In October, the People’s Republic of China celebrates its annual national holiday, known as Golden Week. Similar to Chinese New Year, the entire country is on holiday, resulting in business closures and a potential 14-day halt in production and transportation of manufactured goods stated Forbes.
According to the Bureau of Economic Analysis, imports from China to the U.S. were worth $563 billion last year, the disruption of China’s Golden Week on the global supply chain is nothing to cheer about.
Impact of Golden Week
As the Golden Week approaches, manufacturers’ production capacities are also running at full speed in order to fulfill orders in time for the next big sales events such as Black Friday, Cyber Monday or the Christmas shopping season and to be able to ship them from China before the holidays.
“Air freight will become more important this year as the reopening of China after the COVID pandemic, tourism is on the rise and so is the demand for air travel,” said Uwe Haizmann, partner at EAC International Consulting. “However, this capacity is still low here, so air freight capacity should also be planned well in advance.”
Planning Ahead
Logistics and transportation
To ensure customer satisfaction during the busy period leading up to Golden Week, it is critical to plan transportation capacity and work with reliable partners to avoid potential delays and bottlenecks in logistics services.
For example, securing transportation capacity for late September should begin as early as late August or early September.
In general, it is advisable to book ocean freight three to four weeks in advance and air freight at least one week in advance. Real-time data can help logistics accurately estimate arrival time and forecast demand, facilitating accurate planning of supply and demand, especially during peak season.
Inventory management
Companies should adopt inventory optimization strategies to position the right inventory of the right goods in the supply chain to keep products closer to actual demand, which requires, flexible and good warehousing and inventory management.
Companies are now building up security stock in the event there’s global supply chain disruption.
Building and maintaining the network
Networking and relationship-building are crucial in Chinese business practices. Collaborating with Chinese partners helps adapt swiftly to demand changes during Golden Weeks and Chinese New Year.
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Source: Forbes
