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How To Mitigate Supply Chain Volatility During Chinese New Year
As millions of people in China and elsewhere in Asia prepare to celebrate the upcoming Chinese New Year (CNY) on January 29, supply chain managers around the world are likely already grappling with significant backlogs at ports and warehouses. This annual logistical challenge is expected to exacerbate existing supply chain disruptions, making it crucial for companies to proactively mitigate potential issues.
With this in mind, it’s essential to anticipate and prepare for three key areas of supply chain volatility as CNY approaches.
Firstly, the looming threat of tariffs from the new U.S. president could prompt many U.S. companies to expedite shipments before tariffs are activated, potentially causing congestion at ports. To mitigate this risk, organizations should plan ahead and optimize stock levels by topping them up in advance, leveraging data-based planning tools and AI-supported demand forecasts to minimize the risk of either overstocking or understocking.
Secondly, strikes on the US East Coast and Gulf Coast may soon come into effect if a contract is not ratified by both parties in time, leading to further delivery delays. Companies should consider alternative delivery options, such as ship-to-rail or an alternative combination of ship-to-air, to ensure timely delivery of critical goods.
Lastly, a weakening Chinese economy and subdued consumer demand for goods could lead to increased layoffs and labor shortages, potentially impacting production capacity during the CNY period. To address this concern, companies must be prepared to maintain internal productivity with reduced resources by optimizing processes and leveraging cloud technology.
As we head into CNY, it’s vital to recognize that supply chain volatility is an annual logistical challenge that requires proactive planning. By expanding supplier bases and networks, maintaining positive relationships with suppliers, and staying adaptable in the face of uncertainty, companies can navigate these disruptions and maintain business continuity.
In the spirit of celebrating the Chinese New Year, let’s focus on the importance of guanxi – or good relationships – in the Chinese business world. Building strong connections with suppliers and partners can make a significant difference during CNY. A simple congratulatory message or small token of appreciation can go a long way in maintaining trust and ensuring smooth operations.
By adopting these proactive strategies, organizations can stay ahead of supply chain disruptions and avoid costly delays, ensuring that the Year of the Snake is not an obstacle for their businesses.
Source: www.forbes.com
