytag dishwashers? Listerine mouthwash? Painted toys? Contaminated toothpaste? (See Year of the Recall)

The problem is large baskets which (as Mark Twain pointed out) need to be watched very carefully.

What can we do to prevent or reduce this problem for ourselves and for our customers? We need to either:

  • Make the baskets smaller. (i.e. differentiate products, differentiate batches, and use multiple suppliers – not just the cheapest). Would the recent Maple Leaf Foods recalls have been as big if “different” brands had in fact come from different production lines?
  • Watch the baskets better. (i.e. inspect, test, and verify rather than blindly trust the supplier). Independent government (or other) certification is definitely an advantage here for any industry where the bad actions of one competitor can affect the trust in all industry members.

Or perhaps we need to do both.

5 October 2008

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