5 Things Santa Needs for a Stress-Free Holiday Supply Chain

Originally Published November 9, 2022 – Updated December 22, 2022.

He’s making a list. He’s checking it twice. He’s running it through a series of stress tests, contingency plans, and scenarios. And he’s trying to find out if his supply chain will be naughty or nice.

Santa has learned a lot in the last two years, but he also knows this year will be different and that he can’t leave anything to chance. If he’s going to navigate this season’s holiday supply chain challenges and deliver nearly eight billion gifts in one night, even with the help of some pretty powerful magic, he’s going to need to take his supply chain design to the next level.

5 supply chain actions Santa has already taken to handle Christmas supply shortages

In the last two years, Santa has:

1. Gotten serious about data

Santa knew he needed to gather data on everything from wishlists to production capacity at each fulfillment center, to transportation routes in order to let his magic…truly work its magic. He needed to know exactly where his stuff — and its component parts — was at all times to be prepared for disruption.

2. Improved visibility of his supply chain

By creating a digital twin of his supply chain, he’s gained the ability to stress test and run models of his end-to-end supply chain. Now he can see what the impacts will be virtually before making changes to his physical supply chain.

3. Expanded the team of elves that design and manage his supply chain

Santa’s elves were growing tired. There was just too much demand, and too many changes happening for one single, small group in an isolated snow-covered workshop to handle. So he’s built out his supply chain team and equipped them with the best technology and processes to create the most resilient, efficient, and cost-effective supply chain possible.

4. Stopped over-emphasizing cost-minimization

Don’t get us wrong, Santa loves saving money as much as the rest of us, but he’s realized he needs to balance cost with sustainability and risk.

5. Built out a network of alternative suppliers

When his top confectionary supplier had an unfortunate incident with a band of candy cane-hungry polar bears, he was able to pivot quickly and source these crucial items from another supplier that was already pre-vetted and known for quality. Delays were minimal, and Santa was able to bounce back quickly from the disruption.

But, supply chain challenges look different this holiday season. Instead of shortages, he’s seeing a glut of inventory. Transportation is still a challenge, but for different reasons than last year. One of his top priorities is to help his Chief Supply Chain, Procurement, and Finance Elves band together to continue to outsmart disruption. Beyond that, like many other supply chain leaders, he’s working to address the following issues:

5 more steps Santa is taking to prepare for holiday supply chain issues in 2022 and into 2023

1. Addressing inventory imbalances

Just like Nike and Nordstorm, Santa’s workshop has a little too much inventory on hand this year. This might be great for all the kids anxiously waiting to hear the clop-clop of reindeer hooves on Christmas Eve, but Santa doesn’t like wasting anything. How can he make sure the overflow doesn’t continue? How can he coordinate with his toy manufacturers? How can he predict demand and finally get it right?

Word on the street is that he’s starting by establishing policies and practices that will help him right-size his inventory.

2. Planning ahead for logistics and transportation snafus

Even magical flying reindeer can get sick. With ocean freight and air cargo rates dropping, he’s been looking into additional transportation options to make sure he meets his delivery deadlines. He’s even considering creating an electric backup sleigh in case the magic ever runs out.

3. Preparing for extreme weather events and climate impacts

Even though Santa and his elves are used to cold and snowy conditions, he’ll never forget that one time he got stuck in a record-shattering blizzard. And with the polar ice caps melting at an increasingly rapid pace, he’s worried about some of his warehouses getting flooded.

One thing he’s looking into, now that he’s able to make data-based decisions and model scenarios with the digital twin of his supply chain, is building in optionality so that if a storm or flood strikes, he can respond quickly and still get his deliveries out on time.

4. Continually updating his supply chain design

With Santa’s biggest delivery date being one-night-only, he needs to make sure nothing goes wrong. Last year he learned that his supply chain design is not a one-and-done exercise. So this year, he’s been continually reviewing and updating his supply chain design to make sure everything stays on track until the gifts arrive in the homes of squealing children.

5. Empowering his elves with technology and decision-making power

In the last hundred years or so, Santa has had to expand the number of production facilities he owns throughout the North Pole to meet demand. He prides himself on running an efficient operation and creating an environment where elves can carve out their own career paths. To achieve both goals, he’s adopted technology that makes it easier for the elves who didn’t go to engineering school to model scenarios and make data-informed decisions to help them achieve their goals.

Even with a head start on the holiday season, like many supply chain superstars, Santa must continually revisit his supply chain. (Santa! He’s just like us!) He recognizes supply chain maturity is a journey, not a destination. And one of his top priorities in the next year is to build supply chain resilience.