Holidays always raise the risk of supply chain delays. Most organizations, even newer ones, understand this and bolster their supply chain as the December holiday season approaches. Chinese New Year is easier for U.S. companies to miss, but it deserves the same attention.

In 2023, the Lunar New Year starts on January 22 and runs through February 5. Many companies in China and other nations celebrating the holiday will shut down for at least a week. Because China is the world’s largest manufacturer, accounting for 28.4% of global manufacturing output, that shutdown could mean significant delays. Here are five ways you can prepare for it.

1. Plan and Order in Advance
The first step to minimize supply chain delays during the holiday is to talk with suppliers ahead of time. Learn what their break will look like to get a better picture of the possible delay timeline and when you should order things by to get them on time.

Apply this to logistics partners in and around China, not just your suppliers. Book any freight slots you’ll need as early as possible, as they’ll become increasingly difficult to get the closer you get to Chinese New Year. Keep your schedules flexible, as even with advanced planning, you may encounter delays.

Take the time to build close relationships with suppliers and shipping partners. Business will become increasingly competitive closer to the holiday, so you’ll want to be at the forefront of their minds.

2. Build Inventory
As you plan these shipments, go beyond what you normally order. Most factories will close for a week at minimum, but many remain understaffed for up to two weeks as workers from more rural areas take time to see their families. Consequently, it can be difficult to tell when delays will start and end, so you’ll want larger safety stocks.

Inventory is one of the eight wastes of lean manufacturing you may want to avoid in most contexts. However, in light of how long these delays may last and how far behind many China-dependent supply chains already are since the COVID-19 pandemic, they’re a necessary evil.

Determine your average demand for the season and calculate any growth you expect. Use these figures to guide you in ordering enough supplies to carry you through the first or second week after Lunar New Year to mitigate disruption.

3. Diversify Suppliers
Another way to prepare for Chinese New Year-related delays is to decrease your dependence on the area. Pandemic-related disruptions have already highlighted the fragility of single dependencies, and Lunar New Year presents another chance to reconsider your sourcing strategy.

Look for suppliers in other countries, favoring reshoring and nearshoring opportunities to shorten travel distance and further reduce delays. This shift will inevitably involve high upfront costs and may be more expensive to maintain, but the added resiliency will compensate for it when competitors face lengthy disruptions.

Supply chain diversification is a good long-term strategy, but you should aim to have some ready alternatives in the short term. Have at least one alternative supplier for your most critical or disruption-prone resources outside China.

4. Maximize Visibility
You can also mitigate supply chain delays by improving your visibility. With so many companies across multiple countries taking a break for the Lunar New Year, keeping track of everyone’s operations may be difficult. Your organization needs a cohesive, streamlined reporting system so you can detect and respond to delays.

Internet of Things (IoT) systems are a critical part of this visibility. Cloud-based IoT tracking systems provide a single source of truth across logistics partners and stages for all parties involved. These centralized, real-time reports are particularly useful for intermodal transportation, as they track the shipment itself, not the vehicle.

An IoT system will reveal delays and potential disruptions as they occur. You can then respond faster, contacting alternative suppliers or redirecting shipments to minimize lead times and losses.

5. Manage Client Expectations
Recognize that some amount of disruption is likely inevitable. Following these other steps will minimize Chinese New Year-related delays, but these disruptions are still possible. You can manage the fallout of that risk by informing clients and downstream partners of potential delays.

Customers today actively look for estimated delivery times and want tracking solutions for their orders. These trends suggest that people expect and appreciate transparency. If you’re open about potential supply chain delays and inform partners that things may take longer than usual ahead of time, they’ll be less disappointed when slowdowns occur.

Err on the side of estimating longer than expected wait times. That way, customers and downstream partners will be pleasantly surprised if delays don’t happen or are as anticipated. This assurance and transparency will improve client relationships amid disruption.

Avoid Supply Chain Delays This Chinese New Year
Chinese New Year will substantially impact operations as long as supply chains rely on Chinese manufacturers. Understanding this impact and preparing for it ahead of time are the first steps to mitigating it.

Delays are likely in this season but not unavoidable or unmanageable. Following these steps and planning appropriately will help you maintain high productivity throughout the Lunar New Year.

Emily Newton