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Is Your Supply Chain Prepared for the Chinese New Year?

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Chinese New Year Lanterns

It’s the most important question you should be asking as soon as the Western holiday season ends. The Chinese New Year, beginning this year on February 19, signals a 3-4 week shut down of Chinese commerce, as the majority of the nation’s workforce returns home to celebrate the hallowed traditions of China’s biggest holiday with family. Though some manufacturing operations have returned to Europe and America in recent years, China is still the dominant force in manufacturing and remains the #1 emerging market in the world.

Understanding what will happen before, during and after the Chinese New Year can give you a leg up on competitors and prevent future delays and disasters.

Plan Ahead

The Chinese New Year manufacturing exodus begins at least one week before the official start to the 3-week holiday. Create surplus and be prepared for shipping delays on expected orders during the holiday.

Post-Holiday Lag

More than one-third of migrant workers will not return, adding more stress to Chinese manufacturers. Understand the amount of demand and available product in your warehouses and DCs and manage accordingly.

Supply Chain Savvy

If you’re unable to store needed materials and goods, want to avoid the delays caused by the Chinese New Year, or believe you are already at capacity, the holiday is a good time to liquidate older goods at inexpensive prices. It may quell demand for newer items and alleviate pressure from your Chinese sources.

Western demand for goods and parts will be bottlenecked without proper foresight and preparation. Though many businesses have risen to ensure a steady supply of desired goods are on hand at warehouses and DCs, there are those that are caught off guard by China’s nationwide shutdown. And as more workers decide to stay home and not return after the holidays, creating a surplus is more crucial to meeting demand because Chinese factories are slowed in the weeks after the holiday is over. Thankfully, January and February are slower consumer periods in much of North America and Europe, so savvy companies use the Chinese New Year as chance to offer older inventory at inexpensive prices to avoid overstocking and alleviate the bottleneck of demand that occurs after the Chinese New Year.

Alleviating the stress of the Chinese New Year on your supply chain can be a benefit rather than a detriment if you use a little planning and business acumen. Knowing what is to come is half the battle, and being prepared is the best way to distinguish your supply chain.

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