10 Dec, 2020 / BY Neil Sharp

What impact will CNY 2021 have on UK electronics manufacturing?

Every year the UK electronics manufacturing industry braces itself for the impacts of the annual Chinese New Year (CNY) celebrations.

And every year the advice to manufacturers follows pretty much the same format - plan ahead, be sure to book and ship your cargo well in advance and stay in regular communication with your electronics manufacturing services (EMS) partner.

The impacts of COVID-19 however have well and truly dominated the past year and have created a level of business disruption and uncertainty that's been quite unlike anything the industry has experienced before.

So how is the global pandemic likely to affect UK electronics manufacturing in the lead up to CNY 2021?

Preparing your logistics for CNY

While the annual CNY holiday takes place over just a seven day period, the effects are now well known to resonate throughout the manufacturing industry for many weeks both before and after the celebration.

Typically, UK original equipment manufacturers (OEMs) can expect to start noticing the effects of the slowdown several weeks before CNY even begins as factories close their doors and workers prepare for their journeys back to their hometowns and villages.

The reopening process is a gradual one too, with it often taking several weeks before operations are back to normal.

Then, just to further complicate matters, there is the high rate of 'workforce turnover' that the Chinese manufacturing industry experiences, with up to a third of factory workers often not returning to their jobs after the holiday season is over.

Weathering business disruption

So when the impacts of COVID-19 are combined with the supply chain challenges of CNY, what can the industry do to withstand the challenges of the coming months?

The positive news is that as an industry we're probably better prepared than ever.

One of the biggest significant factors brought on by the events of the pandemic has been the sense of anxiety and uncertainty that it has generated.

If we look back to February this year, when the crisis was still very much in its early stages, the mood among manufacturers was already showing signs of fragility.

A survey conducted by the IPC in that same month reported that 84% of the electronics manufacturers and suppliers who were surveyed were expressing "concerns" about the impacts of COVID-19 on their business operations.

More than two thirds (65%) also reported that they'd been informed "directly by their suppliers" to expect delays in delivery of up to several weeks.

Further down the supply chain, manufacturers were also noticing bare board and component shortages amongst their customers, primarily caused by delays in shipments.

Among the respondents, contract Electronics Manufacturing Services (EMS) partners made up the largest group who were being warned of impending supplier delays, with PCB fabricators and OEMS also being affected.

Capitalising on lessons learned

While it's been an incredibly challenging time, without doubt there are key lessons to be learned from the events of the past year.

The disruption and uncertainty of the global pandemic has forced businesses to become even more adaptable, agile and responsive to changes in market conditions.

There's been increasing recognition of the importance of maintaining solid relationships with vendors, suppliers and EMS partners.

And there's been a greater emphasis on ensuring transparency in the supply chain. 

With CNY 2021 now just weeks away, planning and preparation are going to be more important than ever:

  • Ensuring you have sufficient inventory stocks to last out the holiday period
  • Securing the materials that you need well in advance
  • Giving your factory plenty of time to fulfil your order ahead of the holiday shutdown
  • Making sure to book and ship your cargo early to avoid costly delays and reduce the strain on your business
  • If you're a higher volume customer, communicating a forecast of your expected cargo to your logistics partner in plenty of time so they can plan ahead

The annual CNY celebration has always posed its challenges for electronics manufacturing, but it's something that the industry has grown well used to planning for and overcoming.

As the industry continues to reel from the devastating impacts of COVID-19, the lessons learned in 2020 could well hold the key to helping businesses stay on top of their end-to-end processes, protect their supply chain and build even greater resilience into their operations.

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Written by Neil Sharp

Neil has over 25 years’ experience in Electronics Manufacturing Services and Component Distribution. During his career, Neil has held a range of leadership positions in sales, marketing, and customer service. Neil is currently part of the ESCATEC Senior Management Team and is responsible for setting and delivering the overall Group Marketing strategy. Neil heads up the marketing department and is responsible for both the strategy and the implementation of innovative marketing campaigns designed to deliver high quality content to those seeking outsourcing solutions.