Piles of meat
When I was sitting through lectures about supply chain management I never thought they'd end up being useful like this. Still business is all around us as they say, so here goes. In a comment below David from Tokyo points to some Japanese figures about the size of their whale meat stockpile. I have a few comments about those but I'd like to start by pointing out that in the year from 1 August 05 to July 31 06, the stockpile grew by 445 tonnes.
Looking at the numbers from 1 September 05 to August 31 06 the growth is 469 tonnes. Or to put it another way, either David's translations are wrong or that stockpile is getting bigger on a year by year basis. If anyone wants to look the original Japanese (which I can't read) is here.
To address his point - that doesn't suggest Iceland will be able to sell them much.
However this movement is pretty minor in the scale of things. For more about the exciting world of supply chain management and all the numbers, read on.
Inventory costs money. The last thing any business wants is more of it. This is the principle on which Toyota's lean production system conquered the world's automotive market. It's the principle on which Dell hammered all comers in the PC market in the late 90's and it gave the world ideas like Just-In-Time production. Inventory is bad because it costs money, it costs you money to store product, it costs you money to store raw materials. When a business looks at it's warehouse it sees only costs.
But sometimes you have to have inventory. You might need inventory because demand is unpredictable, or to build up for a seasonal rush. Inventories of Turkeys, Toys and Mistletoe all surge before Christmas. You might need inventory because your production is unreliable - if your widget making machine breaks you need enough widgets to keep your customers happy till it's fixed.
One of the key measures of how well you're managing your inventory is how many times it turns over in a year. If I have ten widgets in stock, and sell 100 widgets a year my inventory turns over ten times. Dell's inventory turns over more than 100 times in a good year. The Japanese whale industries turns over about one and a half times (7768 tonnes sold, 4671 tonnes on hand).
Exhibit A, stocks of whale meat
| Month | Stockpile at previous month end | Incoming stock | Outgoing stock | Stockpile at current month end |
| Aug '05 | 4226 | 1325 | 747 | 4804 |
| Sep '05 | 4804 | 210 | 450 | 4564 |
| Oct '05 | 4562 | 207 | 551 | 4220 |
| Nov '05 | 4220 | 195 | 525 | 3890 |
| Dec'05 | 3890 | 247 | 626 | 3511 |
| January | 3512 | 224 | 551 | 3185 |
| February | 3185 | 149 | 436 | 2898 |
| March | 2898 | 1539 | 827 | 3610 |
| April | 3610 | 2920 | 561 | 5969 |
| May | 5969 | 129 | 357 | 5741 |
| June | 5741 | 163 | 414 | 5490 |
| July | 5490 | 905 | 1723 | 4672 |
| August | 4672 | 1387 | 785 | 5274 |
The conclusion you should draw from this is that they have far too much inventory. Looking at the numbers you can see that just after the delivery of the meat from the antarctic in March 827 tonnes was sold, presumably to distributors who wanted the fresh catch, not the stuff that had been frozen for years. Meanwhile the inventory never went below 2897 tonnes. So even if no whale meat came in for three months in a row, and those months were all the same as the busiest month of the year for whale meat sales they wouldn't run out.
How much inventory should this business be carrying? Well definately a lot less. Especially if you allow for latency in the supply chain - once the ministry runs out of whale meat there'll still be some in the supply chain for wholesalers, supermarkets and so on. Given the fairly predictable looking demand and the reliable delivery I'd say they should be running with between 500 and 1000 tonnes at most, turning their inventory about eight times a year.
That would be a lot of money in the bank. 3500 tonnes of refrigerator space doesn't come cheap.
Meanwhile where did those extra 400 tonnes come from? Well taking an extra 500 whales at about 1 tonne per whale is probably what did it. It's an insane business decision, especially when the Japanese government has to resort to selling whale meat at wholesale prices to get rid of it, and as we've seen here, still has three to six times more than they need sitting in warehouses.
We can learn even more from historic levels of inventory. In 1980 the business carried about 20 000 tonnes of stock - presumably because they thought they needed it. That suggests that demand for whale meat has crashed in the last 25 years.
No one is denying that whale meat sells in Japan. People bought BetaMax videos and Gauloise cigarettes right up to the end - but it didn't make those viable businesses either.
Comments
Hi Martin,
Sorry, I didn't realise you created a whole new post out of this, so I replied on the old post first.
Basically, my point:
Consumption increased significantly last year, but it was masked slightly by an even bigger increase in supply.
Just-In-Time production isn't possible with whale meat, because it's only hunted in season (austral summer, northen summer). The majority of stock comes in at two points in the year.
By the way, you used an estimate of 1 tonne of meat per minke whale, which is way too low. They weigh in between 5 to 8 tonnes typically, and (again I can aid you with my Japanese skills) the ICR actually announced the amount of by-products to go on sale:
3,168.7 tonnes of minke whale meat
(http://www.icrwhale.org/02-A-52.htm)
That's from 853 whales, so an average of 3.7 tonnes each, much more than you allowed for.
So 400 tonnes is equivalent to only approximately 108 minke whales. The actual increase in minke whales killed last year was 413 whales (853 - 440).
So where did the other additional 305 minke whales worth of meat go? As media reports suggest, and as the stockpile movements suggest, I put it to you that the increases in sales that I have been reading about in the Japanese media has quite a lot to do with this.
Again, the figures point to a clear increase in consumption year on year, as also reported in the local media. Furthermore, without a doubt today consumption is far higher than it was in the early 1990's when supply was limited to around between 1,000 tonnes (330 minke whales). In the month of July alone 1,700 tonnes of meat was shipped (equivalent to 460 minke whales, although some fin whale meat would have been included in that).
Also, the government has always sold the whalemeat at wholesale. The government is not in the business of operating restaurants and cafeterias, the government is just trying to recoup most of the costs of the research programmes.
> No one is denying that whale meat sells in Japan.
Indeed, given the clear increasing consumption trend since the early 1990's as increases in supply have permitted, it would be hard to make such an argument.
Interesting however, as some groups have been repeatedly making such statements in recent times.
Posted by: david@tokyo | October 27, 2006 5:48 PM
Oh, one other little tidbit of information that I gleened with my Japanese skills:
The meat from JARPA II didn't go on sale until July (based on info on the ICR page I posted in my previous comment), so the 827 tonnes shipped in March was just normal whale meat.
Apparently there was a kaffufle in July because it was the first time in ages that fin whale meat was available. I guess the good result from IWC 58 also helped with some exposure.
Posted by: david@tokyo | October 27, 2006 6:21 PM
Oh, whoops :-) ONE more thing I should have pointed out...
The "stockpile" isn't actually just one stockpile, as your analysis seemed to assume. There are various areas around the country where whale meat is stocked.
As a special treat (I've not put this on my own blog yet, so you're getting my services completely free) the top 7 stockpile location as per the Ministry's figures:
Hakodate - 1068 tonnes
Kanazawa - 983 tonnes
Tokyo - 849 tonnes
Kushiro - 804 tonnes
Ishimaki - 582 tonnes
Osaka - 348 tonnes
Shimonoseki - 123 tonnes
(Total 4457 tonnes - I guess the rest is stored elsewhere)
Posted by: david@tokyo | October 27, 2006 6:50 PM
'given the clear increasing consumption' - David
Really? Are you sure?
http://www.theforeigner-japan.com/archives/200602/whalemeat.htm
:o)
:o)
:o)
Posted by: Lamna nasus | October 29, 2006 11:34 AM
Click on my name above, to see those figures we were discussing in a graph form...
Cheers,
David
Posted by: david@tokyo | October 30, 2006 5:12 PM