Dec 4, 2020

SAP: Santa’s five steps for a successful supply chain

Supply Chain
Georgia Wilson
3 min
Santa on a video conference
With just 21 more sleeps till Christmas, SAP had a chance to speak to Santa himself to discuss the most successful supply chain story of all time...

With his keen eye for target markets, near-perfect order rating, global distribution channels, and unique delivery model, Santa is set to face his biggest challenge yet - maintaining a successful operation during the global pandemic.

Taking time out of his busy schedule, Santa spoke with SAP to discuss his top five steps to ensure that Christmas remains magical while ensuring everybody is safe.

  1. Capturing actual demand via digitalisation

Speaking with SAP, Santa explains that like the rest of the world he is working from home and taking important virtual calls through the use of video conferencing platforms.

Santa has confirmed he will still have face to face meetings; these will be reduced this year, with social distancing measures in mind. As always, Santa is receiving ‘wish list’ letters via the traditional method; however, like many other organisations around the world, he has also gone digital with an online option available too. 

Even though Santa is hundreds of years old, he can still keep up with the latest trends. Other ways you can contact Santa include Facebook, Twitter and via email at [email protected]

Did you know? After 108 years of operations, the US Postal Service’s ‘Operation Santa’ campaign has gone digital. Fulfil a child’s wish this year in four easy steps via the US Postal Services campaign page.

  1. Customer segmentation

When it comes to customer segmentation, Santa explains to SAP that traditionally, his customers are segmented into two groups - Naughty and Nice. With 2.2bn children to keep a record of in his customer database, Santa has adopted a cloud database approach to flexibly manage continuously changing data. 

  1. Employee safety

Whilst perhaps not a standard location for a global manufacturing centre, Santa’s elves in the North Pole have been working hard while quarantined in their ‘bubble’. 

To ensure that all elves remain safe while working, Santa has installed a network of sensors in the factory that leverages artificial intelligence (AI) to take their temperature, and he has provided them with wearable sensors to trigger an alarm if they get too close to another worker. 

  1. Supply chain safety during distribution

After extensive testing, Santa confirmed to SAP that when it comes to his Chimney delivery model, the unique approach is perfect for a socially distanced supply chain.

Due to regulations, factories at the North Pole - like many others around the world - have had to operate with a lower capacity of workers than usual, make significant investments in procuring personal protective equipment (PPE) and redesigning the shop floor to accommodate social distancing measures.

One industry trend that Santa is adopting in his own factories is the use of machine learning (ML) algorithms to analyse real-time data to know how many elves are allowed in an aisle at a specific time, allowing tasks to be scheduled accordingly.

On the big day, Santa will be sanitising his hands and sleigh to ensure that he doesn’t bring any germs to the households he visits, while his eight flying reindeers have been put into their own ‘bubble’ until Christmas Eve.

  1. Intelligent toy production

Finally, Santa explains to SAP how he and his elves are leveraging industry 4.0 technologies to design and manufacture smarter gifts with built-in sensors that create digital twins. By harnessing this technology, Santa has greater visibility on how he can best serve and provide maintenance throughout a toy’s lifecycle.

Outside of the factories, Santa has adopted the use of predictive maintenance processes with IoT sensors to determine the overall equipment effectiveness (OEE) of his sleigh, tracking performance, temperature and calibration of key parts and components.

For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital.

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Jun 11, 2021

NTT DATA Services, Remodelling Supply Chains for Resilience

6 min
Joey Dean, Managing Director of healthcare consulting at NTT DATA Services, shares remodelling strategies for more resilient supply chains

Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.

The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.

A Multi-Vendor Sourcing Approach

“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.

“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.

But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?

“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.

Wielding Big Tech for Better Outcomes

So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry

“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality. 

“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”

Evolving Procurement Models 

From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view. 

“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.

“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”

“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”

But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?

“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.

The Challenges

These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.

On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.

Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”

He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”

As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”


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