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How Lunar New Year affect your business?

How Lunar New Year affect your business?

If you process any product from Vietnam, you are probably familiar with the Lunar New Year (LNY). Maybe your supply chain has even gone through LNY before. If so, you know that the Lunar New Year itself is a layer when preparation for production and shipping is interrupted. If this Lunar New Year is your first trip, let us help keep your supply chain on track while minimizing any negative effects.

Normally, offices and factories in Vietnam close for about three working weeks, allowing workers time to return home to spend holidays with their families.

What does Lunar New Year mean to you?

Maybe you’re halfway around the world wondering why you should mind and plan the biggest Vietnamese holiday of the year. Get your calendar and follow.

Although LNY officially lasted only a week, many factories and businesses stopped accepting new orders for 5-10 days so that LNY had time to produce and send workers back home. There is always a mad rush to get the product out of ports before the country closes. This can lead to increased freight costs and longer transit times if there is a delay at the port or a container is not loaded onto its intended vessel.

Don’t forget to calculate travel times back to the city. In general, a vacation can disrupt production and shipping schedules for up to three weeks or more. Interestingly, the LNY vacation is also seen as an important time for job transition and many workers do not return to work at all. This can lead to even longer production times as factories struggle to find new workers and boost production orders.

How to plan for the Lunar New Year

What can you do to keep your supply chain running when one of the world’s largest exporters has shut down for almost a month? We’ve come up with 10 tips for proactively planning the Lunar New Year to minimize any disruptions to your supply chain:

1. Understand what happens in LNY

Once you understand that Vietnam closes almost everything to LNY and nothing, absolutely nothing will come out of Vietnam during that time, the better you can plan. Your orders need to be delivered LNY ahead of time and don’t forget to plan the inventory needed to get you through the vacation. There’s no way to avoid LNY – it happens every year (albeit on different days) and it requires advanced preparation to minimize disruptions.

2. Develop a relationship of trust with your supplier or manufacturer

There is little more value than establishing a strong relationship with your supplier or manufacturing partner in Vietnam early on. If you are sourcing from Vietnam and are just starting to build your supplier network, it will be difficult to build that relationship in the months preceding LNY. There is great pressure on Vietnamese factories right before LNY and if your business is the newest account at the factory, then it is likely that your goods will be their last priority upon order completion and shipping before LNY. If you’re working with a manufacturing partner, make sure they have experience handling LNY crushing. Ask them what measures they have in place to help clients plan LNY. One of the advantages of working with manufacturing partners is that they often have years of experience building a reliable supplier network and can help ensure your product gets shipped on time during vacation. busy ceremony.

3. Generate predictions that help you get through LNY and more

If you can predict how much product you will need in the first 3 to 4 months of next year, you will have to ensure that your company has enough stock to sustain your operations through LNY. We created this simple rule to help solve the LNY delay.

Another big advantage of providing forecasts to your supplier or manufacturing partner is that the factory will be able to see your demand after LNY, so the factory can start hiring and training. workers sooner, even though they know that part of their staff will not return.

4. Increase your inventory first

The forecast you created for our final tip will also be helpful for this one. If you already know how much product you’ll need for the first season of next year, you can start ordering a bit more products now to deal with the lack of orders received by March of next year. keep in stock. Accurate forecasting and previous sales history will be beneficial to keep inventory at a manageable level and ensure you are not overbought for products.

5. Take the goods to the port at least 10 days before the date of the ship

If you are responsible for arranging your logistics from Vietnam to the company or client’s store, please pre-order LNY shipments by steamboat. The railways are a touch notorious for taking advantage of the Lunar New Year situation as there’s an abundance of cargo waiting to go away from the port before things close. Steam carriers often raise rates large during this period due to high demand for loading ships and those who can afford higher costs will leave ports on time. It is not uncommon to hear of containers being shipped to the next order in the weeks leading up to LNY; This means that the container collides with the next available vessel leaving port. Depending on how often a container is transported, this could mean daily or weekly delays. This is where other trustworthy relationships with freight forwarders or manufacturing partners come in handy as more people work with more organized shipping lines and are better prepared to cope with high demand. points of LNY.

6. Do not put all eggs in one basket

Consider working with manufacturers that have operations in countries other than Vietnam. This not only helps to diversify your supply chain but also maybe your manufacturer can find a backup supplier if needed during the holiday season in Vietnam. Some products are made from ingredients from different countries, helping to ease the pressure of a factory doing all the work. For example, the parts may be sourced in Vietnam and then shipped to Vietnam for assembly and packaging. Remember that Vietnam also celebrates the Lunar New Year, known as Tet Nguyen Dan, the same day as the Lunar New Year. However, Tet usually lasts only one week at most. The influence of Tet is not equal to that of the Lunar New Year, but factories and factories are still closed for a week to allow workers to spend time with their families.

7. Presenting a Quality Management Plan

The last thing you want is that your orders with quality problems will be delivered right before LNY. Sometimes, quality can cause people to step back because the factory is producing at high capacity and is rushing to get the product out the door. This is another time when the relationship with a trusted supplier or manufacturer will be of great help. Having a thorough quality control and inspection plan greatly reduces the risk of delivery delays due to quality problems or worse, shipping the defective goods to your customer’s doorstep.

8. Take advantage of Provider-Managed Inventory

Vendor Managed Inventory (VMI) is a business model that allows suppliers and buyers to maintain agreed-upon inventory levels for a product. Suppliers will ensure that required inventory levels are maintained by ordering more efficiently and adjusting to seasonal demand and market changes, helping to reduce costs for buyers. Your supplier will typically need your current sales and inventory history to forecast your needs and schedule an order. VMI is ideal for those who find their lead times challenging and cope with holidays like LNY, which can wreak havoc on the supply chain without proper planning.

9. Make plans for after the Lunar New Year

Remember earlier when we mentioned that not all factory workers will go back to their old jobs after LNY? Not only do you need to plan before your vacation, but also after. If there is a shortage of workforce, it can take weeks, sometimes months for factories to get back to normal production rates when they look for replacement workers. Having forecasts we mentioned or increased inventory on hand will get you through until the plants are running at full capacity again.

10. Start planning early

It’s never too early to start planning Vietnam’s biggest holiday. The earlier you start, the better your supply chain will be. Analyze your sales history over the past year, start making forecasts, and work with your suppliers and manufacturing partners now to start planning the upcoming Vietnam holiday.

Knowing what to expect in LNY is only half the battle. Good preparation is the best way to lessen any negative effects on your supply chain. We hope these 10 tips will ease LNY’s stress and contribute to a successful and smooth plan for the next Lunar New Year.

For Foreign companies that want to start or expand businesses and look for an office in Vietnam:


We offer a free consultation to support you to find a suitable Office For lease In Ho Chi Minh:

Phone: (+84) 398 716 459 – Available via Whatsapp/ Viber/ Zalo

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