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How to Save $$$$ by Making Rational Procurement in face of CNY?

The world’s largest annual human migration is around the corner.

“Well, sounds interesting. Where and when?” You might ask.


Those engaged on constant business activities in China are probably smirking now. Yes, they know the answer.


It takes place in China and it falls on Lunar Chinese New Year.Millions of Chinese workers will be heading to their hometowns for the holidays.


One thing is for certain---Business activities in China will be paralyzed throughout February and workers cannot be back to work until after Lantern Festival (Feb 19) & capacity cannot be fully vitalized until after the end of Feb (Feb 28).


The impact is far-reaching:

Capacity reduced,

Raw materials falling short,

Commodity price soaring,

Leading time postponed,

Shipping space fully booked

...


In one word, your supply chain will be disrupted, costing you extra on purchasing with eroded margins, and worse, driving your customers straight to the door of a competitor.


“So there is no doubts that we can do?

“Well. YES and NO.”


No, if you continue with a slow move and operate your purchasing on a very compressed calendar.


“And, YES, if you start to take precautions immediately and put forward your sourcing plan on a predictable timeline.” Move what you need to order in Feb and late of Jan to Dec and early Jan.


Some customers also ask,I need to wait for a while and to see if there is any price drop?

Are they wrong or right?You may have an idea after see below:

1. All orders move ahead and focus on Dec and Early Jan,the capacity and ETD are under big pressure,do you think the price will drop?

2. The appreciation of RMB,the exchange rate drop will lead to price increasing in USD.

3. The production and shipping will break off for 1 month!




Since each year around CNY, workers are in a rush for heading their hometowns, almost all the raw materials factories in a rush for production, thus products’ quality will be more or less affected, let alone the cost rising. Therefore in order to ensure the quality&availability as well as secure better pricing, you’d better plan earlier and move what you need to order in Feb and late of Jan to Dec and early Jan no matter where you will place the order. All in all, the earlier, the better for you!


As an old saying goes, “save for a rainy day”!

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