China is a major player in the global economy. There should be no doubt of that. One thing that some businesses don’t recognize is how much influence China has. When they take days off for holidays, it can be felt around the world with reduced shipments and delayed shipping times. If you haven’t prepared for the Chinese New Year (also known as CNY) in 2022, now is your time to start. You will be impacted by CNY in 2022, but it is your choice how to deal with it. If you want to be prepared, follow these ideas to reduce the CNY impact on your business operations:
Look at the Total Time for the Chinese New Year
The 2022 Chinese New Year will start on February 1, 2022, and officially last one week. What many don’t realize is that factories and businesses typically shut down about 10 days prior to the official CNY start to allow over 80 million workers time to travel back to visit their families. There is also a delay in employees returning to work after the CNY ends, which can also take up to a week. That means Chinese businesses can be down for up to three weeks for the Chinese New Year come February 2022. With the current snarl of container ships at ports around the world, adding another 3 weeks of delays may just cripple some businesses for new components and products. You will need to look at the total time Chinese businesses will be shut down and plan ahead.
Forecast Ahead for Mandatory Downtime
Many businesses offer vacation or paid time off (PTO) for employees to take throughout the year, but rarely do they completely shut down the whole business for every employee to be off at the same time. Chinese New Year does just that, which is hard to imagine. One way to avoid the CNY delays is to open a dialogue with your Chinese suppliers on how they will prepare for the time off. Most businesses and suppliers will have a rush of orders from foreign partners to account for their time away. If you haven’t ordered ahead for products, or haven’t thought about it yet, now is the time to start the discussion.
Typically your business will have a forecast of components and products needed for a time period. That could be weeks, months, or by fiscal quarters. To account for the Chinese New Year, you may need to change your forecast and delivery schedule. Consider what you expect to need for the first four calendar months of 2022 and adjust your delivery timing. You may need to have a percentage of the deliveries for March brought in late January just before the February shutdown. The remaining deliveries can be shipped from China just before CNY, which should arrive in February while your Chinese partners are taking time off.
Adjust Your On-Hand Inventory Immediately
You know the CNY shutdown is looming, and you may need to start adjusting your on-hand inventory immediately. Why wait until the deadline to start planning? You may want to start increasing your orders now if you have the capacity to store more inventory at your business. It may also require leasing additional space to store more inventory, but that could be offset with the guarantee that you will have components and products available next year when crunch time comes.
If you are planning to continue to ship products and components from China until the CNY deadline, be sure to get them to port no later than ten days prior to the deadline. It will be a rush at the port to get containers loaded and off to foreign partners, and it’s not uncommon for later deliveries to miss the boat.
Take Advantage of the Global Supply Chain
It may seem like a great idea to put your faith in one location to ensure quality and delivery, but that can also lead to trouble. It may be a better option to use partners that have multiple locations around the globe to back each other up when shutdowns like CNY arise. It’s common for partners to have duplicate sourcing in different countries that can handle fluctuating volume throughout the year. China may have a larger percentage of the business, but some can be directed to another source when holidays come and go.
If you can take advantage of multiple sites, you also need to have a solid quality management plan in place to ensure consistent products and components are delivered from each location. That may include increased inspection around holidays to ensure your incoming deliveries weren’t rushed out the door with missed steps or operations.
This may also be a good time to discuss shifting inventory management to a vendor-managed system instead of keeping everything in your location. Many businesses shift the inventory management to a partner to handle the volume adjustments rather than account for holidays and shutdowns from a global supply chain. If you want a consistent delivery schedule without needing to focus on which countries celebrate what holidays, a VMI (vendor-managed inventory) partner may be a better solution.
Plan for a Reduced Returning Workforce
We are in a workforce crunch in the United States with many leaving their current jobs for various reasons. Chinese businesses aren’t immune to a similar reduction in workforce, especially around major holidays. Employees go on holiday and don’t come back. Adjusting your forecast ahead of the holiday and increasing your on-hand inventory may offset the reduced workforce available at your partner locations. It could take weeks to return to full capacity, and you need to be prepared for that volume adjustment.
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Final Thoughts
Being well prepared for the Chinese New Year is a multi-step process that may take years to fully understand. Volume adjustments from sales and distribution history may only paint a small picture of what really happens around major holidays in foreign countries. It’s never too early to start planning ahead. The Chinese New Year is the most talked about holiday, but they also have more shutdown days throughout the year that will affect your business. SEA-LECT Plastics has mitigated the risks of the Chinese New Year time and time again. We have an elite staff that can manage inventory, specialize designs for part assembly, and mitigate risks to keep your business on track. We are in the top ranking for turn-key manufacturers that can offer industry-specific design options, material selection for competitive cost and performance, and turn-key assembly options to produce it in-house in Everett, Washington. If you have a new idea or need help to navigate the global supply chain, call us (425) 339-0288 or email us at mattp@sealectplastics.mystagingwebsite.com. We can offer you advice on the best technology to use, the best materials to meet your product demands, and how to navigate through each development stage with ease.
Matthias Poischbeg was born and raised in Hamburg, Germany. Matt moved to Everett, Wash., after finishing his bachelor’s degree in business in 1995 to work for Sea-Dog Corporation, a manufacturer, and distributor of marine and rigging hardware established in 1923.
In 1999, Matt took over the reins at Sea-Lect Plastics Corporation, a sister company of Sea-Dog and a manufacturer of plastic injection molded products with an in-house tool & die shop. Matthias Poischbeg is also a contributor to Grit Daily.
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[…] in global business. Just when you thought things would lighten up and start to flow again, the Chinese New Year is just around the corner. The 2022 Chinese New Year (CNY) will start on February 1, 2022, and […]