Approximately three months later, on Feb 16, 2018, it’s coming to another Chinese New Year, Year of Dog. New year always brings pictures of joy, peace, prosperity, and very likely, the nightmare to you, when you suppliers call you for extension of lead-time. It is not the first time to have a Chinese New Year, why do they always have problem with lead-time?
Things can be complicated but the root is very simple, labor shortage. Unlike a typical New Year which can last for few days, a Chinese New Year hangover can last for several weeks.
- Worker: most workers in a factory are not local and their hometowns can be as far as 2000KM away. They will not go back frequently, but more like every year or even every other year. New Year is the most important holiday in China for family reunion and celebration, so they will spend quite some time with family rather than few days.
- Production: due to the industry requirements, most plant workers cannot shutdown the plant on Saturday and Sunday, and then come back to work from Monday to Friday. Some positions require man on spot 24×7. Taking die-casting for example, deburring, machining and packing can be only with 2 shifts, but for tools and die-casting process, they have to be on around the clock. Die-casting tooling could take 1-2 months based on the complexity of the design, taking 1 shift off means 30% more lead-time and customers won’t be happy about it. As for die-casting, it can take hours to heat up the tool to prepare itself for pressing. When it cools down, you have to spend another few hours to warm it up and you do not have to wait for few hours every day. Workers on these positions can take max 1 day off every week.
- Transportation: despite the rapid growth of airports and high-speed trains, transportation for workers aren’t always easy. Airports and trains covers only to medium and big cities while most workers are from rural areas where there would be extra several hours or even whole day. They could spend 1-2 days on the road before they are really home, and another 1-2 days getting back, so they require longer time to be truly at home.
- Celebration: Celebrations traditionally starts from New Year eve to the Latern Festival on the 15th day of the first lunar calendar month. That means they will be at home from Feb 15 to Mar 2. Not many will sacrifice this holiday.
Does above FACTS means you can only cross your fingers and wish your suppliers would not bring you the nightmare: I need few more days?
You can follow the steps below to minimize the possibilities of a late shipment:
- Plan: You need a thorough plan from the beginning of the year, not when it comes to an end. Every detail need to be taken into consideration so that your plan is good. It may not be perfect, but it will bring you a full picture.
- Customer analysis: every product has a pattern. You need to look into your sales, analyze it and anticipate it. It is always very dangerous to place an order when the inventory is hitting the red line. It may be good to cash flow, but if it means order delay, customers are not going to be happy.
- Supply Chain Management: a strong supply chain management team is very helpful to get you out of problems. They can keep your inventory to be minimum yet you won’t find your warehouse is empty when customers ask for a shipment.
- Quality: good inventory is not good enough. To avoid fines for late shipment, suppliers may mix some defectives in the shipment and that will be extremely dangerous, especially they are used in some critical areas, like electrics, chemical related, EX required, personal safety, etc.
- Relationship: in China, having a good relationship with suppliers are very important. Suppliers will have better cooperation, short lead-time and extra attention if you have a good tie with them.
Do you find it’s actually difficult? You are right, it’s not easy at all! That is why MES is here to help customers like you. We have a strong team in China and engineers on site at every plant. Things will get very easy and comfortable to you, if you have a local team handling business for you.