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  • Writer's pictureMatt Wright

Hub & Spoke or Micro-Warehouse Network - which is best for your business?

Like most complex problems, the best solution depends are your priorities. As frustrating as that may be for some - facts are friendly. Freight costs, time in transit (TNT), order pattern reliability, inventory turns, near same-day or 2-day delivery, etc. are factors that need to be weighed and factored into your decision process.

To be successful in determining the best supply chain network solution, we need to be familiar with the options. Both models are intended to address the challenges associated with servicing multiple locations often referred to as 'point-to-point'.

A wheel best describes Hub & Spoke network with a central 'hub' with projecting 'spokes'. The airline industry is an example of this service design with a large hub serving numerous routes from that hub. Amazon has mastered this approach as well. This alternative is well-established and effective in many different business models. The challenge with this model is a warehouse footprint is required.

Micro-warehousing or a micro-fulfillment center (MFC) is akin to the hub & spoke design but is unique in its specific intent and size. A hub or centralized warehouse services Micro-warehouses with a specific and limited mix with the intent of enabling near same-day or 2-day delivery. Micro-warehouses are often automated to a higher degree and replenished multiple times per week. A simple example of this is a vending machine in a business cafeteria. The challenge with this model is adapting to changing or volatile demand.

Amazon has set a new standard for delivery with near same-day or 2-day delivery that every business operator must acknowledge. Small-medium-sized businesses (SMBs) are scrambling to deliver the same service levels as the big guys without breaking the bank. Having the product near the end consumer is becoming more and more important.

Which alternative is best for your business?

When partnering with Admirari 3PL Solutions we can provide the best of both worlds. Utilizing our existing network or developing warehouses, Admirari can leverage the advantages of both models without the limitations of either. Reach out to Admirari 3PL Solutions and allow us to customize a solution for you today.

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