Quick Tips: Hub and Spoke Replenishment
When to Use Hub & SpokeYou 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.
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.
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.
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