Santa’s Supply Chain Goes Digital

Richard Howells

It’s no secret that Santa is the greatest supply chain success story of all time. Not only does he have a laser focus on his target market – children of all ages – but he has a near perfect order rating, a global distribution channel that spans the world in 24 hours, door-to-chimney delivery, and low turnover rates among the elves. Still not convinced? Santa’s supply chain was the very first to run “in the cloud.”

Today, preparing for the holidays is an easy feat for many – not just Santa and his network of helpers. That’s thanks in part to efficient supply chain and logistics processes that have held up to an increase in gift giving during this time of year. But for this to happen, retailers must have in-demand products on their shelves at precisely the time consumers are moving from the awareness stage to the decision stage in the purchase funnel.

In the spirit of the holidays, let’s take a closer look at Jolly St. Nick’s supply chain superiority in the context of the ghost of supply chain past, present, and future.

Ghost of supply chain past

Once upon a time, Santa’s supply chain consisted of a year-long production cycle. In fact, the minute he returned from his 24-hour journey around the world, Santa would go back to his workshop and begin planning for the following year. As you might imagine, Mrs. Claus was not thrilled with this process. Her home has become the largest single manufacturing plant in the world.

He had never heard of automation or artificial intelligence to help his production, but had to rely on good old elbow grease and elf power to hand-make his toys. When it came to delivery, he had no route optimization software or SatNav guidance system, but had to rely on a red nosed reindeer to show him the way. Santa had little idea about any weather issues on his route or if his sleigh’s performance was suboptimal.

And he was 100% reliant on face-to-face demand sensing at his thousands of grottoes around the world to get a true picture of demand. And I can only imagine the cost of employing all those “Elf on the Shelf” helpers to keep track of who was on the naughty list and who was on the nice (a constantly changing dynamic in my house growing up).

Luckily for him and for Mrs. Claus, recent adjustments to the business process have paved the way for a more robust supply chain. Go ahead, get your milk and cookies (read: chocolate chip) ready. Santa is on his way to a chimney near you in a more efficient manner than ever before.

Ghost of supply chain present

Santa’s ground work has brought us to the era of an on-demand, responsive supply chain. Today’s production for Christmas presents is a model in a state of perpetual flux. This readiness enables Santa to be nimble at every stage – from research and development to sourcing and assembly to distribution. Consider the child who moved from the naughty list to the nice list. Thanks to Santa’s expansive customer database – which consists of over 7 billion records – these changes are more manageable because the database is “in the cloud.” Do we dare say that Santa is also one of today’s greatest Big Data success stories?

While Santa still takes a number of face-to-face meetings and receives purchase orders via the traditional letter to Santa, he now accepts orders online. That’s right boys and girls, you can “friend” Santa on Facebook. Just remember to be mindful of what you post. After all, he always “knows if you’ve been bad or good.” You can also follow him on Twitter @Santa or reach him via C2S (Child2Santa) at: santa@santaclaus.com.

Let’s take a look at how Santa completes his own mission impossible each year.

  • Focus on the customers (of all ages): Santa has a laser focus on customer-centricity and always strives to deliver everything on everyone’s Christmas list. This year there is a big demand for individualized products, such as those custom sneakers designed with a child’s favorite team color and number. This is no supply chain “nightmare before Christmas,” thanks to Santa’s new responsive manufacturing processes and 3D printers.
  • Deck the halls with digitizalition: Thanks to his introduction of digital twin capabilities, Santa knows if last year’s toys are on the fritz. These digital copies of physical products give Santa visibility into how to best service and provide maintenance to last year’s broken toys. He now also has better visibility into the performance of his sleigh through predictive maintenance processes that leverage Internet of Things sensors to track performance, temperature, and calibration of key parts and components.
  • Securing Santa’s stocking stocks: This year, Santa is starting a pilot project with blockchain to provide visibility into how his presents are sourced and delivered. If important parts get lost en route to the North Pole, Santa can now track and trace these items. Children across the world are also going to sleep well at night, unknowingly due to blockchain-enabled processes that help Santa manage cross-border shipments and proof of ownership. When it comes to customs documentation as presents cross the border, Santa is paper-free.
  • Intelligence is top of Santa’s wish list: Santa now leverages machine learning algorithms to better plan and manufacture presents in the most economical way. It shouldn’t come as a surprise that he also has a route-planning optimizer to enable his journey to every house around the world in 24 hours.
  • IoT-enabled naughty list: The naughty or nice list is the best example of how Santa is using Big Data to fuel his operations. After all, he’s got to have a record of every child in the world. He is rumored to be thinking of leveraging smart sensors to make the job of gathering this data is a little bit easier.

Santa’s current supply chain operates like a well-oiled machine, but it’s also equipped to handle the challenges of tomorrow.

Ghost of supply chain future

With the world’s population growing, and the choices and demands from customers increasing, Santa’s job isn’t going to get any easier. Santa seems to be taking digitizalition very seriously to keep up with changing business demands, and through the use of technology he is well positioned for the future.

Take your first step toward digitalizing your supply chain today by completing your very own digital maturity assessment.

This article was originally released on Huffington Post and re-posted with permission.


About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.