Why You Must Plan Early for Chinese New Year

If you're a regular blog reader you might have read the title and said, "It's TOO EARLY to start reading about planning for Chinese New Year!" And you're sort of right.

It's true you don't have to get your orders in for Chinese New Year (CNY). That would be overkill. But it's not too early to look at the calendar and strategize about how to avoid hiccups in your product flow as a result of the holiday.

          Photo by Annie Spratt

For those readers who haven't experienced the disruption caused by Chinese New Year, this post will serve as primer on the topic. And we've got some to-do items, straight from a member of our Operations team.

First lets look at a few CNY facts:

• It's an annual celebration of the New Year on the lunar calendar.
• The date changes from year to year.
• It is a massive holiday in China and other places in Asia.
• Government and business shuts down for up to two weeks as workers head to and from their family homes.
• It is the largest annual migration of human beings on the planet. Seriously. 
• The holiday connects to the Chinese zodiac, for example, 2020 is the Year of the Rat, while 2021 will be the Year of the Ox. 

It's a great family holiday, brimming with cultural significance. There’s nothing to compare it to in the U.S., in terms of the business impact. Think of the masses of people traveling hundreds of miles to and from their homes. That takes time.

Combine that with the phenomenon of workers who enjoy being home so much that they choose not to return to their jobs. Can you imagine being the plant manager who learns that 40 percent of his workers aren't coming back? Production will be slow to ramp up until those workers are replaced. 

Likewise, vessels stop operating during CNY which means all the vessels right before and right after the holiday are packed to the brim. Crowded vessels on the China side mean crowded vessels on the domestic side of the journey. Once your vessel makes it to port, no matter how efficient it is, you can expect delays as containers are unloaded from ships and moved to trucks/rail. 

Whether factories, ports or other transportation methods, it takes time to get back to normal. You don’t shut the factory lights off for two weeks and get up to 100 percent, full speed the day you return. 

Okay. How should you prepare? Here's a quick checklist of things to consider now — before the early reminders we'll send in late August/early September, and certainly before the rush. 

Your Chinese New Year Checklist

• Mark your calendar now!
  
  
• Start reviewing forecasts as early as possible. Look for trends and plan accordingly.
  
  
• Take advantage of any inventory program your contract manufacturer might offer or look at temporary storage solutions to hold additional inventory. This is especially true if your forecasts are erratic or unpredictable. [Will that cost you more $$? Yes, but compared to the cost of having to shut down production because you don’t have the product/part you need, or having to air freight product/parts, it’s small price to pay.]
  
  
• We tend toward the conservative side so we recommend that you add 30 days to the lead time for any order falling within the CNY time frame. This accounts for slowdowns in production/logistics/shipping.
  
  
• Get orders in as early as possible. Other customers will be planning for CNY, too.
  
  
• Take advantage of the experience and knowledge of your Customer Service Representative (CSR). These folks have done this before and they know what they’re doing. Ask them what they need from you and when they need it, then follow through.

Chinese New Year doesn't have to be something to dread. With a little education and solid planning, you can get through those weeks without missing a beat. 

Read more:

• 6 Tips for Creating a More Accurate Demand Forecast
• 3 Benefits of Using a Vendor-Managed Inventory (VMI) Program