As we anticipate the arrival of Chinese New Year (CNY) in 2024, it’s essential to prepare for the significant disruptions it brings. Much like Thanksgiving or Christmas in the Western world, CNY is among the most revered festivals globally.
For merchants sourcing from China, CNY signifies more than just festivity—it entails potential disruptions in supply chains. Chinese manufacturers typically shut down operations for two to four weeks, posing challenges for unprepared businesses.
But fear not, we’re here to guide you through the timeline of CNY and equip you with the best inventory management strategies to navigate this period effectively.
Timeline for Chinese New Year 2024
The date of CNY varies each year based on the lunar calendar, typically falling between January 21 and February 20. In 2024, it coincides with the second new moon after the winter solstice, landing on January 31—marking the Year of the Dragon.
National holidays for Chinese New Year commence on the eve of CNY and extend for seven days. However, many workers take additional time off in the preceding week. Depending on their employer and region, production may not resume until two to three weeks post-CNY.
This hiatus can result in nearly a month of disrupted production. To mitigate its impact and maintain optimal inventory levels during and after the holiday, careful planning and good communication are essential.
Consider the following strategies.
1. Talk to your suppliers
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’.
2. 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.
3. 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? Find out how Inventory Planner can help with a free demo.