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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:

  • All location/items should be evaluated to determine if the vendor package quantity can be turned at least the minimum annual acceptable turns.

  • If an item does not pass, it should be a spoke item.

Qualification 2:

  • Calculate annual purchases for all remaining vendor/warehouse/items and divide the annual purchases by the vendor target for that warehouse.

  • 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.