Posted on 13 Dec, 2018 by Neil Sharp

supply-chain-disruption-chinese-new-year-blogChinese New Year, also known as CNY or the Spring Festival, is China's most revered and highly anticipated annual holiday and is observed by an estimated 1.4 billion people worldwide (or close to a quarter of the world's population).

The date of the festival varies from year to year depending on the lunar calendar, with the 2019 celebrations, marking the Year of the Pig, scheduled to begin on February 5th.

But as China eagerly anticipates a fortnight of festivities, electronics manufacturers who source their Printed Circuit Boards (PCBs) from China will be bracing themselves for some significant logistical challenges.  

What's the problem?

Chinese factory workers often work in coastal areas, far from their home provinces so CNY offers a rare opportunity for some precious family time.

While the official holiday only lasts for around 10 days (five working days, plus the weekends either side) suppliers typically wind down their operations one to weeks in advance of the holidays to allow plenty of time for workers to travel the often vast distances back to their inland villages. And most factories aren't back running at full capacity until at least a week after the holidays officially end.

It's also not uncommon for factories to resume production with as little as a third of their original workforce - with some workers simply never returning at all.

Uncertainty about staff levels after the holidays is a very real obstacle for Chinese factories if they're forced to replace or retrain workers after CNY. And it's one that can lead to potential quality issues for manufacturers. 

So what's the best way for UK electronics manufacturers to safeguard their supply chain in readiness for the inevitable global ripple-effect of CNY? 

Act now

To avoid any negative impact on deliveries or lead-times, the best tactic is to start planning early. And while there's no need to "panic buy" you'll definitely be wanting to think ahead when communicating with your PCB suppliers.

If you allow for a three-week stop on production, plus another two to three weeks of delay, then you'll be looking to place orders in late November or the first week of December in order to meet your pre-CNY requirements.

Getting your orders in before the factories close for the holidays will also allow time for any special tasks to be scheduled - whether that's the creation of specialist PCB tooling or the sourcing of specific raw materials. And ordering head will ensure production can quickly commence once the factory reopens.

Plan your shipping

Planning your shipping requirements is also going to be crucial. With large numbers of orders needing to be moved before CNY, the pricing of sea freight can reach its peak - so you'll want to get your orders in well in advance to avoid delays and keep your costs down.

Industry advice is that shipments need to be at the Chinese ports at least ten days prior to the start of the holidays and that they should be booked a minimum of two weeks in advance to guarantee a spot.

Bear in mind too that many ports don't resume shipping till a week after the holidays end, so you'll want to check with your freight forwarding company to avoid disruption.

Work with people you trust

If you outsource your electronics manufacturing services, and your EMS partner procures your PCBs on your behalf then you'll want to make sure they've got experience handling the demands of the Chinese New Year. Staying in close communication with your EMS provider and making them aware of future demands will be key. 

If you source directly from your Chinese suppliers then having a well-established relationship can ensure your goods taking priority when it comes to completion and shipping.

Opting not to put all your eggs in one basket can also provide some added reassurance. If you've taken the time to establish connections with UK suppliers then they may be able to plug any gaps in your supply chain.

But bear in mind that your UK contacts will also be experiencing a peak in demand leading up to (and during) the holiday period as they rally to fulfil these additional orders.

 

There's no doubt that the ripple effects of factory closures during Chinese New Year have the potential to create some pretty major headaches for UK electronics manufacturers. But by planning ahead and getting confirmation of your supplier's schedule well in advance, you can prevent delays to your PCB production and ensure your orders are dispatched without interruption.

 Supply Chain Excellence

Topics: Supply Chain

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About the Author

Neil Sharp
Neil Sharp
Previously holding sales, account management and customer service roles, Neil has over 20 years’ experience within the Electronics Manufacturing Services industry. Neil heads up the marketing departme...read more