From Lead Elf to Santa Re: The Need for an Intelligent Supply Chain

December 20, 2017

Dear Santa,

As another busy, festive period draws to a close, it behooves us to look at our manufacturing processes and admit that things are just not working as well as they should. We need to make some significant changes or risk being unable to deliver another Christmas to children around the world. It is time for us to adopt an intelligent supply chain.

With a client base of 2.2 billion children, Santa’s workshop is one of the busiest production facilities in the world, yet we use processes that date back to Henry Ford’s time. Rather than finding ourselves struggling in 2018, let’s start thinking now about how Internet of Things (IoT), analytics and process integration could help us keep this operation sustainable.

I have taken the liberty of listing five improvements we could make immediately.

Better Supplier Management

Every January, Santa, your elves start searching for suppliers who can provide us with the raw materials we need to keep the workshop ticking. This is a logistical nightmare, especially because we don’t have a cloud-based enterprise resource planning (ERP) system to keep track of everything.

A robust ERP could be the basis of our intelligent supply chain. This would allow us to work with suppliers, many of whom could provide us with live data about incoming shipments. Also, by installing more smart devices in our storerooms, we could monitor stock levels and automate the ordering process.

Working together with suppliers, we can have a more efficient supply chain, ensuring that we always have what we need, when we need it.

Improved Client Management

Our biggest improvement in recent years has been the Elf on the Shelf spy cams, which provide detailed data about individual children. This excellent use of IoT has massively improved the accuracy of the naughty and nice lists, but we are not using this data to improve operational efficiency.

Customer data and operational data from the production floor can be used to make accurate forecasts about demand; however, we need the infrastructure in place to gather this information. This means smart devices throughout production that can give us real-time data about stock levels, plus a sophisticated CRM that can manage customer data. From this information, we can extract meaningful insight, allowing us to order materials as and when we need them.

Reduced Waste and Spoilage

The North Pole is really a terrible place for a production facility of this scale, to be frank. Shipping materials to the workshop is a nightmare and goods frequently arrived damaged by cold, water and polar bears. Smart devices within containers can help us to monitor this kind of spoilage. For example, food and medical transportation companies already use such smart devices to ensure that their goods are kept refrigerated at all times.

We can also use data from the intelligent supply chain to monitor any wastage that occurs in-house. RFID allows us to tag items on a fine level, so it is easier to identify the point in production where items become damaged or lost. If we are having problems with materials from certain suppliers, we can identify that quickly and change suppliers.

Optimized Use of Storage

Your magical sleigh can carry toys for all 2.2 billion children, which is very impressive. However, our warehouse does not have the same magic, so we face the same problems as every other warehouse: where do you put everything, and how do you make it easy for people to find it when they need it.

Live stockroom data gathered from IoT monitors throughout the facility would allow us to keep on top of current stock levels and plan accordingly. Using this data, we can send live instructions to our logistics team so that, for example, we could instruct a delivery sled to drive directly to the production unit if demand is high, or to an overflow storage unit if it is not.

Greater Profits

All of these changes will bring down costs dramatically — by adapting to changing demand, by reducing waste, by keeping our production lines supplied and by building better relationships with suppliers. These savings should offset the costs of new infrastructure.

Santa, we are going to have to talk about income. A milk-and-cookies based payment system is just not practical in this day and age. Have you considered asking the children to leave you some Bitcoin?

I look forward to your response.

Sugarplum Snickerpops, Workshop COO