Chinese New Year Will Disrupt 2020 Q1 Supply Chain
The new year celebration in China and much of Asia comes early this year and is already set to disrupt 1st Quarter 2020 manufacturing and delivery. Proactive suppliers and OEMs have already put orders in to minimize problems 4-6 months from now. Chinese New Year (CNY) impact to manufacturing is just not the same as most holidays.
GOT Interface put its customers ahead of this issue in August with supply chain audits and alerts. Those with sensitive Q1 inventories have locked in pricing and delivery assurance to protect their businesses.
CNY is a time of supply chain upheaval
The reason CNY causes such challenges is that employees, especially Chinese workers, typically take two weeks off to travel home and because the year is associated with a new beginning, they frequently begin a new job at another company when they return. The implications are massive because of the staggering scale at which workers travel to and from distant hometowns and undertake workplace transitions.
- Factories and towns with 5-digit populations have only a fraction of that number in residence for many days at a time.
- A transportation system normally devoted to commercial and industrial work shifts to support the migration of hundreds of millions of people over a period of about two weeks.
- Companies are consumed with training and onboarding entirely new employees.
For these reasons (and many more) the manufacturing and transportation of goods essentially come to a hard stop for two weeks in China and in other parts of Asia. Experienced OEMs and suppliers submit compensating quantities in their orders in September and October which tend to crowd out smaller and less important orders. The ramp-up times also can be problematic.
The solution of course is to develop a very good forecast and share that with important suppliers.
At GOT Interface, we work with customers to protect their sales by protecting more than just their supply chain. We protect their business by adding value to the customer touch point – quickly and with less risk than the alternative.