To many, the Chinese New Year marks the beginning of the New Year, while businesses see the holiday as a supply chain nightmare. The date of the festival falls on the second new moon after the winter solstice on December 21st, which happens to be January 25th, 2020. Even though the Chinese New Year only lasts one week, many factories and businesses shut down for about 10 days before the holiday to allow for travel time, causing the disruption to last anywhere from 35-40 days. As you can imagine, this throws a serious wrench into many business’s logistics plans.
The Chinese New Year will affect your supply chain in several ways. During this time when employees travel back to their hometown, all manufacturing projects are put on hold while manufacturers and distributors go on vacation as well. This means that no orders ship out of China or Taiwan. Any attempts at phone calls or emails will remain unanswered as no one will be present on site. You may experience serious production slowdowns about one to two weeks before the Chinese New Year because employees have already left to travel back home. In addition to slow production, you may also run into some quality control issues as workers rush to complete orders before too many employees leave and before they close for the holiday. The Chinese New Year produces a lot of turnover within factories, resulting in additional quality control problems from inexperienced new hires. This all may seem like inevitable chaos, but fortunately we have several tips to help keep your supply chain running smoothly.
Ship Orders Early: Try to ship your orders out before Chinese New Year with additional inventory needs in mind to get through the holiday.
Build Trust: Establishing a trusting relationship with your China supplier or manufacturer will help ensure that your product will be shipped on time during the holiday rush.
Make a Forecast: Create a plan for how much product you will need during the first three to four months of the new year. For example, if the holiday fell in March, take 50% of the volume normally received in March and receive it in January, then receive the other 50% of volume in February. This shifts all March orders forward because none will be delivered during that month.
Consider Manufacturers Outside of China: Look at manufacturers who operate outside of China to offer the possibility that your manufacturer could find a backup supplier during the holiday if needed.
Create a Quality Management Plan: This will dramatically reduce the risk of a delayed shipment due to quality issues or the shipment of defective products.
Plan for Turnover: As we mentioned above, turnover following the Chinese New Year will happen, so planning for this ahead of time with a forecast and increased inventory will help hold you over.
The hurtles that the Chinese New Year creates can be frustrating, but taking the above tips into consideration will help get you through on top. Smart Warehousing can help your business navigate and properly prepare for the Chine New Year with a logistics partner who cares. Don’t let this year’s holiday get the best of you – reach out to one of our Account Executives at (913) 888-3222, firstname.lastname@example.org or request a quote here.