Throughout the year, there are a number of seasonal challenges that you have to plan for in order to ensure that you can keep your supply chain flowing smoothly. However, there are challenges you may not think to account for as you plan for potential supply chain delays, particularly if they are not common events. One of the most common is the Chinese New Year.
What is the Chinese New Year?
Chinese New Year is an incredibly important celebration in the Chinese culture. The Chinese New Year for 2023 will begin on Sunday, January 22: just weeks after businesses across the US ramp back up following their own holiday celebrations.
During the Chinese New Year, everything shuts down for a minimum of 7 days. Residents go to see family. Warehouses, manufacturing facilities, and shipping may all cease. As a result, there can be global shifts in availability and anticipated supply chain disruption. Some facilities will shut down for 10 days or more to allow their employees time to get home to be with family. As a result, little moves throughout China during those days.
The Chinese New Year Impact on the Supply Chain
The Chinese New Year may have a significant impact on several elements of the global supply chain. Since 2009, China has been the largest global exporter of goods. As a result, when the Chinese New Year hits, it can have a significant impact on businesses’ ability to get the goods and materials they need.
Delays
Delays are common during and around the Chinese New Year. Since so many things shut down, it may be more difficult to move goods or get raw materials than anticipated. Rush orders may be significantly more expensive.
In many cases, those delays may last until spring, due in part to the significant supply chain challenges faced around the world over the last couple of years.
Costs
With nothing coming out of China for days, and shipping slowed down much longer than that, costs may rise for many critical goods. Businesses that have the ready capital on hand may be able to overcome some of the delays and challenges but can expect to pay more as a result.
Shortages
In some cases, the Chinese New Year may lead to shortages of essential goods. When shipping bogs down, it can be much harder to get those essential items at all. In many cases, it will take longer than anticipated to get those items back in stock.
Preparing for the Chinese New Year
Preparing for the Chinese New Year is essential. Since you know that you can anticipate shipping and production delays during that time, and that those delays will occur on top of the supply chain challenges you may already be facing, it is essential that you plan to address those potential problems and ensure that your business comes through them smoothly.
Planning
Pay attention to your long-term demand and build a strategy that will allow you to have the right goods on hand. Make sure you have a plan in place to ensure that you have the right goods on hand for your customers when you need them. That may mean increasing your orders of some items leading up to the Chinese New Year.
Look at your available storage space and how much inventory you can realistically have on hand at a time. In some cases, you may not be able to increase your inventory significantly leading up to the Chinese New Year. In other cases, you may have the warehouse or storage space to increase your inventory and make sure that you have an adequate supply of critical items.
Diversity in Sourcing
Consider diversifying your sourcing to build in resilience. Chances are, you can get many of your materials and products from somewhere other than China. As a result, you’ll find yourself in a much better position to keep your goods and your supply chain flowing smoothly. By looking for a wider group of suppliers, you may also find that you can cut costs or prepare for unexpected delays in the future.
Prioritization
As you build your inventory and plan for potential delays around the Chinese New Year, make sure you take your top-priority goods into account. Ask yourself questions like:
- What are your biggest sellers during this time of the year?
- Are there specific items that are in lower demand at this time of the year, and which you could keep less inventory of during this time?
- What are the items that customers are most likely to need during this period?
- What items can you stock up on ahead of time?
- What are the items that would mean the biggest loss for your company if you don’t have them in stock?
Make sure you clearly understand your top priorities as you plan for the Chinese New Year. Having those priorities laid out ahead of time can make it easier to deal with potential challenges as they occur.
Shifting Inventory
If you have multiple locations for your business, shifting and rotating inventory may offer your best odds of ensuring that you can keep as many customers satisfied as possible. In some cases, you may have inventory at one location that isn’t moving, but a shortage of those same items at another location. In other cases, you may want to spread out inventory to keep customers as happy as possible.
Help From Supply Chain Planning Software
Your supply chain planning software can make a huge difference in your ability to manage potential challenges in inventory management, including shortages and delays brought about by the Chinese New Year.
Stock IQ can help forecast demand, keep track of your current inventory, and plan how you may need to move inventory around to address potential problems, all while helping to cut down on unnecessary expenses as much as possible.
Furthermore, it helps take delays like the Chinese New Year and other seasonal shifts in supply and demand into account, so that you can plan more easily.
Are you thinking ahead to the Chinese New Year? Contact us today to learn more about how we can help you navigate those potential challenges.
