Santa’s Supply Chain: Best in the World?
TAKE NOTE(Insights into the SAP solution and technology)
Gartner likes to publish the Top 25 Supply Chains every year. Unfortunately, there’s one supply chain the esteemed analyst firm continues to overlook. And it just so happens to be the greatest supply chain success story of all time. I’m talking about The Santa Claus Supply Chain. Don’t believe me? Who else can claim:
- A laser focus on the target market – Children of all ages
- 100% perfect order rating, on-time delivery and fill rates
- A global distribution channel that spans the world in 24 hours
- Direct Door to Chimney Delivery Model
- A committed workforce with zero turnover
- The very first known supply chain to run “in the cloud”
Let’s take a closer look at Jolly St. Nick’s supply chain superiority, shall we?
Manufacturing and Distribution Facility
At first glance, Santa’s manufacturing and distribution facility (the North Pole) is not ideally located from a logistical perspective. However he does have total control of his manufacturing and achieves tremendous economies of scale in production by having a single manufacturing facility (Santa’s Workshop).
It is also believed to be the largest single manufacturing plant in the world. With the global population surpassing 7,000,000,000 people, of which around 35% are under 19 years old, the workforce (Santa’s Little Helpers) need to produce over six million presents every day of the year. As a result, inventory of billions of end products are built up towards the peak season (Christmas Eve) creating the ultimate warehouse management challenge.
In addition, The North Pole location is also a brilliant financial strategy as records show that it is it is exempt from all government taxes and regulations as, being located in the Arctic Ocean it is not owned by any single country and is considered “international territorial”.
Santa has an unblemished reputation for “delivering on the promise.” There’s never a late delivery, and in my experience, he usually delivers more than expected! I’d say that deserves a perfect order rating of over 100%. But how does Santa actually maintain such an accurate customer database (naughty and nice list)? With over seven billion records, it’s a prime example of “big data” and is of course more manageable because it’s “in the cloud”!
Traditionally, Santa has taken a large number of orders personally. Usually by face to face customer meetings (whilst sitting on his knee), or from letters delivered via the once popular mail system (older readers may remember it). Thankfully, Santa is no technology slouch either as he now accepts orders electronically through popular social networking sites. That’s right boys and girls, even Santa is on Facebook. You can also follow him on Twitter @Santa or reach him via C2S (Child2Santa) at: [email protected]
Supply Network Collaboration
There is no official count of how many suppliers Santa deals with but I have heard that he leverages S2B (Santa to Business) process to collaborate I can only imagine the level of visibility that Santa requires to orchestrate purchase orders, shipments, in transit inbound inventory of raw materials and components, and the optimization of the transportation network to get all his supplies to the North Pole on time.
Supply Chain Planning
Santa’ demand forecasting must have him pulling at his beard when trying to synchronize supply to demand during S&OP meetings. He has millions of SKU’s that all peak at exactly the same time (Christmas Eve). He also has to deal with unbelievably short planning cycle times based on 1 on 1 order taking processes at strategically placed customer service centers (Santa’s Grottos) and Direct orders (letters to Santa) that are sometimes not available until point of delivery (with milk and cookies at the fireplace). These complex challenges require a very responsive planning system to manage “push/pull boundaries” in a very demand driven, finish-to-order planning and manufacturing process.
Transportation and Logistics
Santa has the logistical and fulfillment challenge of visiting every customer / location combination in a 24 hour period. Actually it is a 31 hour time period (read on). This is all done through his own logistics fleet of “a miniature sleigh, and eight tiny reindeer” (see “The Night Before Christmas” for more details).
Santa also seems to have perfected his Inventory Optimization and safety stock planning, as you never hear of a “Santa Sale” on December 26th – a fact that’s been making his competitors pull their hair out for hundreds of years!
Tracking and Tracing
Because Santa flies a single delivery route and mode of transport, there is not a great need for individual RFID tags on each delivery. He has, however, in the past few years, taken advantage of a GPS Tracking device so that his customers can track and trace his movements and current location in real time; through a service provided by NORAD (children love this). This is also a very good system for parents to “encourage” children to go to bed as they can now tell, to the nearest hour that “he is coming”.
So, based on the aforementioned, does Santa have the best supply chain in the world?
Would you dare say “no” and perhaps end up on his naughty list?
P.S. According to our records, Santa is an SAP Customer!!
UNDER DEVELOPMENT(Information for ABAP Developers)
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Message from Principals (Special message from CEO & President)
It is nice at this time of year for all of us to reflect on what we have learned throughout the year, and what we hope to achieve in the year to come. When we think about 2012, the overwhelming feeling is one of gratitude.
We feel gratitude that we have been able to grow IT Partners, in spite of all the bumps and challenges that this journey inevitably brings. We feel gratitude that hopefully our hard work has made at least a little difference to the lives (and wallets!) of all of you, our valued partners and friends. Gratitude in the trust and loyalty you all have shown us. Gratitude in knowing that our teams take enormous pride in really trying hard to do a great job, every day, and that most of the time, we succeed.
And looking at the year ahead, my overwhelming feeling is one of excitement. We have so many new opportunities and partnerships ahead. It’s going to be a fun 2013, and I’m honored to be able to work with such outstanding people and partners.
So thank you, from the bottom of all our hearts, for your support, friendship and your business. We wish you all a fantastic holiday season, full of cheer, family, fun and warmth.
Thank you again, and Happy Holidays from all of us at IT Partners!
Christine Cecchini – CEO
Anthony Cecchini – President