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Chinese New Year 2018 - What it means to supply chains

Posted on 06 Feb 2018

Chinese New Year 2018 - What it means to supply chains

Chinese New Year poses one of the biggest annual challenges to the logistics sector. China is essentially closed for business over this holiday period which means that planning ahead for stock surpluses and post-holiday lag is vital. Warrant Group's Head of Supply Chain, Andy Simpson explains.

Supply chain managers 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.


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 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 per cent of that volume "shifting" to arrive in January and the remaining 50 per cent for February's intake.
The net effect on stock migration sees January and February taking an additional 50 per cent 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 by tweaking resource allocation, invariably 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.

For more advice and information, contact Andy Simpson on andy.simpson@warrant-group.com


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