5 Procurement Questions for Santa
After pulling a few strings, we managed to catch Santa on one of his few coffee breaks at this busy time of year to fire five burning questions at the reigning world champion in procurement.
Christmas is a holiday worldwide, but the busiest time at work for you. When does your year start?
Actually we get Christmas wish lists all year long. Children have wishes all throughout the year but it really gets going in October. Then my elves have to work at full blast. It’s very important that each order is categorized correctly so each elf knows what to pack and by when. It’s also important to have an overview of wish lists that haven’t been fulfilled yet or have been changed. Some children change their wish lists several times during the year – sometimes several times during a week! We have to record all of this so that we don’t deliver the wrong toy. That would be a catastrophe.
How many children do you have to deliver to in one night?
There are 7,534,283,000 people in the world, 2 billion of whom are children. And I have to deliver to all of them in one night with my eight reindeers! For this I need exact timing and a supply chain without any gaps. My team and I work the entire year through up to this very special day and there cannot be any mistakes. If I don’t stick to the delivery date, I lose the trust of my most important customers – the children. We can’t afford any damage. If the children don’t believe in me, I wouldn’t exist.
How do you handle the sheer number of orders, all with the same delivery date?
I have a lot of help! To get a grip on all the orders, I use JAGGAER, a globally recognized for procurement optimization. I especially use the solutions for complex logistics: Vendor Managed Inventory, call-off, Kanban, and more. As soon as an order arrives, this is processed immediately and made available. To keep storage costs, at the North Pole, as low as possible I deliver the presents to hubs strategically placed all around the world before they travel the final few miles on December 24th to find their way under the Christmas tree.
To buy such an enormous range of presents, you definitely need a well thought-out supplier database with a highly sophisticated category strategy. How do you implement this?
That’s right – we have numerous suppliers. Lots of children have special wishes that often only a single supplier worldwide can fulfill. We have a special strategy for such single-source suppliers. If this kind of partner disappears, we’re stuck. So they have to be nurtured and fostered the whole year round. By establishing a long-term partnership, we can reduce costs together, ensure high quality, and potentially improve the product through cooperative R&D.
In other industries, such as cuddly toy production, there are a variety of suppliers. We take extra special care that the cuddly toys are produced sustainably. We support companies who work without child labor, use renewable raw materials, and behave in a socially responsible manner. As a rule, we have strict CSR policies.
Because December is very busy and you only bring presents to good children, do you have a system to see who has been good and who has been bad?
My workers make an account for each order received which is then deleted when the child becomes a grown-up. The customer is then observed all year long and graded. For this we use a rating system that has been developed especially for us. It’s a supplier rating system that has also been expanded so we can rate our customers. In mid-December the ratings tell us how many presents each child is entitled to and we can define our orders to our suppliers more exactly. So you better be good all year round!
Thank you very much for taking time out of your crazy schedule to talk to us, Santa.