For large distribution companies with fairly developed base volume, the hub & spoke model may result in significant savings. We have over the years developed several such models by balancing payload, shelf life, transit times, volumes, distance, modes of transportation, GDP of cities within the route & driver hours of service.
A complex mathematical analysis is required to optimally infrastructure the hub. The spokes have to thereafter, be routed in the correct sequence and frequency to deliver the perfect model.
We are leaning towards one leading warehousing partner across North America that operates all our hubs and several regional carriers that deliver the end mile. The line-hauls are a function of which model leverages more value:
own assets or contracted carriers.
Example:
We put a team service (2 drivers to enable non-stop motion) on a 4 day transit lane, implemented the hub at the city with the 2nd largest GDP along the route, re-scheduled the delivery times with the end-customer and enhanced their on-time delivery and reduced their shelf life by up to 2 days and eliminated all waiting time for the shipper and consignee. The shipper in turn has been able to increase volume by 20% and reduce their $ per pound cost by 10% since project implementation.
