How to Minimize Disruption and Avoid Losing Revenue During Chinese New Year

The Chinese New Year (CNY) is fast approaching. This is one of the most celebrated festivals on the planet, on a par with Thanksgiving or Christmas in western countries.

But whether you celebrate it or not, CNY means one thing for every merchant that orders from China: disruption. Many Chinese manufacturers will completely shut down for between two and four weeks, wreaking havoc for merchants that aren’t well prepared.

But before you go into panic mode, we’re going to walk you through the timeline of CNY and share the best inventory planning practices to ensure you’ll have enough stock to meet demand.

Timeline of 2023 CNY

The date of the CNY changes based on the lunar cycle, and can occur any day between January 21 and February 20. It is typically the second new moon of the winter solstice, which falls on January 22 in 2023 – which is also the year of the rabbit.

Chinese New Year national holidays usually start the day before CNY and last for 7 days in total. However, many workers will take the week before the New Year off and depending on the supplier they work for and the part of the country they are located in, they will not return to the production line until two or three weeks after the CNY.

That can mean almost an entire month of production is lost. So what can you do to ensure you maintain the optimum stock levels during the holiday and beyond?

Planning is key

Just as with the holiday season in November and December, careful planning and good communication are essential to avoid stockouts and overstock after the holiday season. This means:

1. Talk to your suppliers ASAP.
   Your liaison with your supplier is your first line of defense when planning for CNY. Here is a list of questions to ask them before businesses close in China for CNY:

• How long will you be closed? Each supplier will be closed for different lengths of time. Carefully note which suppliers will be closed for up to four weeks, and plan accordingly.
• How much notice do you need for orders? Ask when you can place your last orders. Don’t expect many orders to be filled in January. Any last-minute orders you place after Christmas or in January will not be filled until February or, more likely, March. Keep in mind that your suppliers fill orders for other vendors, so this is really a crunch time for everybody.
• When do you expect production to pick back up? It is helpful to know when production will start, when back orders will be filled, and when they expect to be back at full production. Ask if you can reserve extra manufacturing time to avoid stockouts. This will make for better planning on your end, even if there are additional costs involved.
• Will staff be on hand to answer questions if I need help? While production workers will certainly be gone for a minimum of three weeks, can you work with the sales, engineering, or administrative branches of the company? They are less likely to be gone for the entire duration of the holiday. Will they be answering communication at all during the holiday? If so, when?
• Do you have stock on hand in case of emergencies? Even the best laid plans can go awry, no matter how carefully you plan. What then? If you have a product that is particularly in demand, your supplier may have inventory they can ship via freight or by air should an emergency arise.
• How long will shipping take? Much of the transportation network will also be shut down at CNY. Expect a backlog in shipping right after the holiday. Can your liaison tell you how long it will take to ship stock after CNY? Can they give you a timeline of when they expect shipping to resume normally?
• Will there be a backlog at customs? Expect bottlenecks on both sides of the ocean, especially items leaving China. While it may be difficult to predict exactly how long it will take for your inventory to clear customs in China, your supplier liaison will have the best time estimate available to you. Use what they say to adjust your ‘days of stock’.

1. Update the days of stock in your demand forecasting model.
   
   Days of stock is the number of days you want your inventory to be in stock. It’s a crucial factor in demand forecasting to avoid stockouts and overstock. It’s crucial to make sure you add the CNY holiday closure into your days of stock. For example, if you normally have 14 days of stock of a particular item and you know your manufacturer shuts down for 30 days, increase you days of stock to 30 for the four weeks they are closed, because you cannot order during that time.
2. Don’t forget shipping times.
   
   After CNY, items can be held up on either side of the ocean so you must factor in extended shipping times when forecasting. Using the same example as above, vendors should consider carrying 30 days of stock plus 7 days of freight for a total of 37 days of stock. You can go back to regular stock levels after CNY, but check with your manufacturer to see if their lead time is increasing to cope with a backlog.

Want to prepare for CNY the easy way? Get a free demo of Inventory Planner today.

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