The magic of planning analytics: A holiday story

Senior Content Marketing Manager, Communications Sector, IBM Analytics

We tend to imagine that the work of Santa’s elves at the North Pole is full of happy songs, bright smiles and endless cheer. For the most part, that’s true. But, many of us don’t know about something else at their workshop. It’s a clock—or a simple timer, actually. And it’s ever present in all aspects and locations of the most complex manufacturing, procurement and logistics operation the world has ever seen.

Nicknamed, Father Time, this clock counts down to Christmas Eve and then, when the holiday finally arrives, it automatically resets, and the big show starts all over again. While Santa’s workshop is indeed a happy place, it’s also full of pressure that builds with each tick and every tock that takes the elves one step closer to the next Noel.

We also commonly think that Santa’s operation spends most of the year making toys. Until recently, that perception wasn’t the case. Instead, Santa’s elves typically found themselves bogged down in manual planning processes along with inefficient budgeting and forecasting by endless spreadsheets pulling information from disparate data sources that exist in silos within various departments above and below the 85th parallel.

All of these challenges combined, year after year, to create significant waste of the elves’ extremely valuable and extremely limited time. Because of the countdown, they never feel as though they have enough days, weeks or months to properly design, develop, build, buy, pack and deliver the best possible toys for all the children.

The real brains behind the operation

Of course, all the pressure in the world doesn’t seem to bother jolly old Saint Nick. He works hard, suits up, flies straight and makes his deliveries, just as he has always done, without a care in the world. His concern isn’t everyday decision making. His focus is entirely on customer satisfaction.

But, one person in the organization has had enough with hundreds of years of watching a growing, global enterprise become bogged down in endless inefficient processes that resemble an underpowered snowplow in a heavy, wet blizzard. And that person is Mrs. Claus, COO at Artic Circle Carriers Consolidated (ACCC), which happens to be the delivery arm of Claus Enterprises.

Beginning the day after Christmas 2015, as soon as Father Time’s countdown commenced once again, Mrs. Claus realized it was time for a change. And that’s how Planning Analytics Revolutionizes Christmas Eve Labor (PARCEL) was born—not in a starlit manger but on a snow-whiteboard in Mrs. Claus’s office. From the first moment it was ceremoniously opened, project PARCEL wasn’t just for baking more cookies in the background or ensuring that the elves have the dental benefits they so often require. It’s about fundamentally transforming the entire yuletide planning cycle, from target setting and budgeting to reporting, scorecard analysis and forecasting.

The only other time such a massive undertaking as this one had occurred was decades ago when the elves had transitioned from hand tools and wooden toys to modern assembly lines and talking dolls. Now, once again, Mrs. Claus needed help—not the kind of help that has a glowing red nose or cute pointy hats. She needed a different kind of professional. She reached out to Tripp Braden, an old friend of the Claus family and a recognized expert in big data, advanced analytics and Industry 4.0. She wanted to see how Braden could assist in making this critical evolution take place as soon as possible.

Jolly consultation

Recently, I was lucky enough to catch up with Braden and ask him some questions about how he has been helping out with project PARCEL over the countdown of the past year and to chat about all the data-driven goings on at the top of the world. Braden was nice enough to carve out some time to answer a few questions during a routine flight from the mainland US to the Arctic.

Thanks for taking some time out just before the big holiday rush to talk to us. Can you start by telling us a bit about yourself and how you came to work for ACCC?

I lead special projects for Santa’s executive advisory team. I manage a team of technology and data experts who are in the business of equipping Santa Claus and his elves to select and work with the most advanced technologies available that helps Santa’s team stay ahead of the competition.

As you know, the goal and mission of Claus Enterprises is to deliver happiness to every good girl and boy around the world in a single night, while providing the ultimate customer experience—not to mention, eating a few cookies along the way. As with many successful large organizations, its biggest competition is not a competitor, but a countdown: Father Time. This factor means Mrs. Claus, as COO, is tasked with providing Santa with the most efficient delivery organization on the planet.

My other strategic planning and analysis consulting includes helping many of the world’s most successful manufacturing and distribution companies leverage advanced analytics technologies to transform their businesses. My role is to help them align their technology strategy with their goals and objectives. And that’s exactly what I am doing in the Arctic.

The three core tenets of project PARCEL are speed, agility, and foresight. What do they mean and why are they important to Santa, as CEO of the Claus Enterprises, and Mrs. Claus, as COO of ACCC?

Project PARCEL focuses on helping ACCC become faster, smarter and increasingly agile. This focus would be a major undertaking for any size organization, but when you overlay the fact that ACCC manages 100 percent of the delivery operations for Claus Enterprises in a closely held family business environment, the complexity increases tenfold. Its planning and forecasting systems have been used for decades, if not longer. Until recently, much of it was still done using manual systems and spreadsheets. It’s slow. It’s painful. It had to change.

When you look at the core mission of ACCC, you realize that to succeed, its team needs to have a wide range of planning, analysis and forecasting processes to support that mission. What makes ACCC so unusual is that everything needs to be done to reach its target date no matter what. No exceptions are available, which is the organization’s most important rule.

Like many large organizations, ACCC has locations around the world. Each of these locations uses its own planning processes, from completely manual naughty and nice data gathering to fully automated warehousing and distribution partners who have robust supply chains. And these supply changes need to be integrated in ACCC’s logistics operations, making the complexity absolutely staggering.

As Santa’s helpers, the challenge we faced was how to begin standardizing the operation’s planning and budgeting processes? The goal of project PARCEL is to push decision making into the many locations while maintaining the financial controls and flexibility a multibillion-dollar, nonprofit operation requires.

Let’s talk about integrated scorecards and planning process management. How do model metrics measure progress toward certain key objectives in the holiday cycle, and how do you then link them dynamically to Santa’s actions and Mrs. Claus’s forecasts?

Here’s where the story gets complicated. How do you build a more successful planning system? Like many large clients of mine, Claus Enterprises and ACCC have been successful for many years. They’ve never missed a deadline. One time was close, but, as we all know, Rudolph the Red-Nosed Reindeer helped them save Christmas that fateful foggy night.

But here’s what we found when I interviewed the best planners and financial analysts across the Claus organization. Most where spending much of their time preparing spreadsheets that were out of date the moment they were created. They had yearly planning sessions that sat on their shelves—aka, the Elf on the Shelf budget book—and never changed. The organization’s planning systems were even worse. They were designed on the if it ain’t broke, don’t fix it model. The organization paid more attention to the countdown than it did to its ability to make the most of the time it had.

The other challenge Claus Enterprises faced is many of their suppliers were upgrading their supply chains and offering significant cost reductions if Claus Enterprises would automate its financial planning processes. This approach could help reduce cost while increasing the value of the presents Santa could deliver.

The antiquated planning process was leaving the enterprise with inventory that it couldn’t distribute through its traditional methods—personal delivery. By introducing more extensive financial modeling into its planning and budgeting processes, we could save Claus Enterprises millions of dollars. But, what if we could update the organization’s planning system?

Incorporating standard scorecards into its financial planning capabilities could facilitate better decisions faster. Over time, we could automate many of its old, redundant manual planning processes. This system could also help Mrs. Claus provide different departments with a baseline budget they could work from. The collaborative platform allows the organization to use real-time planning and analysis of all aspects of the organization. The money and time savings would be tremendous. Budgeting and planning could become… fun again. Almost magical!

In fact, the real magic of advanced analytics can provide integrated scorecards to allow the elves to make better decisions on what they build and what they buy. Developing a custom set of key performance indicators (KPIs) on top of the standard metrics helps save the organization time and money. And the KPIs allow ACCC to align its strategy with its production goals. 

For example, ACCC is currently using analytics to help model key markets’ naughty and nice trends along with buying behavior to be better prepared to respond to changing market demands. If naughty behavior is trending upward, then ACCC has to source more coal to stuff stockings. Energy and commodities are not just inputs of production, but in this case, the end product. This distinction is challenging to document in a spreadsheet; yet, in planning analytics various factors can be modeled in a multidimensional manner. Analytics modeling has almost unlimited possibilities in these kinds of organizations.

As Mr. Claus says, we want to see when we are in the green, not in the red. I think he means black, but he feels a picture’s worth a thousand words. He wants a visualization engine as flexible as those the supply chain partners have. The visualization and collaboration aspects have proven incredibly helpful in handling multiple stakeholders, both inside and outside the organization—be they short or tall.

How do the elves fit in? Assuming that Mrs. Claus needs to engage users from across the organization in high-participation planning, does PARCEL allow her to collaborate with remote and distributed users through a range of mobile devices?

The future belongs to mobile technologies and project PARCEL brings ACCC up to date with a very special application codenamed Mobile Enterprise Real-time Response Interface (MERRI). The MERRI app helps keep the elves both informed of what’s happening in real time and responsive. Mrs. Claus even told me that they are constantly working to get information in the right hands in a decision-ready format at the right time.

She also shared how naughty and nice has evolved from a simple spreadsheet that Santa looks at leading into his annual trip to the Negative Behavioral Sentiment Index or Pout Scores. And it’s now being constantly updated with multiple input streams of data driven into critical areas of the organization. Yes, the rumor is true: Santa Claus is monitoring social media and blending it into your annual naughty and nice score. Cyber bullies beware.

Here’s what both Santa and Mrs. Claus wanted in terms of the customer stratification process being nothing less than a quantum leap. They have successfully transitioned from Santa’s old, manual naughty and nice list to a solution that has allowed for providing the best-behaved kids with much cooler gifts. They are much better able to know who’s been bad right up to Christmas Eve—now you really need to watch out!

Santa has four levels of kid segmentation from very, very bad to very, very good—kids you want to build a relationship with and maybe even kids you want to hire in the future. Here’s another secret: Claus Enterprises is always hiring professionals to keep its edge in holiday giving. Planning analytics enables elves to respond to almost any event, good or bad, while Santa’s in flight.

The elves, who are very good at analytics development and distribution, are selected to travel around the world while monitoring things. They monitor weather conditions, inventory levels, strategic partnerships and real-time changes that might impact what’s in Santa’s bag before he stops for his next delivery and before traveling to other homes in other cities.

I’d like to understand the architecture behind project PARCEL’s planning analytics solution. Because of the limitless cooling power available at the North Pole, did Mrs. Claus decide on the on-premises deployment option?

One of the early decisions we had to make is where to put Santa’s large-scale planning and analytics platform. We had several considerations to make about data security, potential systems outages and the ability to reach team members around the world. That’s where IBM came in. It had the solution and the talent necessary to make this project scalable and successful, and continue to be the gift that keeps on giving throughout the entire year.

Depending on your needs, IBM Planning Analytics can be deployed on premises or in the cloud. The IBM financial planning and analysis elves, nicknamed Blue Hats at Claus Enterprises, decided that a key driver is to move from CAPEX investments into OPEX investments. They can easily do that with the software-as-a-service (SaaS) option. Further, having a secure global cloud that can take data inputs and instantly calculate results puts us leaps and bounds ahead of Father Time.

Lastly, I asked Santa to bring me a new smart watch for Christmas. Can you put in a good word for me?

I’ll see what I can do Graeme, but with Claus Enterprises’ planning analytics, anecdotal evidence of being good doesn’t go very far. Santa is pretty good at determining naughty and nice without guessing at it.

And to all a good night

Happy Holidays, Graeme, to you and to all the people who are helping make advanced analytics a reality—even at the North Pole.

Thanks, Tripp. It’s great to learn more about the analytics transformation Santa is using to outthink the holiday rush. I’m sure this week is going to be a very busy one for you and for all of your hard-working colleagues at the North Pole. Good luck, stay warm and fly safe. 

Good boys and girls: learn more about IBM Planning Analytics