Benefits of hub and spoke

Discussion in 'The Latest UPS Headlines' started by cheryl, Oct 5, 2010.

  1. cheryl

    cheryl I started this. Staff Member

    Benefits of hub and spoke - Tribune

    United Parcel Service, the largest package delivery company and a leader in global supply chain services, developed early versions of the hub and spoke model, which is at the centre of most distribution and transportation companies – including airlines.

    Under the hub and spoke design, all deliveries go through a centralised distribution hub, usually located strategically. The resulting route map looks like spokes with a hub at the centre.

    Why does it work?
    Common sense suggests that parcels from a source city should be sent directly to the destination instead of routing them to a hub first, especially if the source and destination are close to each other. Although in such a case the hub and spoke model is seemingly inefficient, its benefits more than compensate for the downside.

    If five cities need to be connected to each other, there are 10 possible routes going from each city to every other city. Similarly, for 20 cities this amounts to 190 different routes and for a 100 cities this amounts to 4,950 routes.