It’s The Most Wonderful Time of the Year! Right?

Well, that depends on who you ask. This busy time of year can push many supply chain and distribution operations to their limits. Volumes, deadlines, somewhat distracted staff all can play an influential role in your year-end success – and keep you second guessing yourself and the decisions you made to prepare for this year-end push.

Every industry has its own nuances, but a lot can be learned from reviewing the experiences of others. Here’s a high-level view of one operation’s challenges:

  • Organization:                                    Santa’s Workshop
  • Location:                                             North Pole
  • Industry:                                             Toy Manufacture & Distribution
  • Primary Competition:                  Amazon

Santa’s Workshop is a privately owned organization that has been in business for over 200 years. It evolved out of Kris Kringle’s home-based workshop where he made toys for local children. As demand grew, Mr. Kringle moved the operation to the current location at the North Pole. This location offers the ample space needed for growth in manufacturing as well as housing and services for Santa’s Workshop employees, the Elves.

The manufacturing process has evolved over the years. While many toys are still created by the Elf Craftsmen, it is assumed that there may be relationships with other manufacturers such as Nintendo and Apple to meet electronics demands, Kingsford for coal lumps, etc. However the nature of these arrangements is unknown as Santa’s Workshop is privately held and does not disclose any financial or OEM information.

The supply chain process flow at Santa’s Workshop is similar to many organizations. Orders are received (also referred to as Letters to Santa). Orders are processed based on behavioral credits. Approved orders move to the Gift Fulfillment process. Declined orders move to the Coal Fulfillment process.

Every effort is made to anticipate the high-demand orders and prepare inventories and picking zones accordingly. Adjustments to replenishment activities and location changes are sometimes needed if an item reaches a higher velocity than planned. For example, since 2016 was an election year in the US, a higher demand for coal was planned. The key is to make sure that the Elf Picking Team has what they need, where they need it so that orders are ready for shipment.

Packing and Distribution are handled a little differently at Santa’s Workshop. Orders aren’t filled and shipped on-demand. Instead, all orders are filled and staged for Distribution. Distribution has a single effort – performed within one world-wide shipment window: after bedtime on December 24th to before daybreak on December 25th. All deliveries must be completed within that window.

The Distribution Team is led by Kris Kringle himself, who more currently goes by Santa Claus. A single sleigh powered by 8 reindeer carries Santa and all prepared orders to their individual destinations worldwide. A partnership with NORAD provides tracking capabilities to ensure customers can track their Orders.

Like many organizations, Santa’s Workshop performs regular reviews to see where operations and systems can be automated and streamlined to ensure demands can be met and business isn’t lost to competitors. Areas where more recent changes have been made include:

Orders: Letters to Santa may still be submitted by mail. Orders may also be delivered by email, text and Facebook. Expanded social media options are planned for next year.

Warehouse: Santa’s Workshop created a customized WMS to track and improve operations. This system has been outgrown and takes many Elf Administrators to maintain. SW is considering a commercially manufactured system, possibly cloud-based, to streamline systems.

RFID: Santa’s Workshop has piloted RFID tags to track some of the higher-value inventory. They are expected to expand this use in the coming year.

Distribution: Increased population has really pushed the limits of the Distribution Team. Santa’s Workshop is considering the possibility of Drone Delivery to some locations. Pilot activities have been limited to supply distribution within the North Pole proper. Since this is such a huge departure from current Distribution processes, there is strong internal resistance. Pilot activities for actual order distribution may be delayed as a result.

While your business may not fully parallel Santa’s Workshop, you may be looking at what you can do to improve your operations and expand your business in 2017. Some questions to ask yourself may be:

  • What worked well?
  • Where did things fall short?
  • What was your unexpected event? There is always at least one…
  • Are you keeping up with the changing dynamics of your industry/customers?
  • Are you taking advantage of technology options?

While you’re in the thick of things, stopping and thinking about systems and processes may are not going to be your highest priority. But, as you’re heading into the home stretch of the year, start taking note of what’s going on – and look at what other organizations are doing. A lot can be learned between these two perspectives that can help you to drive decisions, and improve outcomes for 2017.

What are some of the successes or challenges that your team experienced this year? I’d love to hear about what you’re doing.

Until then, in the words of our profile organization’s principal:

“Merry Christmas to all, and to all a good night!”

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