Lunar New Year 2023: Supply Chains Brace for Impact
The Lunar New Year is a major holiday celebrated by many cultures around the world. The annual, widespread celebration involves long journeys and extended rest. Factories often shut down for several weeks to commemorate this festive occasion! The significance of the event is often amplified when it falls within the supply chain. This year, Lunar New Year took place on January 22nd and is expected to have an impact on global trade flows as businesses in Asia close down for the holiday season.
Most notably, China tends to see a significant decrease in economic activity during this period that affects both consumption and production across industries. This can lead to shortages of components or materials used for products and services elsewhere in the world. The lack of available supplies may cause delays in deliveries since orders may not be fulfilled on time, leading to the disruption of supply chains.
Moreover, many factories and manufacturing companies across Asia may be shut down for the holiday season, thus creating additional pressures on the global supply chain. This could result in increased costs as companies scramble to find alternative suppliers or resources that are still available during this time period. It’s critical for businesses to plan ahead and ensure they have enough stock stored prior to Lunar New Year so they can continue operations without interruption both during and after the holiday.
According to the annual Chinese New Year survey by Container xChange, 73% of supply chain professionals said they expect the holiday to disrupt supply chains and shipping freight. Note this number is up from the 66% who expected disruption in the previous year.
While the Lunar New Year will certainly impact supply chains around the world, having a thorough understanding of how it might affect production and delivery schedules is paramount in order to prevent any disruptions from occurring. Companies should consider working with experienced logistics partners who are familiar with the region, to help ensure that the supply chain remains uninterrupted throughout this period. Additionally, companies should plan to buffer their schedule by allowing extra time for orders and deliveries during this peak season, in order to mitigate any delays or disruptions.
This is notoriously a challenging time for supply chains. By understanding the implications of Lunar New Year on global trade flows, businesses can be better prepared for managing their supply chain operations throughout the holiday period by proactivity improving forecasting and controlling costs. Doing so will allow companies to ensure their products and services remain available for consumers with minimal disruption. Ultimately, having a solid contingency plan will enable businesses to avoid costly mistakes or losses due to unexpected delays caused by Lunar New Year 2023.