Santa’s Supply Chain: Holiday Logistics in 2020
This blog is co-authored by Wayne Snyder, VP, Retail Industry Strategy EMEA, and Alan Duncan, Senior Director of Industry Strategy, EMEA.
“T’was the night before Christmas, when all through the house not a creature was stirring, not even a mouse. The stockings were hung by the chimney with care, in hopes that St. Nicholas soon would be there.” The famous opening lines from the 19th Century poem by Clement Clarke Moore
This year’s visit from Santa Claus is sure to be different.
Stockings will still be hung by the chimney; children will still go to bed filled with excited anticipation of the gifts and fun of Christmas day. But, will we hear the “clatter” of Santa’s sleigh and his eight reindeer? For this year, Santa’s operations will have to cope with the increased complexities and restrictions imposed to curtail the spread of COVID-19.
A Socially “Different” Holiday
Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donner, and Blitzen. Will Santa and his eight reindeer need to abide by the “rule of 6”? Which of them will be furloughed? How will Santa deliver the “sleigh full of toys” if he is not able to enter people’s homes? His usual attire will need updating – fully decked out in PPE, mask, gloves and high-vis jacket adorning his traditional red and white, carrying hand-sanitiser for use before entering every home. If you catch a glimpse of this jolly old gentleman, you may be startled. But it’s for your own good.
For centuries, Santa has achieved more than any global logistics operation could ever dream of. Who else can single handedly deliver over 500 million parcels across the globe in 24 hours? Amazon delivered 10 million per day in 2019 – only 2% of the volume Santa deals with on Christmas Eve – and they have tens of thousands of helpers.
But this year, on the “night before Christmas,” Santa is preparing for a very different delivery service, as he was not immune to the virus’ effects that continue to challenge the planet.
In a normal year he was able to meet children everywhere and “take orders” to help sense demand. In 2020, due to social distancing restrictions and lockdowns, Santa is using alternative methods of prediction. Like many, he switched some of his market intelligence gathering online – taking to Microsoft Teams, Zoom, FaceTime and other video conferencing platforms to talk to children across the globe about their wishes for the holiday season.
He’s Making a List, and Checking Inventory
But we know Santa had to start planning long before the delivery date to ensure he had adequate inventory to satisfy all these children, especially as forecasting has been more difficult than usual in 2020. However, we understand Santa has introduced new technology to aid him this year.
Prompted by Mrs. Claus’ warning that, “You cannot let the children down this year,” Santa has invested in AI demand forecasting capabilities to ensure he can meet the demands of all his important recipients. So, what is he seeing? LEGO and board games are predicted to remain popular as we continue to fight boredom indoors, and parents seem to want their children to receive bigger gifts this year as compensation for lost experiences due to the pandemic. But can Santa even make everything on time with goods restricted from demand spikes and supply constraints? Santa has needed to increase his flexibility to respond quickly as things continue to change before he can finish his lists, check who has been naughty or nice and prepare for the final deliveries.
The New North Pole
Seasonal peaks occur in many businesses and Santa manages the greatest peak of all. But in 2020 some of the elves have had to work from home. Safety in the North Pole workshops has been paramount, with social distancing rules significantly reducing output. Santa and his highly adaptable elves have had to explore production techniques to combat the efficiency drops and counter the challenges of poorer demand visibility. Inventory pre-builds, product redesign for late configuration and range reduction are all strategies Santa has employed to get through the extraordinary circumstances.
Like many businesses, the efficiencies the North Pole workshops have enjoyed in the past have been exposed for their lack of resilience in 2020. Spokes-elves have indicated that Santa may be considering moving to a more global/local sourcing strategy in the future. Food for thought for the night after Christmas. Remaining COVID-19 compliant whilst supporting his many elves working from home, ensuring they continue to collaborate has been tough, but Santa Clause knows, this year, more than ever, he needs to bring joy to every child.
You Can Teach a Jolly Old Man New Tricks, and Tech
And what of the new complexities of delivering millions of parcels during a pandemic? Fewer families will get together, creating more delivery points; differing regulations and restrictions in place from country to country to consider; the need for Santa, the elves and the reindeer to socially distance (social bubbles already in place); the “Rule of 6” in place in many countries means that the sleigh cannot be pulled by the usual eight reindeer so sleigh-power is reduced. This will place a greater need on efficiency: Santa must do more with less. Luckily for the children, Mrs. Claus has bought him his own Christmas present (please do not tell him it’s an AI-powered logistics control tower!) to ensure he has complete visibility of his delivery network and can mitigate issues before they happen.
Network and route optimisation software will be used for the very first time and, after running various scenarios, Mrs. Claus is confident that Santa will deliver all the gifts on time and in full. With reduced sleigh pulling power and more delivery drops, Santa must change his approach. Insider elves leaked that Santa has trained a senior elf to drive a second sleigh to a secret location on or around the Greenwich Meridien where Santa will swap sleighs with the slickness of a Formula 1 team, mid-journey around midnight GMT. The decision about which reindeers are to be used on each leg of the journey remains a closely guarded secret, although Leg 1 is expected to use only four reindeer and, given the more dense population of the Western hemisphere, Rudolf is expected to be drafted in to boost the Leg 2 team up to five.
Those who track Santa’s progress through the NORAD or Google control towers will not see any interruption: the sleighs are said to be fitted with identical GPS tracking devices to ensure full visibility throughout the journey.
And what next for Santa? With the likelihood of a vaccination for COVID-19 soon, he is hopeful this year’s challenges will be short lived. However, there’s no rest for the world’s greatest logistics team. Santa and his team of management elves are already looking to 2021, weighing up the implications of Brexit and the change in U.S. President. What will be the impact on global tariffs? Will more suppliers move to production nearer to Lapland? How will Brexit impact the free movement of elf labour from UK to his workshops in Lapland (inside the EU)? How can Santa Claus, the reindeers and elves drive toward carbon neutrality and a circular supply chain? And what will be next year’s favourite toy?