According to figures from the UN, there are currently more than 1.9 billion children aged 14 and under in the world, a 121% increase on the number of children in 1950.
If Father Christmas gives just two presents to each child, this means making and wrapping more than 3.8 billion presents before Christmas Eve. With Santa’s gargantuan task getting bigger and more complex each year, KPMG’s experts investigated if the Christmas supply chain might be made more efficient so Saint Nick can continue to keep up with the corresponding growth in demand for gifts.
Santa’s grotto (which includes warehouse and production facilities) is situated in one of, if not the, most remote areas on the planet. Despite the need for confidentiality and seclusion, KPMG investigated whether there might be a better suited location.
The Christmas workshop is currently located in the North Pole which has average winter temperature of minus 40°C. According to analysis this means heating costs of 16.4 pence per square foot, so assuming a warehouse size of 600000ft2, this results in an overall heating cost of £98,814.82 per month. Therefore, relocation to a warmer climate would reduce the need for any heating costs.
In fact, according to KPMG’s analysis, the optimum location for Santa to set up shop would be Kiribati, the easternmost inhabited island on earth and therefore the first place children wake up on Christmas Day. Not only would this reduce operating costs, it would also make for a more streamlined journey (see below).
Santa’s current delivery route goes from east to west across the globe which is important as the light of the sun also travels from east to west so this maximises his available night-time.
However, starting at the North Pole means Father Christmas and the reindeer begin their journey by flying 6,085 miles to Kiribati to begin the Christmas deliveries which means the elves have to have the presents ready that much earlier. What’s more, the final stop on Santa’s journey is American Samoa so, once all the world’s children have been given their gifts, the sleigh then has to travel 7,215 miles back to the North Pole.
Assuming Santa has the eight hours from 10pm on Christmas Eve until 6am the next morning to empty his gift bag, relocating to Kiribati would mean he could fly directly from the International Date Line, east to west in the 32 hours he has to work with due to the different time zones around the world. Once all the deliveries are done, the sleigh would only have to travel 1455 miles back to Kiribati from American Samoa.
Therefore, the relocation of Santa’s grotto from the North Pole to Kiribati would save him and the reindeer 11,845 miles of travel. While this only amounts to a small percentage of his entire journey, it to put it into context, this is equivalent to the distance between London and Dunedin, New Zealand.
Currently, the most popular order method for Christmas presents is a letter to Father Christmas himself. In fact, Lapland Post Office in Finland receives upwards of 550,000 letters each year.
However, the approximate delivery time for a letter to reach the North Pole from the UK is around 7 days. With orders being placed increasingly close to the delivery date, KPMG would suggest implementing an online option (via email) which would reduce this delivery time down to less than one minute or approximately 20,160 times faster.
Producing the presents – just-in-time
Employing a just-in-time production method to produce the 3.8 billion presents helps limit the required storage space required, but also means Santa and the elves can better match demand as orders can be taken at a later date. However, Santa’s production capabilities have remained static for decades whilst the world’s population has increased by 168% since 1950 so KPMG analysed whether there were ways the manufacturing process might be smoothed out.
Making use of Big Data solutions to convert data into information would benefit Santa’s supply chain as it would allow for better focus on the target audience and improved prediction of customer demand. For example, by employing a demand prediction model capable of analysing trends in children’s toy sales, Father Christmas would be able to spread production over more days to help ease the pressure on his workforce in the lead up to the peak manufacturing period.
“Every year Father Christmas performs the incredible and magical feat of delivering presents to millions of children around the world, but what if by improving some of the processes that make it all possible for Saint Nick, he could get Christmas delivered faster – maybe even with time to spare?
“Having successfully delivered presents to the world’s children for thousands of years, Santa’s supply chain is undoubtedly a well-oiled machine, but that doesn’t mean the process couldn’t be improved. In theory the entire chain might be smoother and speedier if, say, the grotto were located closer to that start / end point of the delivery route, or if production could be evened out a little by using Big Data to better predict toy demand, or even if children were able to submit their requests online.
“Now clearly this research is a bit of a light-hearted take on supply chain optimisation, but there are real-world takeaways that highlight the importance of making sure businesses’ logistics and delivery mechanisms are fully operational and able to cope with peaks in demand.
“Of course, a lot of our findings are based on a number of assumptions – including that all the world’s children have managed to stay on the ‘nice’ list as well as the fact that Santa’s elves and reindeer would consider a move to a remote island on the International Date Line. Yet, as the planning and effort that goes into Santa’s annual adventure around the world becomes ever more complex it’s certainly nice to imagine we could help Santa get back to Mrs Claus that little bit earlier on Boxing Day.”
For further information please contact:
Jess Liebmann, KPMG Corporate Communications
T: +44 (0)207 311 3245
M: +44 (0)7551135778
KPMG Press office: +44 (0) 207 694 8773
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.