In the past few days, the novel coronavirus pneumonia epidemic has affected everyone’s nerves, and the country has been fighting against the “epidemic”! The State Council issued a notice extending the Spring Festival holiday:
The Spring Festival holiday has been extended to February 2 (the ninth day of the lunar month) and work will begin on February 3.
Recently, Guangzhou Zhongda, Huzhou Changxing, Jiaxing Haining, Keqiao Textile City, Wujiang Shengze, Nantong, etc. Textile cluster markets and companies have also successively issued notices on extending the opening of markets and work:
According to local notices from national textile, printing and dyeing companies, the start of work is currently postponed to February 13 at the latest Start of work.
The start of construction after the holidays is generally delayed by 2-9 days
Longzhong Information’s survey data on major weaving production bases in Jiangsu, Zhejiang, Fujian, and Guangdong show that sample companies plan to start work as early as February 10 (the seventeenth day of the first lunar month), which is generally 2-9 days later than the pre-holiday plan. However, the sample companies also stated that February 10 is the tentative planned start time, and the actual resumption of production still needs to be adjusted based on the arrival of non-local employees. We will continue to track the recovery of the weaving industry’s operating rate.
Longzhong Information conducted a survey on major domestic weaving production bases on January 23 before the festival. Most companies plan to start work from the eighth to the fifteenth day of the first month, and some plan to start work later from the fifteenth to the twentieth. Resume operation.
Table 1 Start-up time of major weaving production bases
Data source: Longzhong Information
For the textile cluster market, we have investigated the three major markets Shengze Oriental Silk Market, China Textile City, and Guangzhou International Textile City. They all plan to postpone it to after the Lantern Festival on the 15th day of the first lunar month. The specific The market opening time will be notified later.
Table 2 Main textile cluster market opening times
Data source : Longzhong Information
Finished product inventory and raw material inventory levels vary
There is a large gap between finished product inventory and raw material inventory of weaving companies in various regions. According to statistical data, as of January 30, the inventory of warp knitting companies in the sample data is generally 10-15 days, and the inventory of gray fabrics of circular knitting and water-jet companies is generally 30-40 days, and some are as high as 60-90 days.
In terms of raw material inventory, most companies carried out centralized stocking before the year in December 2019 and the first half of January 2020. At present, the stocking days of terminal weaving enterprises are generally 10-30 days, some lower stocking days are around 7 days, and some higher stocking days are 40-50 days.
The outbreak of this epidemic is not only a test for the domestic medical industry, but also a test for the manufacturing industry. The start date of construction is delayed and the normal resumption of work of enterprises is full of uncertainty. In this case, the operation and management of enterprises after the holiday will be a matter worthy of serious consideration! Faced with this sudden epidemic, how should companies in the textile industry chain respond?
From the perspective of supply chain risk management, the sudden outbreak of the epidemic has caused too much uncertainty, which will have a significant impact on the normal resumption of work of Chinese manufacturing enterprises after the holiday. Impact (Fortunately, the WHO emergency committee meeting on January 23 did not list China as an epidemic country, otherwise… However, WHO will hold a second meeting before February 2 to re-judge based on the progress of the epidemic. This judgment will be very important to the global economy and supply chain), this impact will spread from the domestic market to the global market, and the specific impact in the short term will be reflected in three aspects:
1. Domestic customer demand may change significantly in the short term
The General Office of the State Council has announced that the 2020 Spring Festival holiday will be postponed to February 2 (there is a possibility of extending it again), and various regions may continue to extend it according to their own circumstances. This will inevitably cause downstream customers to delay their resumption of work after the holiday, and the original production and sales plan will be broken; and according to historical habits, the post-holiday period is also Will the company’s employment peak and previous recruitment difficulties be exacerbated by the epidemic (passenger transport controls are tightening, and panic has not yet recovered)? Even if work resumes after the holidays, will the company’s capacity utilization rate drop significantly due to insufficient labor, leading to a significant reduction in demand in the short term? What if a focused epidemic occurs after work resumes, resulting in unexpected shutdown?
From another perspective, Hubei, especially Wuhan, is also a relatively intensive and developed area of China’s manufacturing industry. It is still unknown when companies in the area will be able to resume work after the holiday.
2. The situation of the domestic supply market may change significantly in the short term
(1) In the short term, most industries may experience a decline in supply levels due to possible reductions in production capacity
Upstream suppliers are also troubled by extended holidays and difficulty in recruiting workers, and This may result in production capacity being unable to be released normally after the holidays, leading to an imbalance in the supply market.
(2) Supply and demand in the short term�Balance
In some specific markets, such as non-woven fabrics, solution-sprayed fabrics and other supply markets that are closely related to the epidemic, supply and demand will be seriously imbalanced; while in other markets, there is a correlation What will happen to the supply market?
3. Domestic logistics and transportation may be affected to a certain extent in the short term
We are currently during the Spring Festival holiday. The impact of logistics capacity and epidemic prevention and control issues has not yet been reflected because most companies are on holiday. So what changes will happen after the holiday?
Logistics interruption?
Logistics delay?
From the specific operational level of the enterprise, the possible risks in the enterprise’s supply chain management are as follows:
(1) Supply has Risk of delay or interruption
(2) Impact of cost increase caused by market changes
(3) Operation caused by enhanced employee protection Rising costs
(4) Production capacity problems caused by insufficient labor and planning problems caused by changes in customer demand lead to delivery delays
(5) Logistics problems lead to delivery delays and rising logistics costs
(6) Impact on product delivery
From the supply chain From a management perspective, if the epidemic is regarded as a disaster that has already occurred, then professional supply chain managers should initiate risk emergency management and disaster recovery plans (DRP).
Identify and assess risks, formulate management plans, implement and update them promptly:
•Assess what has happened and what may happen , calculate the probability of occurrence and severity of consequences
•What are the risk levels and impacts?
•What can be done?
•Who is responsible? When will it be completed?
•How to verify the results?
•When is it necessary to update the risk management plan?
Conventional measures that can be taken
(1) Close upstream and downstream Collaboration:
Collaborate with downstream customers to understand changes in clients and the market (resumption of work, adjustments to order delivery, changes in demand plans, changes in forecasts, etc.)
Collaborate with upstream suppliers to understand the situation of the supply market and suppliers (suppliers’ degree of impact on upstream supply, resumption of work, production capacity status, contract performance capabilities, logistics service providers’ capacity recovery and transportation market conditions, etc. ), promptly adjust order delivery dates, and timely release updated forecasts
(2) Appropriately increase redundancy in the supply chain Yu:
Demand will be affected in the short term, but in the medium and long term, demand will return to normal. During the period of fluctuation, it is necessary to appropriately enlarge the inventory redundancy in each link. Otherwise, when demand returns to normal, it will be difficult to tell whether your company is functioning normally or not.
Own production capacity and plan management:
Everyone will be very busy after the holidays, HR is busy recruiting workers, sales are busy communicating with customers and making adjustments. Procurement is busy communicating and adjusting with suppliers. Because of this special moment, everything will change more frequently than in previous years, and the pace will be faster, putting everyone under a lot of pressure. The time has come to test the company’s adaptability, and the planning department will have a headache. At this time, supply chain links are needed It is necessary to establish a temporary cross-functional management team for smooth information sharing and efficient communication among all departments.
Supply market and demand market management:
•How much impact will supply and demand have?
•What appropriate communication methods can be used to understand the status of customers and suppliers in a timely manner? Capturing customer and supplier fluctuations?
•How can upstream and downstream information be efficiently reflected into internal operations?
•Procurement with increased risks and shortages Where are the goods, alternate suppliers or substitutes? How long does it take to complete the switch?
•Are there opportunities across supply markets to address supply bottlenecks?
•How to absorb excess production capacity? How to find new customers or meet the urgent needs of new customers?
•Are there opportunities across demand markets to address excess capacity?
•How are commodity price levels changing? What will be the impact on costs and profits?
•What adjustments should be made to inventory control?
•How to manage the priority level of customer orders?
•How should we respond when the transportation market changes?
•How to respond to customer inquiries?
•What needs to be done when an order needs to be delayed? How to get customers’ understanding? (Please note that the influence of the domestic market is different from that of foreign markets, and the handling of customers is also different)
•……
Another important thing is the corporate social responsibility:
Try our best to help those employees and their families, local communities, local governments, and upstream suppliers who have been affected by the epidemic within their capabilities. suppliers and downstream customers out of trouble. If every company does this, all companies themselves will benefit.
From the perspective of supply chain risk management, every time a crisis occurs, someone will always fall because of it, and there will always be someone who will become stronger because of it. Is it a “crisis” or an “opportunity”? , it depends on how you do it?
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