Quick Tips: Hub and Spoke Replenishment
When to Use Hub & Spoke
You should consider using a hub & spoke replenishment process if:- There is a vendor high target order requirement in relation to the usage at an individual warehouse.
- A vendor’s package quantity of a particular item far exceeds a normal customer order quantity.
- Many products in a branch location experience sporadic usage.
- The cost of moving the products between warehouses is relatively low.
What to Hub & What to Spoke?
Here are some handy tips on how to figure out what to hub and what to spoke. Use these hub & spoke guidelines to see whether your items qualify as hub or spoke items.Qualification 1:
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All location/items should be evaluated to determine if the vendor package quantity can be turned at least the minimum annual acceptable turns.
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If an item does not pass, it should be a spoke item.
Qualification 2:
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Calculate annual purchases for all remaining vendor/warehouse/items and divide the annual purchases by the vendor target for that warehouse.
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If the vendor/warehouse/items do not allow for at least one purchase order per month, these vendor/warehouse/items should be spoke items.
Want to learn more about how the Absolute Value Demand Planning system can help you manage your inventory across multiple locations? Contact us here.