Direct Sourcing and the Impact of Chinese New Year Shutdowns

Most executives who work with supply chains or manufacturers are always acutely aware of the Chinese New Year (CNY). CNY each year means two to four weeks where new orders are not being processed or shipped out of China. Making a plan for your purchasing needs over this period is critical for any business especially in the healthcare industry, where supplies have already been thin during the COVID pandemic.

The Chinese supply chain VS Made in the USA

Although the holiday lasts a week, it is common to shut down for up to 10 days before and several days after the holiday; the effects are felt worldwide. 2020 has been a very stark example for many health systems on the need for reliable sourcing partnerships when manufacturers become unreliable and ‘Just in Time’ (JIT) logistics processes fail. With the impact of CNY on the logistics infrastructure, there is a strong argument for partnering with a direct sourcing expert like ASP Global that couples comprehensive plans for CNY for specific goods and also has products made in the USA that are not impacted by the holiday. Understanding the effects of CNY on sourcing and logistics over the holiday and the post-holiday ramp-up to full production is a key part of ASP Global’s expertise in sourcing and procurement for health systems.

Planning for Success

There is no way of avoiding CNY if you source products in China. The key to coping is for health systems to make sure they have the right products or materials in advance. In addition, Indonesia, Korea, Malaysia, Singapore, Taiwan, and Vietnam have their own work stoppages over some combination of days during that time period. Contingency plans have to be made, a key part of logistics success is proactive procurement planning and partnerships.

• Partner with a direct sourcing expert: “We take precautions each year and 2020 makes those precautions even more important as health systems saw increased demand all year and dealt with empty supply rooms,” said Bill Fallon, Chief Commercial Officer at ASP Global. “Working with our suppliers and our health system partners, ASP Global uses years of health system sourcing experience to ensure that all necessary supplies are available throughout the holiday.” 

• Plan ahead: Understand demand and plan for increases in demand to ensure your health system is not left without critical supplies.

Don’t wait too late: As 2020 has shown, if you wait until the last minute to plan for sourcing of critical materials, your health system can end up on an allocation list that leaves you lacking. Make sure you have a comprehensive sourcing plan NOW.