Chinese New Year: Don’t let printed circuit board supply get your goat

As you may be aware China has a national holiday fast approaching when they will be celebrating the start of a New Year - paying homage to the humble Goat. During this period Printed Circuit Board (PCB) manufacturing factories will be closed; which is why those customers who source PCBs offshore from China need to start planning now. Whilst the New Year holiday is officially only Thursday 19th February to Tuesday 24th, as I’ve explained below, this is often significantly extended and the negative impact on deliveries and lead-times has been dramatically disproportionate. So, failure to plan is planning to fail as the old saying goes and certainly not planning your way around this one is likely to cause both you and your Contract Electronics Manufacturing (CEM) partner significant pain in terms of production delays. This post looks at the challenges Chinese New Year presents, particularly with regards to timings, so you can plan in advance to minimise the impact this holiday has on your business. Timing is everything Whilst individual factory closure dates will vary slightly during the holiday period, experience suggests that you should plan for a minimum of 3 weeks shut down. In basic terms this is due to: Employees taking 1 week to travel home before the holiday. 1 week for the holiday itself. A further 1 week travel time for employees to return to the factory after the holiday. Depending on where their hometown is based, it can take employees anywhere between 3-7 days to travel each way. The factories therefore will start to see their workforce deplete from around the 11th February 2015. From a planning perspective it’s vital that any printed circuit boards you have ordered are clear of Chinese customs for shipment during the week commencing 9th February 2015 (or sooner) otherwise there is a fair chance you will miss the boat, quite literally. The holiday itself runs for 7 consecutive days. This starts on the 18th February (New Year’s Eve) through until Tuesday the 24th February 2015. After this date, employees are expected to return to work. However based on the extended travelling times, this could mean that factories are not up to full capacity until around the 3rd of March – which of course assumes they all return back, which has been an historic problem for China. Keeping your calm With the potential for significant PCB production delays looming it’s easy to see why some companies may start to panic. However, like one of the personality traits of the goat being celebrated this year, I would recommend you remain calm. By assessing both your current and future demand, and then working closely with your PCB suppliers, CEM provider and end users, you can take a number of steps to minimise the risk to your business. Whilst there is no need to ‘panic buy’ you will need to look further out in terms of your demand when talking with your PCB suppliers. If you accept that there will be a 3 week production stop, plus a further 2-3 weeks delay whilst the supply chain gets back up and running, you really need to be looking to place orders now for your April, May and June requirements. Placing scheduled orders prior to the start of the holiday allows for a number of tasks to be completed in advance, such as the creation of PCB tooling or the sourcing of raw material, so that production can commence immediately once the holiday has finished. Many PCB suppliers will offer stock holding agreements with the ability to schedule deliveries which in many cases means you shouldn’t have to pay up front for this forward planning activity. Of course if your CEM provider procures the circuit boards on your behalf, then make sure you communicate your priorities and future demand to them. If they don’t have access to long term forecasts from you and the only visibility they have is of your firm order book, it stands to reason they will continue to work to the same schedule they already have unless you tell them otherwise. It is important to recognise that there will be a peak in demand on UK PCB manufacturers leading up to, and during the holiday period as not all customer demands will be met through offshore sourcing. Maintaining strong relationships with your UK PCB manufacturers can help minimise disruption during this time as they should already understand your business and may be more likely to support you as an existing customer, rather than satisfy short term requirements from new ones that are unlikely to repeat. With some careful planning and close communication it’s entirely possible to avoid costly delays associated with the lack of PCB production during Chinese New Year. Hopefully this blog post has helped clarify for you some of the critical dates and timings you need to plan around in order to ensure continuity of supply.

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