Santa: Deconstructing the World's Best Supply Chain

Typically, the holiday season is a joyous time spent gathering with friends and family to enjoy feasts and quality time spent with loved ones. Of course, the COVID-19 pandemic may make this year’s season look a bit different than previous years, but there is one tradition that the virus cannot take away from us – our ability to celebrate the season through the retelling of familiar stories. From religious stories like The Festival of Lights or the Nativity Story, to long repeated classics like Dickens’ “A Christmas Carol” or “A Visit from St. Nicholas (Twas the Night Before Christmas)”, to more modern classics like the movie “A Christmas Story” or David Sedaris’s reading of “Santaland Diaries,” this is a season to return to classic stories. And, after the year we’ve all been through, maybe now more than ever.

So, our gift to you – a classic post from years past (and one of this blog’s most popular posts ever), a closer look at how Santa Claus manages the most difficult supply chain of all.

From everyone at Magnitude: Merry Christmas, Happy Holidays and Peace on Earth.

Deconstructing The World's Best Supply Chain - Santa-flying

If you’ve spent the last year battling with the challenges of creating a world class supply chain, one able to meet the demands of the modern consumer, and are now looking forward to a well-earned break, spare a thought for the big man in red and his annual supply chain challenges.

Billions of finished products, a D2C (Door to Chimney) delivery model to a truly global set of customers who demand 100% Perfect Order Fulfilment – Santa faces a supply chain challenge that would have Amazon stumped. Take into account that he’s also permanently short staffed (average Elf height = 18”), has a single central distribution center located thousands of miles from most of the customers (for tax reasons – the North Pole has a generous corporation tax rate of Zero), relies on a purely organic (but slightly smelly) logistics workforce without any warehouse robotics, drones or autonomous trucks, and Bezos and the rest of the Gartner Top 25 would be waving the white flag.

Deconstructing The World's Best Supply Chain - Santa-Chimney

It all started with the forecast…

Just imagine the number of real-time data capture points required to build a demand forecast which can continually monitor and update a child’s present qualification criteria (aka the Naughty or Nice list), and react to a vast number of last minute changes on Christmas Eve, caused by parents across the world changing the criteria to improve their level of Child Bedroom Compliance. There must be some serious big data analysis going on at head office for such flawless OTIF figures to be achieved. This information, combined with the specialist intel coming in from Santa’s shopping mall army and a whole series of personal, knee top VotC (Voice of the Child) consumer insight capture points at Grottos worldwide, provides the perfect harmony between big and small data. The elves in charge of this operation really earn their Christmas bonus.

An amazing production facility

As ‘Buddy the Elf’ so painfully demonstrates, the speed at which elves can assemble and build toys puts Tesla’s robotic mega factory and the latest 3D printing technology to shame. With a growing population to serve and a demand forecast that fluctuates right up until the end of the year, Santa’s workshop needs to produce over 20 million finished goods per day, every day of the year in order to meet the Xmas demand. Talk about a seasonal peak! We can only imagine the number of candy canes that are gobbled up by elves to provide the sustenance and energy they require to get the job done. To date, they’ve never let Santa down. Must be on a permanent sugar rush.

Magical delivery…

Deconstructing The World's Best Supply Chain - Santa-magic

One night, approximately 510,000,000 kilometerstravelled and 1.9 billion happy customers on Christmas morning – this truly is a magical delivery service. Even with the ability to leverage the different time zones, creating a 31-hour delivery window, Santa’s HQ must have some serious bespoke route planning software. Like most modern distributors, progress can be tracked via GPS, but in Santa’s case he recruits the North American Aerospace Defense Command (NORAD) to track his progress so the children can see where he is on his route at any point in time.

Rudolph and the gang don’t want to travel more mile than necessary so the prep that goes into route planning is nothing short of astonishing. The IT team must get nervous this time of year and pray their IT infrastructure can manage the intense workloads coming their way. It’s a good thing that the sub-zero temperatures at the North Pole keep their servers running cool.

Deconstructing The World's Best Supply Chain - Rudolph

While we can’t promise to help you improve your supply chain’s operational performance to Santa like levels, our analytical software is used by some of the world’s best and largest brands to keep their supply chain in tip-top condition. Whether you need to improve the level of customer service, reduce lead times, optimize inventory, manage data or simply reduce waste and excess costs, Magnitude Angles for SAP can empower your team to understand what is happening in your supply chain and why. For more information about how Magnitude Angles for SAP empowers businesses worldwide, click here.

Finally, everyone at Magnitude would like to wish you a Merry Christmas and a Happy New Year. And as your family opens their presents on Christmas morning, remember what had to be arranged to make it happen. ;-)