Santa Claus and his delivery logistics “Toys in every store…”
This post will show how SAP can be used to make delivery logistics as efficient as Santa Claus’. I hope everyone enjoys reading it and that it is inspiring. Happy Holidays!
Christmas will soon be celebrated in some parts of this world. This blog is for everyone who wants to have a rough overview of SAP S/4HANA solutions and this mainly in logistics and delivery. Furthermore, it is for people who know Christmas stories and would like to look behind the scenes at Santa Claus. We would like to put Santa’s logistics under the microscope. Especially since he has to bring gifts to so many people on December 24. It should be an amusing way to shed light on Christmas. We took Santa Claus as an example, since many know him and can well imagine what we mean.
Soon it’s that time again and hundreds of children are waiting for their presents. Now, they are still busy writing their wish lists. Of course, Santa Claus accepts the wish lists not only in writing, but also orally.
He also manages to deliver billions of toys to children all over the world in a single day. In doing so, he has to travel over 500,000,000 miles to reach approximately 1.7 billion children.
Especially the Hollywood version of Santa Claus is known too almost everyone. He lives with many elves at the North Pole and flies once a year with his reindeer around the world and distributes gifts through the chimneys in one night. A romantic idea, which we also like very much.
When we took a closer look at Santa’s skills and abilities this year, we noticed that a lot of what he does has to do with logistics.
- Delivery of Christmas gifts across all time zones within two days (high speed delivery)
- Santa and his elves produce and wrap all the Christmas presents within a year in a factory at the North Pole (for about 1.7 billion children and nearly infinite production resources and probably abilities to stop/slow down time occasionally)
- He must know all the children’s Christmas wishes (paragraph planning through OCR of the wish lists)
In the following, we will subdivide into the chapters Sales Planning, Procurement and Production and Delivery. In doing so, we want to show how SAP can support Santa Claus in his annual business. We describe what we do differently than Santa Claus and how we can solve the problems of Santa’s business.
It is certainly a bit fanciful here and there, but in essence, Santa Claus also must face similar challenges as SAP’s customers.
So, our Santa Claus as a real person. That is, he would be an ordinary sales planner. He would calculate his forecasts and sales data for the current year. And this is where the first problem arises: For most people, the gifts are different every year (except for vouchers or socks, which are among the top sellers). In addition, most people obviously do not receive the right gifts (as desired or imagined), as evidenced by the exchange business after Christmas.
So, the experience data, on which the sales planning is also based, is not helpful for our Santa Claus. What could he possibly base his planning on if it’s not past data? In some cases, real wish lists are sent to Santa from official postal stations (for example, from Rovaniemi, Finland). But this part is rather a smaller proportion, measured against the total number of wishes. Moreover, among them are also wishes that cannot be fulfilled (such as world peace, snow on Christmas or a real dinosaur).
How can SAP support Santa Claus here?
Santa Claus with SAP
Our Santa is, of course, focused on making his business what SAP envisions an intelligent enterprise to be, and he’s doing it with the support of SAP’s cloud solutions. Whether these come from the SAP data centre or from a Hyperscaler is not revealed here. He only focuses on his core processes and SAP takes care of the IT. Sustainability can also be an issue for Santa, which is why the data centre is CO2 neutral certified.
He has chosen SAP Integrated Business Planning for Supply Chain for planning from SAP’s modular system. There, he records historical planning data (e.g., wish list from the previous year. To possibly deduce what might be a good gift next year), behaviour after delivery (e.g., exchange of the thirteenth pair of socks), and the relevant information on suppliers, supply chains, and replenishment times.
He gets support from the classic planning and forecasting functions (e.g., moving average), SAP AI Business Services (e.g., the recipient of a gift is only very limitedly happy about socks, but about a train) and his very own Planner view.
He maintains this Demand information on the desktop as long as he works at the North Pole. He uses SAP Fiori on his mobile devices as soon as he is on the road. He appreciates the real-time capability of the solution, allowing him to respond to last-minute change requests.
The real-time capability also enables him to respond at any time to short-term fluctuations in demand (change of wish list), challenges with the celestial delivery service such as limited capacity of the sleigh, as well as UN sustainability goals such as animal welfare (e.g., duration of use of reindeer).
Using SAP Integrated Business Planning for sales and operations, he balances demand and production. While he has more than enough elves, maximum working hours apply here as well, and using SAP SuccessFactors Succession & Development, he ensures that motivation remains very high. He has connected the SAP Integrated Business Planning for demand with optical character recognition recognition via SAP Business Technology Platform to be able to automatically scan as many wish lists as possible and evaluate their content. Through integrated algorithms, regional wishes are managed directly.
To get an overview of all the inventories and their range, he uses SAP Integrated Business Planning for inventory. Here, the current inventories are considered in real time from the integrated SAP S/4HANA system. With the SAP Integrated Business Planning for response and supply application component and the SAP Supply Chain Control Tower, he maintains an overview. SAP AI Business Services helps him proactively identify and resolve potential conflicts (does it not fit through the modern chimneys, so the delivery is replaced by connected 3D printers).
Santa has introduced these components gradually over the last 2 years; after all, as a sole proprietor, he has limited capacity.
Procurement and production
What creates Santa Claus then its procurement and production?
As already stated, Santa Claus is a superhero and obviously has infinite resources and does not need to procure raw materials for his factory at the North Pole. Now, however, a new problem forces itself upon us: The budget. Santa would have to have a lot of budget to procure necessary materials or purchase already finished products based on his not-so-accurate sales plan for the gifts.
Of course, we can’t say exactly how big the budget would have to be, but we decided to assume the value of all Christmas gifts. This would be at least an approximation. So, we assume that Santa Claus would want to give presents to all 1.7 billion children in the world, then his budget would have to amount to about 200 billion euros. Thus, he is not the richest, but the second richest person in the world (behind Elon Musk (279 billion US dollars)). But since Santa Claus doesn’t make any sales, he needs this money every year.
In addition, there is now also the production. If Santa doesn’t now have a production facility of gigantic proportions and countless machines, he’s going to have a bit of a production planning problem.
Santa Claus with SAP
SAP can support Santa Claus at this point as follows:
Within SAP Analytics Cloud, for example, there are free Business Content Packages for Financial Planning, among others, which draws on the data structures of SAP S/4HANA. This allows him to make further-reaching plans (also for the future for e.g., warehouses or new machines). In addition, he uses the SAP digital payments add-on (for e.g., his suppliers) in which he manages all payments and organizes the finances.
Precisely because he lives at the North Pole and feels climate change directly there, he is committed to the UN Sustainable Development Goals. By not using combustion engines – his sled is pulled by reindeer – he has a positive starting point. The reindeer only produce methane, which is transparently displayed in his environmental balance sheet. For this, he has opted for a combination of SAP Analytics Cloud for ad-hoc reporting (e.g., when does a child change wishes) and SAP Digital Boardroom for his real-time evaluation and control of his supply chain. In the SAP Digital Boardroom, the wishes or the changes are also immediately displayed transparently with the effects.
Basically, he tries to avoid CO2 in the selection of raw materials and the way he implements wishes.
The SAP Product Carbon Footprint Analytics collects the CO2 consumption data, e.g., from the product master data, parts lists, duration of use of the machines, and thus makes the CO2 values transparent in real time.
By using SAP Environment, Health, and Safety Management and SAP solutions for global tax management, he can also handle all the formalities for a global company regarding travel policies (where is a Corona vaccination requirement, which vaccine is allowed where …), as well as e.g., the correct calculation of the global minimum tax.
At this point you can already see: A “real” Santa Claus would have already huge problems during Christmas if he didn’t have the support of SAP.
So far, it has known exactly how to design its sales planning and has thus actually loaded the right gift onto the sleigh for each individual recipient. In addition, Santa Claus naturally knows exactly where his “customers” live or where they spend their Christmas. In addition, people traditionally have different times and days for giving presents and celebrate in different time zones.
Santa Claus distributes his gifts in one night. Due to the different times of Christmas gift giving, etc., this would result in Santa having to make approximately 500,000,000 miles in a few hours on Christmas Eve. This is a high speed without assuming that Santa Claus of course stops sometimes to throw the Christmas presents down the chimney. In addition, he certainly also speaks with one or the other child personally or eat some cookies and take a break.
Another point and challenge are all the presents on his sleigh. Because these weigh about 2000000 tons or he would have to keep flying back to the North Pole for more gifts. Which in turn costs a lot of time, which he obviously doesn’t have.
Ok, no hard feelings about it: If Santa has solved the speed problem, then along with the weight of the sleigh comes another challenge: Acceleration. The reindeer would have to absorb an incredible amount of energy.
Santa Claus with SAP
Of course, SAP can’t change the space-time continuum, but we continue to do our best to make sure Santa can go about his business as smoothly as possible.
Our beloved Santa is smart and relies on SAP S/4HANA for his intelligent enterprise backbone. Through SAP Demand Management and SAP Supply Chain Management, he has already ensured that many hardworking elves have generated the desired products.
To ensure that his well-known sleigh does not have a breakdown, he uses embedded predictive maintenance in addition to standard maintenance to avoid getting into trouble right at Christmas.
Distribution – just-in-time- to many unloading points is pre-planned in SAP S/4HANA Supply Chain for transportation management and then each shipment is planned and tracked. To ensure that all regional / local requirements (e.g., Supply Chain supply chain due diligence act) are also met and that he can prove this, he has supplemented the SAP S/4HANA Supply Chain for transportation management with SAP Corporate Serialization. This makes it easy for him to verify, with the help of an RFID chip or a QR code on the desired product, that all elves (male/female/diverse) are well paid, have reached their minimum age and that all environmental requirements are met. After all, he is the role model in all our (children’s) eyes.
SAP S/4HANA helps him ensure that the sled is loaded safely using handling units. These handling units also help make unloading quick and in the right order. Integrated route planning also always ensures that the reindeer have enough time to rest.
If one of them catches a cold, SAP Environment, Health, and Safety Management in conjunction with SAP SuccessFactors is used to find a reindeer to temporarily replace our reindeer with a cold. Get well soon, Rudi!
Finally, however, Santa Claus has an ace up his sleeve:
Our beloved Santa Claus naturally thinks ahead and uses Qualtrics to check on Christmas Eve whether the wish has been fulfilled satisfactorily. Thus, SAP AI Business Services, for planning in SAP Integrated Business Planning for Supply Chain, or in SAP S/4HANA for the next Christmas will be continuously improved, the supply chain will become even more sustainable. And the best comes at the end: everything in a unified user interface (SAP Work Zone) based on SAP Fiori and the SAP Conversational AI.
In summary, we can certainly be glad that we have Santa Claus and that he is not a real person, but a superhero and thus every year (also in Corona) he so thoughtfully presents us with gifts and love. So that every year we have “Toys in every store….”.
I hope we could show you how they also become almost as efficient as Santa Claus as a real person with SAP 😉 .
And wish Happy Holiday!
This blog post was written in collaboration with Juergen Puhane from the Intelligent Enterprise Team, Customer Advisory SAP Germany.