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Author's profile photo Richard Howells

The Secret of Santa’s Supply Chain

We’re approaching the time when Santa — founder, chairman, and CEO of Santa Claus Toy Manufacturing and Distribution Corp. — manages to ship billions of toys in a single day, all with guaranteed overnight delivery. Year after year, how does he achieve this feat? By running a live supply chain.

Big Belly, Big Data

It begins with Santa’s unmatched ability to capture and analyze Big Data. His customer base is estimated at 7.4 billion, forecast to reach 11.2 billion by 2100. Surely he manages those records in an in-memory database.

Santa takes an omnichannel approach, harmonizing structured and unstructured data, including customer sentiment and segmentation. Traditionally he leverages high-touch customer interactions, taking a large number of orders in face-to-face meetings as his target customers (children of all ages) sit on his knee in Santa’s Grottos around the world. Another key channel is written orders, through the once-popular national postal systems, that optical character recognition converts to digital orders.

But Santa has also embraced e-mail and social media. Customers can engage with him online, on Facebook, and on Twitter, for example. Of course, Santa segments his target audience based on customer behavior, sourcing a large supply of coal for one particular segment.

From Elf Floor to Top-Shelf Floor

But Santa can’t silo his data. He needs to share it with elves throughout the enterprise.

Santa’s demand forecasting must have him pulling his long white beard, trying to synchronize supply and demand during sales and operations planning (S&OP) meetings. Bear in mind that his demand picture often changes in real time, as many orders are placed (along with milk and cookies) at point of delivery. He also has to manage millions of SKUs that all peak at exactly the same time.

Fortunately, Santa employees a highly engaged workforce with virtually zero turnover. And a robust business commerce network ensures that his workshop is never a single point of failure.

Still, these complex challenges require a highly responsive planning system to manage push/pull boundaries in the ultimate of demand-driven, finish-to-order planning and manufacturing processes. Yet he maintains a perfect order rating of 100%, mostly because he fields a best-in-class data scientist (probably Mrs. Claus).

GPS Coordinates: 90°00’0.00″ N 0°00’0.00″ E

Nonetheless, Santa faces unprecedented logistical challenges. First, because it’s sited in the North Pole, his manufacturing and distribution facility isn’t ideally located from a logistical perspective (though he does save on cooling costs for his data center).

Second, with a customer base of 7.4 billion, Santa and his elves must produce more than 20 million finished goods per day, 365 days a year, to ensure supply meets demand. Surely Santa is on the vanguard of 3D printing technology and additive manufacturing as we customize and personalize more of our gifts. But those products accumulate into the billions before shipping, creating the ultimate warehouse management challenge.

Then, Santa has the fulfillment headache of billions of direct-to-consumer deliveries in a single night. He can ease this burden by leveraging time zones, yet surely his 31-hour delivery run breaks hours-of-service rules for his reindeer. But they’re used to pushing the envelope, as visiting 822 customer locations per second requires travel at about 3,000 times the speed of sound. Let’s see an Amazon drone match that!

Twelve Days of IoT

There’s no question Santa’s sleigh is tricked out with Internet of Things (IoT) sensors. Weight sensors ensure the sleigh isn’t overloaded or out-of-balance. After all, assuming one product per customer at an average two pounds per product, Santa’s sleigh tips the scales at 7.4 million tons.

Health sensors monitor eight overworked reindeer. Given that a typical reindeer can carry no more than 300 pounds, Santa’s airborne team must do the job of well over 49 million of the nonflying variety. Real-time weather monitoring dictates whether a ninth illuminated reindeer gets added to the fleet.

Performance monitors send back data to Santa’s R&D elves, who continually improve sleigh design. They also enable preventive maintenance by technician elves, who ensure zero sleigh downtime.

Finally, GPS tracking, with an assist from the North American Aerospace Defense Command (NORAD), allows parents to make sure children are asleep before Santa comes down the chimney.

In short, Santa runs the most real-time of extended supply chains — and the only logistics operation that’s literally “in the cloud.” Of course, all of this is industry rumor, as Santa guards his trade secrets well. But he’s been known to exclaim, ere he drives out of sight: “A live supply chain to all, and to all a good night!”

Learn more about how running a live supply chain can help you thrive today and innovate for tomorrow.

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