Improving the efficiency of the Hub and Spoke system for the SKF European distribution network

Abstract

The Hub and Spoke system (H&S), initially applied to the airline industry, is an innovative distribution approach which has proved to be successful especially in transportation systems dealing with several origins and destinations and with balanced good flows in both directions. This paper provides an overview of Hub and Spoke theory and proposes some possible improvements to this practice for freight transportation (trucking industry). In particular, the re allocation of transportation resources and the direct connection between pairs of nodes in the distribution network (short cut) have been applied in a case study involving the SKF European distribution network. All aspects of feasibility have been discussed and alternative solutions have been compared to the present configuration in terms of average lead times, goods flow, truck utilisation rate and transportation costs. The results confirm the effectiveness of the proposed interventions, mainly in terms of cost reduction and system flexibility.