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Hub & Spoke Model: Definition, Benefits & Examples

Traffic Control provides automatic work order generation, optimizes the number of direct to rail moves, and load balances across all the WSCs, and optimizes their work order sequence to minimize delays. NWOH uses Tideworks’ Intermodal PRO (IPRO) and Traffic Control products for planning and dispatch and Mi-Jack’s Mi-Star Global Positioning System (GPS) product for the semi-automatic control of the WSCs. Investigate a live attack in the full product demo of ExtraHop Reveal(x), network detection and response, to see how it accelerates workflows. The quality of a more focused infrastructure can then be improved with financial resources. Because so many drivers are moving in potentially comparable routes where loads can be shared, there is fear that their efforts are not being maximized. Eight places were used as examples in the introduction, along with the connections needed for each methodology.

Instead, the hub-and-spoke model allows the end points to release trains to the hub terminal with full railcars of mixed destination using any size railcar available. The hub combines small volumes for less populous destinations from the entire network, and builds large, full, pure railcars for delivery. However, the model works only if the hub can efficiently sort the inbound mixed cargo from many terminals into pure outbound railcars for delivery. If your cloud traffic routes directly to the cloud but your legacy apps go through the central data center, you’ll only have half the visibility you need to fix performance issues, maintain security, and optimize workloads to support modern bandwidth requirements.

  1. DeSoto General Hospital, a small community hospital located in Mansfield, Louisiana, situated approximately 37 miles from Shreveport, had been experiencing difficulties which threatened its ability to remain operational.
  2. Thus, hub-and-spoke networks are an intermediate stage in network development as the service preference remains direct connections.
  3. You’re getting more customers every day, you’ve perfected the unboxing experience, and you’re re-investing heavily in inventory.
  4. When utilizing hub-and-spoke systems within a network, a company may also use relay driving for efficiency and to avoid driver burnout.

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For instance, four services per day could be possible between any two pairs in a point-to-point network instead of one service per day. Larger organizations build layers of hub-and-spoke networks that engage in global, national, and regional interaction. Transportation companies like DHL, UPS, FedEx, and NimbusPost, among others, are excellent examples of this strategy. They run into problems such as multiple divisions or teams developing similar solutions in parallel, unnecessarily complicated processes and creating redundancies. Clearly defining mandates and responsibilities has many advantages and is especially important for a hybrid, interconnected model such as the Hub-and-Spoke Model.

Commercial aviation has followed FedEx’s lead, and now even the healthcare industry is adopting a hub-and-spoke model for the distribution of services to rural locations. Transshipment maritime container terminals, the hubs for vessel services, are the largest and busiest container terminals in the world. A hub and spoke data team works by having a central “hub” system that is responsible for managing shared data assets and operations. Using the data from the hub, the specific modeling and analysis can be routed to one or more “spoke” systems.

To deliver products in the most cost-effective and timely means possible, forward-thinking logistics companies are embracing hub-and-spoke models, where connections are arranged like a wheel. This approach efficiently moves products out of strategically located distribution centers and shortens travel time. Through strategic centralization of the most advanced medical services at a single site and distribution of basic services via secondary sites, the hub-and-spoke model affords unique opportunities to maximize efficiencies and effectiveness. A well-designed hub-and-spoke network satisfies patient care needs fully, yet does so in a manner that fosters resource conservation, return on investment, service excellence, and enhanced market coverage [4,5,6,7].

How Does a Hub and Spoke Model Work?

The impact of the hub-and-spoke model is also significant in terms of a company’s environmental impact — a growing concern of many employees. Downsizing to a smaller hub can shrink a company’s carbon footprint by lowering the amount of energy expended on appliances, air-conditioning, and heating, as well as emissions from commuting employees’ vehicles. Monthly research-based updates on what the future of work means for your workplace, teams, and culture.

The hub-and-spoke organization design revisited: a lifeline for rural hospitals

This model also helps SMB’s realize the same high efficiency a larger retailer fulfillment network uses across all of their sales channels. It is a very practical and balanced work model, which can benefit large organizations and allow them to guarantee the safety of workers, as well as the fulfilment of the company’s objectives. This system led to rapid growth in the air transport industry through increased efficient use of relatively scarce transit resources.

As mentioned, the point-to-point model involves the supplier shipping goods directly to the customer without the need for a central hub. The hub and spoke model is a logistical system whereby shipments are directed through a centralised “hub” before reaching their destination. Ever wonder why some packages take forever to reach you, while others seem to arrive before you even finish ordering them online?

To achieve this, the value proposition of each service needs to be clearly defined and aligned to the business. Common examples where alignment is needed include IT strategy and architecture guidelines and practices for identity, access and cybersecurity. Clear mandates and responsibilities need to be jointly defined between the IT hub and the spokes, as well as publicly and openly communicated and lived as such. While there are some typical responsibilities owned hub and spoke model advantages and disadvantages by either the central IT hub or decentralized business units, there are many decisions that must be made to determine the best possible setup for a particular company. Most importantly, the IT hub delivers standardization and supports innovation in a way that is suitable to the IT organization. The setup of these different areas of responsibility is highly specific to a company’s strategy, especially regarding its ways of working, governance and culture.

Hub and spoke distribution model FAQs

Ecommerce merchants don’t just need an extensive fulfillment center network; they also need an agile and efficient way to distribute inventory across that network. Locus helps businesses in the supply chain improve logistics operations with Artificial Intelligence. Schedule free demo with Locus experts and achieve end-to-end route optimization in your supply chain.

What is a Hub and Spoke Network?

Therefore, team members represent the spokes and the tasks are the “goods” being distributed. A hub and spoke model also makes it possible for transport drivers to travel shorter distances and stay in a more centralized area. In a point-to-point system, there’s no company space for drivers to easily meet and switch. In contrast, a hub-and-spoke network is simpler, as each spoke communicates directly only with the hub.


While office space is a physical representation of an organization’s people, culture, and values, office space itself does not make a company. But the challenge of having multiple office spokes is ensuring that the employee experience — both in the office and culturally — feels cohesive. Companies must then deliberately define what cohesion means for them with consistent and clear interventions. In this method, goods are directly shipped from the supplier to the customer, without any interruption.

A company’s products originate from this hub or are sent to the hub for customer distribution. From the hub, products travel outward to smaller locations for further processing or distribution. By partnering with Penske and leveraging our hub-and-spoke system, you can strategically use your transportation resources and steer a course toward efficiency. Employees are encouraged and enabled to work with an agile mindset and culture, in teams with end-to-end responsibility. As much responsibility as possible is pushed down to the business unit or the central IT hub to cut down on unclear responsibilities that need to be resolved with long governance meetings as part of a governing coalition.

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