Chinese New Year (CNY) – The most important holiday that impacts businesses’ logistics on a global scale quickly approaches on calendars everywhere.
E-commerce businesses that manufacture products from China will face a considerable logistical challenge during this time of year. One of the world’s largest exporters is down for almost a month? What do you need to be aware of? How to keep your supply chain running smoothly? What is its impact on logistics?
Here are some keys for preparation and planning that will help you effectively manage any challenges arising from the Chinese/Lunar New Year (CNY) 2022.
The Chinese New Year Holiday will start on January 31, 2022, and ends on February 6, 2022. Traditionally, Chinese Lunar New Year activities have begun as early as three weeks before Chinese New Year’s Eve. While the festival comes to a close, it often takes time to return to normal again. So it is officially a weeklong holiday that can last up to 25 days.
Usually, many factories have a more extended holiday and are expected to stop their operations until March. One or two weeks before the holiday, factories will increase production. This results in a surge in freight.
The effect of COVID-19 and other logistics challenges such as raw material shortages can have unexpected consequences across the supply chain. So let well prepare for this season by keeping your business in stock of inventory.
Influence On International Businesses
The effects of the Chinese/Lunar New Year on business began long before New Year’s Eve. When most of the global e-commerce businesses rely on manufacturers in China or the other countries in Asia to celebrate this holiday, we need to be aware of:
When factories are closed ( at least for two weeks ), you won’t be able to order or even contact Chinese manufacturers. Therefore, businesses should ensure that they have enough inventory for this period in advance.
Remember other countries that celebrate Chinese New Year in Asia like Vietnam, Korea, Japan. The month before Lunar New Year is a golden shopping time for consumables, gifts, and entertainment products.
Production before the Chinese New Year is often rushed to fill the time gap and meet the increased demand of distributors. In addition, the rate of employees leaving when factories reopen after the holiday is very high, so there is a possibility that the quality of products in the production stage will go down.
Similar to other industries, few logistics also stop at least 3-5 days during Chinese New Year. Some shipping companies may face overloads due to a spike in delivery demand before the holiday, leading to price increases or delayed orders.
Facts That We Have to Believe
Many employers don’t have concrete answers for when or how many employees will return after the holiday. In some cases, it might take two or three weeks following the holiday for timeliness and efficiency to return to usual operational standards.
Many ocean freight carriers will cancel sailings because of the increased congestion, which exacerbates the existing problem of shipment delays and can prove problematic for shippers who have serious deadlines around this time of year.
The later your orders are submitted, your order will land further back in the production queue. As companies face bottlenecks due to this holiday, one month’s worth of orders gets tackled later, and the first orders that were received will be the first orders processed. Many Chinese companies will process orders from preferred partners before handling any others.
How To Prepare
Knowing that the Chinese New Year is coming, here are some suggestions we have for you to keep your business running smoothly as usual:
Plan ahead with the adjustment of stock inventory
Take a look at the sales during the same period last year, determine your business inventory needs in the first 2 to 3 months of 2022. All you need to do is organize your warehouse for the large inventory ahead for CNY. Here are some tips for you to avoid the dreaded delays that might happen:
– With the goods received in February, place your orders, ship 50% of them to your warehouse in late December, and receive the remaining 50% in January.
– Make sure your most popular inventory and all the high-demand items are available in the warehouse for at least two months.
– Aware of seasonal stock goods like Valentines, Mardi Gras, and International Woman’s Day.
This year Lunar New Year (CNY) is one month earlier, so make sure to keep inventory manageable. The seasonal goods have to be arrived in time for their associated holiday and ensure it won’t be overstock. Start placing an additional reserve order now to address future order shortages. It might take a few weeks for manufacturers to work out the kinks and get back up to speed after the holiday, so over-prepared for seasonal items, or it may leave you comes to worst situations.
Build close relationships and manage well the communication with suppliers
Manufacturing partners have years of experience building trusted supplier networks as NextSmartShip and can help ensure your products are shipped on time before the holiday season.
It is precious to establish a strong relationship with a supplier or manufacturing partner early on because they are the only source that can tell you clearly what delays may occur. Both parties will have enough time to deal with unexpected problems to overcome those obstacles effectively.
Find an alternative
Don’t put all your eggs in one basket. You should consider working with more than just one Chinese manufacturer or supplier. Having multiple sources of supply helps you diversify your supply chain and be proactive in the event your supplier is not qualified to fulfill an order.
Choosing your supplier list will make it easy to compare prices, quality, shipping, and service. Your business experience will be more prosperous, and you will be able to choose for yourself quality supplies.
Goods quality management
Before CNY, manufacturers were under tremendous pressure on the number of orders. They have to work with intensity and rush to deliver products on time, which sometimes cannot meet all quality requirements. Having a thorough inspection and quality management plan in place will significantly reduce the risk of quality problems or, worse, shipping defective goods to your customers.
After CNY Rough Plan
Having a sales plan after CNY ends is equally essential to the previous method. The end of the Lunar New Year holiday is also when factories face a shortage of human resources. Sometimes it takes several months for factories to return to regular production rates. Having stock in stock is essential for your business to stay stable until the factory is fully operational again.
With many businesses that rely on suppliers in China, Chinese New Year is always challenging. Find and believe in a reliable partner like NextSmartShip we will help you out with the proper preparatory steps. Hope this will help ease your business stress during CNY ahead, and good luck!