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Lunar New Year Prep: 120 Days to Ensure Your PCBA Production
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The Lunar New Year (LNY) ranks among the most significant holidays, resulting in the largest annual migration of people worldwide. This sweeping event has the potential to impact your supply chain here in America, as the festivities necessitate prolonged closures of factories and businesses throughout East Asia.
Key Takeaways
- This year, Lunar New Year begins relatively late, on February 10th, 2024. Factory shutdowns across Asia will begin as early as February 8th and will continue throughout the month.
- Order impacts will begin much sooner and linger into Q2 2024.
Why Lunar New Year Affects American Manufacturing
In 2024, Lunar New Year festivities run Feb 10th-17th. Factories often cease operations earlier and remain closed for several weeks thereafter to accommodate employees traveling home. This period catalyzes a mass movement from coastal industrial cities as individuals journey inland to visit families, culminating in a staggering 1.5 billion trips within China alone.
Countries observing the Lunar New Year account for over half of the global electronics exports. During this period, corporations typically reliant on these regions for PCBA manufacturing may have to relocate production elsewhere to maintain delivery schedules. The reach of this global event is extensive, and its impact is likely to be felt regardless of your standard manufacturing locations.
The Lunar New Year can also pose challenges to sourcing components or materials originating from the Asia-Pacific (APAC) region, which can create lingering effects stateside. The ramifications of this influence can endure well beyond the holiday season due to accrued demand.
Additionally, factories in the APAC region often encounter difficulties in adhering to production schedules in the immediate aftermath of Lunar New Year, primarily due to staffing changes as individuals seek improved work opportunities. This transition can lead to a potential loss of institutional knowledge and delayed restarts across the manufacturing sector. Expect any issues caused by Lunar New Year to linger for several weeks afterward.
However, these challenges can be mitigated with strategic preparation. You have 120 days to prepare. Here are the top things to do now.
- Begin forecasts now. By anticipating your product requirements for the first and second quarters of 2024, you can gain a competitive edge in maintaining sufficient stock levels during the Lunar New Year. An early forecast shared with your supplier or manufacturing partner will facilitate a better understanding of your needs in the upcoming months. This foresight is especially beneficial if you engage with a Contract Manufacturer (CM) within the APAC region, which could face workforce reductions over the holiday and subsequent hiring and training needs.
Increase inventory levels
- Increase inventory levels now. If your product needs for Q1 and Q2 are clear, it would be advantageous to increase your inventory levels immediately. Aim to schedule shipments before mid-December to circumvent shipping backlogs as factories endeavor to deliver products before the holiday begins.
- Invest in more distributed manufacturing for your business. By implementing a ‘China-plus-one’ strategy, you can diversify your supply chain and alleviate pressures associated with the Lunar New Year. By shifting a portion of your manufacturing to a secondary CM outside of the APAC region, you can circumvent some of the most substantial challenges related to the Lunar New Year.
MacroFab provides North American manufacturing and flexible options across many factory lines located in Mexico, the United States, and Canada, so you don’t have to rely on overseas suppliers. To meet your delivery deadlines this Lunar New Year, let our support team help you pivot production.
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As we approach the Lunar New Year, which starts on February 10, 2024, it’s important to remember a shift in Asian electronics manufacturing.
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