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Example H2
Supply Chain Glossary
ABC analysis
Advanced Shipping Notice (ASN)
Agile supply chain
Air waybill (AWB)
Arrival notice
Automatic Identification Systems (AIS)
Backhauling
Backorder
Bayplan
Beneficial Cargo Owner (BCO)
Bill of Lading (B/L)
Blank sailing
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Bonded warehouse
Booking request
Break bulk cargo
Buffer stock
Bulk cargo
Bullwhip effect
CIF (Cost, Insurance and Freight)
Cargo release
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Carrier
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Carrier scorecard
Certificate of origin
Commercial invoice
Commodity
Confirmed bookings
Consignee
Consignment inventory
Consignor
Container freight station
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Container rollover
Cross docking
Customer
Customs and transit documentation
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Cut-off
Cycle counting
DAP (Delivered At Place)
DDP (Delivered Duty Paid)
DDU (Delivered Duty Unpaid)
DPU (Delivered At Place Unloaded)
Dangerous goods declaration
Deadheading
Deadweight tonnage
Demurrage
Depot
Detention charges
Digital twin
Dimensional weight
Discharge / Discharging of container
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Dock receipt
Drayage
Drop shipping
Dry bulk cargo
EDI booking
EORI number
ETA (Estimated Time of Arrival)
EXW (Ex Works)
Economic Order Quantity (EOQ)
Electronic Product Code (EPC)
Empties
Equipment
Equipment discharge / load report
Event
Exception
Expedited freight
FAS (Free Alongside Ship)
FCA (Free carrier)
FOB (Free on board)
Feeder operator
Feeder vessel
Fill rate
Financial clearance status
Flags of Convenience
Fourth Party Logistics (4PL)
Free trade zone
Freight forwarding
Freight visibility
Full truckload (FTL) freight
GLEC framework
Gate-out
German Supply Chain Act
Global Trade Item Number (GTIN)
Goods Receipt Note (GRN)
Green logistics
Haulage equipment
Haulage requirements
Haulage type
Haulier
House Bill of Lading (HBL)
Hub and spoke model
INCOTERMS
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Hub and spoke model

What is a Hub and Spoke Model in Supply Chain?

In supply chain logistics, a hub and spoke model refers to a system where goods or services are transported through a central hub to various spoke locations. The hub acts as a central point for collection, sorting, and distribution, while the spokes represent the routes connecting the hub to different destinations.

This model is akin to a wheel, where the hub serves as the central axis from which multiple spokes radiate outward. It is commonly used in transportation and distribution networks to optimize efficiency and reduce costs by consolidating flows of goods or services.

Benefits of Hub and Spoke Supply Chains

The hub and spoke model offers several advantages:

  • Efficiency: By centralizing operations at a hub, companies can streamline logistics, reduce redundant transportation routes, and achieve economies of scale in handling and storage.
  • Cost Savings: Consolidating shipments at a central hub can lead to lower transportation costs per unit, as larger volumes can be transported more efficiently.
  • Improved Service Levels: With fewer direct routes needed (due to the spoke connections), companies can enhance delivery speed and reliability to various destinations.
  • Flexibility: The model allows for easier scalability and adjustment to fluctuating demand or changes in distribution patterns.

Potential Drawbacks of Hub and Spoke Supply Chains

While effective, hub and spoke models may have challenges:

  • Dependency Risk: If the hub faces disruptions (e.g., strikes, natural disasters), it can impact multiple spoke locations simultaneously.
  • Increased Transit Times: Goods may require longer transit times compared to direct shipments, depending on hub operations and scheduling.
  • Initial Investment: Establishing and maintaining a central hub involves significant upfront costs in infrastructure, technology, and operational setup.
  • Complexity: Managing a hub and spoke network requires sophisticated logistics coordination to ensure timely transfers and minimize inventory holding costs.

Related terms