How can you outwit the Chinese dragon? A lesson in managing supplier closures

Every year, China witnesses one of the largest human migrations in the world, as the nation’s workforce down tools and return to their home town’s to enjoy the Chinese New Year celebrations. Factories across the country close shop for up to 40 days, meanwhile businesses across the rest of the world face a huge amount of supply chain disruption. Given the level of volatility during this time, what can you do to safeguard your operations before, during and after the factory closures?

In this article, inventory expert, Mario Kwok, explores how organisations can safeguard their operations before, during and after the Chinese New Year period.

With extensive lead times of up to several months, importing goods from China can be challenging at the best of times. However, when you consider that you may be left in the dark for over a month during the holiday period and even then, production may still be constrained for a further few weeks until suppliers catch up with back orders, it is vital that steps are taken to minimise the disruption during this time. Failure to do so could result in costly stock outs, missed opportunities and disappointed customers.

While the Chinese New Year holiday can have a major impact on global supply chains, this is not the only scheduled disruption that businesses should worry about. Throughout the year, there a range of events such as Christmas or even the extended summer holiday taken by some Southern European nations that may result in supplier closures. Consequently, these must also be planned for well in advance.

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Explore how overcoming the following factors can help prepare your business for supplier closures:

Harness internal collaboration to identify and prioritise inventory requirements

Utilise scenario planning to assess the financial impact of purchasing decision making

Establish more collaborative relationships with suppliers

Execute orders to guarantee stock availability

Maintain close control of inventory costs

 

 

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