All Santa wants for Christmas is predictive analytics

It’s only a month to go until the biggest gift-giving extravaganza for retailers and of course, for Santa. At his busiest time of year, and with an ever growing global population, Santa, like retailers, needs to embrace Predictive and Prescriptive Analytics in order to meet customer demand and deliver on time or risk upsetting customers.

According to new research by Blue Yonder of 2000 parents in the UK with children under 16, as many as 1 in 5 shoppers feel angry if they aren’t able to get the right present and 50 per cent would avoid the shop for two months as a result.

In the North Pole, Santa faces many of the same management and logistical challenges at Christmas as many businesses on the UK high streets. He has to ensure he has enough stock to meet customer demand (children around the world) without producing too much waste, ensuring he has enough elves working to cope with the busy festive period, and take the most efficient delivery routes to get the toys to homes on time for Christmas morning.

Every year there is a ‘must have toy’ and every year there is disappointment etched on the faces of a few children (and parents) due to the retail outlets failing to foresee demand. We all remember last November, when the demand for the Disney film’s Frozen toys and its character dolls caught the majority of retailers unprepared leading to empty shelves and angry customers.

But what can Santa and Retailers do to address this and ensure the right presents get to the right place on time?

Know your customer and forecast demand

Santa gets thousands and thousands of hopeful requests for toys each year – this means he has a lot of data to handle. By using Predictive Data Analytics to analyse the type of toys on children’s lists from previous years, he can gain insight into which products are likely to be in demand this year. He can see trends is popularity of products, for example, has the number of children asking for bicycles or iPads decreased in the last few years? Do children want a Thunderbirds Tracey Island?

Combining this with data from toy manufacturers and suppliers, such as the top 12 list of must have toys put together by the Toy Retailer Association, Santa can accurately identify which toys are going to be the top of children’s lists. From this, he will be able to see that his elves need to make Star Wars and Frozen toys for example.

Forecasting is a crucial stage of the manufacturing and stock control process. If the information on quantities needed for each toy aren’t correct, either too much stock will be produced, resulting in waste or there will not be enough product, leading to disappointed faces on Christmas morning.

Through accurately analysing this data, it ensures that Santa and Retailers aren’t wasting valuable time and resource on toys that won’t be quite as popular on everyone’s Christmas list and will know as accurately as possible what the customer wants.

More than that, he can automate replenishment. 99.9 per cent of decisions can be automated and ordering in more stock is one of them. When stock gets to a certain level, processes can be put in place so that new orders are made automatically, thus ensuring that you always have the right amount of the right product in stock. It takes away the ‘gut’ feel and replaces it with a much more accurate decision making based on the latest data that incorporates things manual processes and tools such as Excel can’t. This leave more time for Santa and store managers to focus on their jobs and what is important to their business – customer service.

Home delivery: organising his sleigh route

Predictive analytic solutions can incorporate external factors such as weather to help Santa calculate the most effective delivery route to enable him to deliver all the presents to the right houses, in one night.

Weather varies drastically all over the globe and changes in wind, fog and weather patterns will affect the route he chooses or is physically able to take on Christmas Eve.

In the UK, Christmas is forecast to be very cold with lots of snow on the way, meaning Santa will have to consider how he gets to the houses under heavy snow and how much time will be added to his journey as a result.

Bianca Huttner, Head of Marketing UK, Blue Yonder

Image source: Shutterstock/Stanisic Vladimir