You’re probably aware of Chinese New Year, often abbreviated as CNY, if you export products from China. Despite the fact that CNY is only a week-long, many industries and companies close approximately ten days before the holiday to allow workers to return home.
It’s possible that your supply chain has already faced the CNY. If so, you’re aware that when it concerns planning for manufacturing and distribution disruptions, Chinese New Year is at a level of its own. If this is your first time dealing with the Chinese New Year, let us assist you in keeping your supply chain on track and reducing any negative consequences. To help you plan for Chinese New Year and avoid supply chain delays, we’ve put together a list of ten essential tips:
Be Aware Of What Takes Place during the Chinese New Year (CNY)
You will prepare better once you know that China closes down practically everything for the Chinese New Year and that nothing will leave China at that period. Orders must be shipped before the Chinese New Year, and remember to plan for inventory to last them throughout the holiday. CNY cannot be avoided; it occurs every year, and it usually requires planning and preparation to minimize disruption.
Plan Ahead Of Time
It’s vital to start preparing for China’s major holiday. When you plan early, you get a more effective supply chain. Assess your previous sales history, create an estimate and work with your suppliers to effectively plan for the holiday.
Establish a Trustworthy Relationship with Your Manufacturer or Supplier
Developing a great relationship with your Chinese supplier or manufacturing partner from the beginning is vital. When it concerns order fulfillment and shipment before the CNY, Chinese factories are under a great deal of pressure, and if your brand is the newest at their factories, your products will likely be the last thing on their list. If you’re collaborating with a manufacturer, ensure they’ve handled the CNY rush before.
Make a Forecast That You Can Use Before and After the Holiday
Your store will have enough stock on hand to last you through CNY and after if you can estimate how many products you’ll need for the first three to four months of the following year.
Stock Up On Supplies Ahead Of Time
If you already know how much product you’ll need in the first half of next year, you can start ordering even more now to compensate for any orders that won’t arrive until March of the following year. To manage inventory and avoid over-ordering merchandise, you’ll need an accurate estimate and historical sales data.
Deliver Shipments To The Port At Least Ten Days Before The Ship’s Departure Date
If you’re in charge of your shipping from China to your stores or customer’s doorstep, arrange to ship with steamship lines long before the Chinese New Year. Steamship lines are usually known for exploiting the Chinese New Year period, when there is a surplus of cargo waiting to transit the port before everything closes down.
Implement Vendor-Managed Inventory
Vendor-Managed Inventory (VMI) is a business strategy in which a vendor and a customer agree on an order quantity for a product. The vendor will help the customer save money by ensuring that the required level of inventory is retained by ordering more effectively and making the right during seasonal demand and market fluctuations.
Get a Backup Supplier
Consider collaborating with a manufacturer that has operations outside of China. It will help you diversify your supply chain, plus it’s also logical that your manufacturer may be able to find a backup provider in the event of a shortage over the Chinese holiday. Materials could, for instance, be bought in China and delivered to Vietnam for processing and packaging. Note that Vietnam celebrates its Lunar New Year holiday on the same day as Chinese New Year, known as Tet. On the other hand, Tet usually lasts no more than a week.
Establish a Quality Management System
You wouldn’t want a shipment of items with quality concerns to arrive just before the Chinese New Year. When a factory is running at full speed and trying to push products out the door and meet up with orders, quality can sometimes come second; this is yet another instance where having a reliable source or manufacturer can be quite beneficial. Creating a quality management and inspection system in place will greatly minimize the chances of a shipment being delayed because of quality concerns or delivering defective items to a customer.
Make Arrangements for After the Chinese New Year
You should not only plan ahead of time for the holiday but also thereafter. If there is a labor shortage, it may take weeks, and even months, for the factory to return to the usual production level as new employees are hired. Using the forecast and having an additional inventory available can help you get through until the factories are back up to full production capacity.
Understanding how the Chinese New Year holiday works is one aspect; another thing is to plan effectively to avoid any unfavorable consequences on your supply chain. We hope that the tips we’ve given above will help you plan accordingly and reduce the pressure that comes with the CNY.
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