Chinese New Year 2016

February 7th – February 15th

Posted by Ian Jones

Managing Director of Warrant Group

  • T: 0151 955 0627
Mon 01st, Feb

Chinese New Year poses one of the biggest annual challenges you'll face when working in the logistics sector.

China is essentially closed for business over this holiday period, meaning that planning ahead for stock surpluses and post-holiday lag as workers drip back to work is absolutely vital.

Great communication and forward planning can save you from possible complications during this time. Collaborating closely with clients and planning intimately with suppliers, carriers, airlines and sub-contractors will eliminate Supply Chain interruption.

Supply Chain Managers in 2016 need to plan for no production or shipments leaving China from late January and for reduced output during the first half of March 2016.

It is therefore prudent to analyse the key ingredients required for businesses wishing to maintain Supply Chain integrity during Chinese New Year.

Forecasting

Forecasting can be quite complex as it is dependent upon supplier numbers, geographical location and SKU data.

Factories will enter overdrive mode prior to Chinese New Year to meet delivery obligations prior to closing. Supply Chain Managers must be very specific on:

  • Production deadlines
  • Latest ship dates

Service providers likewise must communicate their client forecasts to carriers so as to avoid booking refusals and container availability bottlenecks. It is critical to liaise with suppliers to confirm exact numbers on an on-going basis at least two weeks prior to vessel departure. 

Increase Inventory

As a rule of thumb, receipts scheduled for March require 50% of that volume "shifting" to arrive in January and the remaining 50% for February's intake.

The net effect on stock migration sees January and February taking an additional 50% increase to counteract a significant drawdown reduction in March.

Warehouse Planning

Warehouse capacity and manpower planning for this seasonal fluctuation is essential.

Creating additional space where spare capacity is at a premium can be managed effectively by having a laser focus approach to creating more room by executing good housekeeping rules.

Manpower planning remains a conundrum between goods in, housekeeping, picking and loading. Tailoring receipts and dispatch activity, invariably by tweaking resource allocation, minimises any short-term disruption.

Changing Sourcing Strategy

Dual sourcing is a common solution. In other words instead of buying additional inventory look to other possible suppliers from different geographical locations, that aren't affected by the Chinese New Year closures, to bridge the gap to maintain a consistent and manageable product flow. 

Supply Chain Savvy

Incentivising slow moving stock and offering promotions can clearly help both revenue streams and warehouse space.

In summary the more time you take to understand the complexity of Chinese New Year, the better equipped you will be to mitigate its effect on your company's operations. 

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