This concept is a metaphor, which uses the image of a wheel with a core component (the hub) and many sub-components (the spokes). Together, the hub and spokes form a whole that can progress forward as one unit. The hub-and-spoke distribution paradigm (or model or network) is a system of connections arranged like a chariot wheel, in which all traffic moves along spokes connected to the hub at the center. The model is commonly used in industry, in particular in transport, telecommunications and freight, as well as in distributed computing. It is a innovative service delivery model which, by design, delivers high quality services at a low cost footprint. The clusters of smaller delivery centers in a hub-and-spoke model are of relatively smaller
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In a wider role, the Hub is expected to take on management responsibilities including those of capabilities development, customer management, regulatory compliance, uniform standards of delivery, and manpower management. On the other hand, a Spoke is administered as a delivery centre that can be scaled up or down depending upon business requirements. Some companies may also choose to leverage near shore Spokes as base locations for business development. Service providers are able to tap into smaller cities that provide a compelling value for sourcing. Thus, a good mix of locations for service delivery ensures a better quality of service at lower costs. The aviation industry was the first to successfully implement the Hub and Spoke distribution model, which has since then been adopted by many other industries. The manufacturing industry, for example, put into practice the Hub and Spoke model in order to leverage a global low cost, high quality supplier base which in turn helped facilitate the production process and lower overall costs. The Hub and Spoke model has been implemented in several other sectors with a great degree of …show more content…
It is a fully connected network with material/information flow between any two nodes being processed at a small number of critical nodes (i.e. hubs) and moved through inter- hub links. Compared with the one built with the point-to-point structure, it has a much smaller number of links. Also, because traffic flows are consolidated by hubs and inter-hub links, significantly less operating cost can be achieved because of economies of scale. Given such advantages, industry companies including airlines, logistics companies, and telecommunications firms extensively utilize the hub-and-spoke architecture to reduce the construction and operating costs. Traditionally, the primary concern of hub-and-spoke network design is the locations of hub facilities and the allocations of non-hub nodes (i.e. spokes) to hubs such that the cost of transportation and construction is minimized.
Benefits of the Hub and Spoke model: The Hub and Spoke model has the potential to enable the organization to achieve two crucial and often mutually exclusive goals: flexibility with regards to organisational responsiveness and at the same time economies of scale with specialisation. Benefits are wide-reaching, as described below:
• Reduced costs – because of greater volumes processed in the Hub and minimised duplication of activities among Spokes
• Improved service quality – due to the greater specialisation that is achieved
In a wider role, the Hub is expected to take on management responsibilities including those of capabilities development, customer management, regulatory compliance, uniform standards of delivery, and manpower management. On the other hand, a Spoke is administered as a delivery centre that can be scaled up or down depending upon business requirements. Some companies may also choose to leverage near shore Spokes as base locations for business development. Service providers are able to tap into smaller cities that provide a compelling value for sourcing. Thus, a good mix of locations for service delivery ensures a better quality of service at lower costs. The aviation industry was the first to successfully implement the Hub and Spoke distribution model, which has since then been adopted by many other industries. The manufacturing industry, for example, put into practice the Hub and Spoke model in order to leverage a global low cost, high quality supplier base which in turn helped facilitate the production process and lower overall costs. The Hub and Spoke model has been implemented in several other sectors with a great degree of …show more content…
It is a fully connected network with material/information flow between any two nodes being processed at a small number of critical nodes (i.e. hubs) and moved through inter- hub links. Compared with the one built with the point-to-point structure, it has a much smaller number of links. Also, because traffic flows are consolidated by hubs and inter-hub links, significantly less operating cost can be achieved because of economies of scale. Given such advantages, industry companies including airlines, logistics companies, and telecommunications firms extensively utilize the hub-and-spoke architecture to reduce the construction and operating costs. Traditionally, the primary concern of hub-and-spoke network design is the locations of hub facilities and the allocations of non-hub nodes (i.e. spokes) to hubs such that the cost of transportation and construction is minimized.
Benefits of the Hub and Spoke model: The Hub and Spoke model has the potential to enable the organization to achieve two crucial and often mutually exclusive goals: flexibility with regards to organisational responsiveness and at the same time economies of scale with specialisation. Benefits are wide-reaching, as described below:
• Reduced costs – because of greater volumes processed in the Hub and minimised duplication of activities among Spokes
• Improved service quality – due to the greater specialisation that is achieved