by Bill Kleyman
Many believe that Santa has his own magical methods of delivering to boys and girls on Christmas and I’m surely not one to challenge Santa. However, if Santa existed* in our lifetime and could use only the tools we have at our disposal, could he deliver all of those presents to all of the children in the world in one day? No, probably not in a day. But what if he had a whole month? Say, the month of December? Could he do it then?
First, let’s look at some numbers. According to UNICEF, there are about 2 billion children in the world. These kids would be 15 years of age and younger. However, not all of them are on the ‘nice’ list and many would argue that the ‘cut-off’ for Santa delivery is around the age of 10-11. So, let’s assume that Santa has to deliver presents to roughly 1 billion children across the globe over the course of a single month. Whether a month or a day, is this even possible?
Believe it or not, it actually could be. But Santa would need more than Amazon-ian scale and capabilities to even come close. Let me put this into perspective. In 2017, Amazon shipped more than five billion items with Prime worldwide to about 100 million Prime members. Alibaba, through its 15 courier partner companies, delivers an average of 30 million packages per day. Or, about 11 billion packages annually. On an average day, there are more Alibaba packages delivered than the United States Postal Service delivered on its busiest day ever, the Monday before Christmas.
So, to hit that 1 billion package mark in one month, Santa would need to deliver about 33 million packages per day. Which, as the numbers show, is just about the same amount that Alibaba does today. In other words, Santa would need to become an absolute logistics powerhouse.
How would he do it? Easy, just follow the Amazon and Alibaba route:
- Strategic Sourcing. It’s all about having the right products sourced from the right locations, found as close to the consumer as possible. This means that delivering everything from the North Pole will make absolutely no sense. Santa will have to diversify operations to leverage sourcing partners to keep products closer to the kids that’ll be getting them.
- Courier Partners. Santa simply can’t do this alone. So, he’ll need to paint those UPS trucks red and get some help. Just like Alibaba, Santa would absolutely need to partner with global firms who can strategically allocate packages to their intended delivery point. Trying to do all of this alone would be highly complex and very costly.
- Smart Warehouses and Connected Systems. IoT sleighs? An AI Rudolph? Elves operating robotics and automation in the warehouse? These are going to have to become the new reality if Santa wants to meet his 30+ million packages per day goal. Bottom line, Santa’s Workshop will need to invest in some advanced and smart solutions to deliver all of those packages. This also means that Santa might need to send some elves to train on new data engines, working with AI, and how to better utilize data. Which brings us to the next point.
- Data Utilization. We live in a data-driven world. And, solutions like big data, machine learning, and even AI can all help proactively spot issues and optimize entire routes. Basically, Santa is going to have to upgrade those data ingestion systems and tracking capabilities. He’d need to leverage a pretty advanced naught-nice list to ensure proper delivery. Leveraging data in real-time is a big way that major logistics organizations stay on time and maintain competitive advantages!
- A Lot of Elves. As of March 2018, Alibaba had 66,421 full-time employees, up from 50,092 in the previous year. To try and match the level of delivery production, Santa would need probably as many elves to help support all of the operations required to deliver 33 million packages worldwide.
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In today’s online world, logistics has become more complex than ever before. To combat this, massive online sellers are leveraging a variety of tools to become more efficient in how they deliver to the world. In some cases, they use more automation, in others, they leverage the power of data. In Amazon’s case, they plan on to launch their own shipping service entirely.
“Shipping costs, which include sortation and delivery center and transportation costs, were $11.5 billion, $16.2 billion, and $21.7 billion in 2015, 2016, and 2017,” stated Amazon’s latest regulatory filing. “We expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, we reduce shipping rates, we use more expensive shipping methods, and we offer additional services.”
Amazon said it is working to “mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies.”
New technologies aim to further help alleviate the challenges of logistics. It’s quite possible that in the near future, Santa will have self-flying sleighs to help with both volume and longer travels. But that could be a while from now. In reality, Santa would need a major upgrade around the technology stack that the North Pole utilizes today. And, although the North Pole might actually be a great spot for a data center, Santa would definitely need to leverage the power of cloud to scale appropriately and work with the right development and data analytics tools.
In the real world, logistics greatly benefits from the use of automation, data analytics, and smarter technology systems. At UPS, for example, IoT sensors help protect the environment by monitoring delivery truck mileage, speed and overall engine health. Coupled with big data solutions, UPS is also able to effectively monitor packages and optimize entire routes. As you look out ahead into the new year, it’s these types of next-generation solutions that could help Santa, and your own logistics goals, become much more efficient.
*Oh, if you’re just finding out that Santa isn’t real – my sincere apologies that I’m the one to break the news.
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