Like it or not, both 2020 and 2021 have prepared supply chains well to manage shipping and production disruptions. Just in time, too as the Chinese New Year quickly approaches. Just like Christmas, the Chinese New Year occurs every year and there is no way around it. The only difference is, the Chinese New Year can slow business down more than other holidays can and it's important for importers to be prepared! Unlike a black swan event that comes as a surprise, the annual holiday provides companies with a runway every year to prepare their businesses accordingly. Accelerated by the pandemic, the adoption of supply chain visibility has become an invaluable supply chain management technology tool to manage and navigate all disruptions, both predictable and unpredictable. So when one of the worlds largest exporters shuts down for nearly one month, supply chains will need both visibility and a conclusive outlook to inform operations before, during, and after the Chinese holiday.
During the Chinese New Year, Chinese suppliers begin to slow down and stop operations one or two weeks before New Years Day (February 1st, 2022). Production does not pick up the following day either. Typically, it is halted for an additional two or three weeks after New Years day. During this time, operations are offline and unreachable. So, where does that leave your supply chain and how do you prepare? There are two very important things to consider this time of year to ensure operations remain profitable and the supply chain keeps on moving on. Forecast
This time of year requires companies to rely on internal transparency to know and plan for how much stock you will need to last before, during and after the Chinese holiday. Proactive planning among all stakeholders is important to measure demand and equip the supply chain with the resources it needs prior to the supplier's shut down. Optimize inventory and map out projected demand accordingly with protected supply. Many companies who use good forecasting share it with their Chinese suppliers early on which puts them in a good position to mitigate risk and improve supplier relationships. The earlier your company shares your demand forecast with your supplier the better. You can imagine the pressure Chinese suppliers are under in lieu of closing up shop for nearly one month. It's important to be mindful of this stressful time. Forecasts and pre-orders eliminate last minute headaches that could potentially cause harm to the supplier relationship. Here is a tip: do not wait til the last minute to place your order ahead of the Chinese New Year! Unpreparedness does not guarantee an on time order nor does it guarantee product quality due to the rushed order placement.
Relationships Supplier relationships are always important and the more committed you are to improving them, the more benefits you will reap, especially during the Chinese New Year. Strong relationships with Chinese suppliers and manufacturers enable collaboration and ensure order priority.
Bear in mind during this time of year factories are in over drive, producing in high gear, rushing products out the door. The better the relationship you have with your supplier, the more peace of mind you will have knowing that your company is taken care of. With the looming holiday amidst the current supply chain constraints, it's very important for businesses to proactively minimize the future supply chain disruptions and plan for the factory down time by developing accurate forecasts. Working closely with suppliers for pre-ordering and securing stock and freight capacity ahead of time is necessary. Don't forget to factor in the current difficulty of delivery of goods into the equation. Consider extra time for a safety net to ensure your supply chain is covered and secure.