Production Disruption: How to Handle Power Cuts in China

Now is the time of year where factories in China are rushing out millions of orders to get ready for Chinese New Year.

This as always puts extra pressure on the supply chain, and unfortunately we are now also seeing delays in production due to planned power shortages are already happening due to power rationing imposed by local governments.

So what is happening and what can you do about it? Let's dig in.

Why is this happening?

The new production issues are caused by two main reasons.

• To fulfill the requirements of the central government's plan to reduce carbon emissions and energy consumption.
• Some power plants are closing down due to increased coal and gas prices

According to the “2021-2022 Autumn and Winter Action Plan for Air Pollution Management” issued by the Chinese government in September, we are expected further restrictions between October 2021 and March 2022 to power supply and therefore production capacity.

China has implemented power restrictions to at least 20 provinces and regions to handle power shortages in the north-eastern region.

This means that production time in the coming seasons can double and even triple.

What to do about it

Hopefully your Q4 orders are already secured but looking ahead this can and will go on for an extended time meaning you have to take action now.

1. Place orders as early as possible

‍As this was also the case during Covid, planning ahead of time is currently the strategy that is proven more important than ever. Delivery time will still be longer, but planned for.

2. Improve your supplier relationships

Understanding what's (and if it's really) going on with your production can be a true talent. Creating a great collaboration is key to helping you maintain nerves of steel during communication and negotiation.

3. Keep a very close eye on quality

‍Some factories will begin rushing orders due to limited working days, which will result in more quality issues. Quality suffers most when things get hectic.

Working with quality during disruptions

With +1,000,000 yearly inspections done using Qarma's inspection app, we'd like to provide some expert advise on how you can work on improving quality in a disrupted supply chain.

1. Incorporating Supplier Self QC
   In line with improving supplier relationships, we are seeing a trend where empowering your suppliers to conduct secure and controlled self-inspections can help you work more agile during disruptions
2. Streamline planning and scheduling
   Having an instant overview of your planned inspections and automatically or manually assigning  inspections based on changes helps you maintain a strategic overview and helps you plan ahead
3. Use standardized processes
   Especially during chaotic times, standardized and customized checklists, helps inspectors to do what they do best and give them the time they need to thoroughly ensure quality consistency