Hub and spoke: Transformation for your multinational supply chain

  • July 24, 2024
hub and spoke of wheel

Supply chain transformations are trending, making this an ideal time to explore the hub-and-spoke supply chain network model. This intuitive approach to transformation is perfect for multinational organizations. Its straightforward design improves collaboration and efficiency across even your most far-flung locations.

Supply chain transformations aren’t for the faint of heart

Long after the pandemic, supply chains are still a concern for both practitioners and the public. Disruptions continue to affect markets, from marshmallows and mowers to machine tools and medical equipment. No doubt your company is dealing with these all-too-common disturbances. An integrated business transformation plan can help you cope with these issues.

But crafting a comprehensive plan can be more than you’d want to take on. A transformation program needs to consider every side of your business. Sales plans and financial plans and strategic and tactical supply chain plans — it’s a big ask. Understandably, your supply chain team may be regarding the project with a wary eye.

Making transformations work despite differing priorities

Supply chain transformations involve multiple rounds of blueprinting, building and testing before deployment. Blueprinting focuses on core business requirements and implementing corresponding processes. The challenge lies in managing complexity due to conflicting requirements from your organization’s competing business interests. These clashes most often arise in large multinational companies with diverse priorities.

Under these conditions, the back-and-forth on requirements can seem interminable. We’ve found that the hub-and-spoke network model is an effective approach to dealing with these impasses. The hub-and-spoke distribution method involves a central location. All requirements either begin at this hub or received by the hub for further distribution to other company-owned facilities called “spokes.” The inherent flexibility in this arrangement makes it easier to address the various priorities of different corporate stakeholders.

How the hub and spokes work together

In the diagram above, we refer to the hub as the central team. Consisting of subject matter experts (SMEs), the hub drives conversations with the organization’s many divisions — represented by the spokes. The central team works to make sure that they properly address all the requirements brought by the spokes in the most effective way.

In traditional point-to-point models, the implementation team usually works with SMEs from assorted divisions within the organization, either concurrently or in sequence. This standard approach can be quite cumbersome. Gathering all requirements from the divisions involved often consumes a lot of time and effort. The central team will have a firm grasp on your organization's overriding needs. Additionally, those SMEs will know the requirements of your company’s divisions.

The point-to-point model does come with a risk of overlapping and conflicting requirements. Close collaboration with the core team avoids this, addressing the necessities of each division. This working relationship shortens the process of determining and fulfilling total network needs.

Core benefits of the hub-and-spoke method:

  • A central team can identify and prioritize authentic needs, making sure that the most critical business requirements are met.
  • By centralizing the requirement-gathering process, the implementation team can focus on designing and delivering solutions. These should be based on discipline best practices, without the entanglements of internal politics.
  • A central team can gather business requirements in a timely fashion, enabling the implementation team to complete their work quickly and effectively.

The hub and spoke in practice

In a past engagement, NTT DATA’s supply chain consulting team worked with a multinational client and applied the hub-and-spoke approach to their transformation project. They had five large divisions across Asia, Europe and North and South America. The venture was strategically critical for the entire organization. Applying hub and spoke, and making use of its intrinsic advantages, they completed the implementation on schedule.

Collectively, the project team proved that the method made centralized processing and achieving the business requirements possible. The hub-and-spoke method reduced back-and-forth and focused attention on the potential benefits to the organization. The central team was an equal champion of all divisions and regions, with the goal of a deeper understanding of their shared needs and challenges. This made them even more willing to come together on a converging set of requirements and plans.

Contact us and learn how NTT DATA’s Supply Chain Consulting Integrated Demand & Supply Chain practice will help transform your supply chain organization. Employing the hub and-spoke method will instill a collaborative mindset, clearing the way to final implementation. Our top supply chain talent, enabled by proven, leading-edge digital assets — tools, methods and content — deliver actionable insights and measurable outcomes to some of today’s largest and most complex supply chains.

Subscribe to our blog

ribbon-logo-dark
Darsono_Tjokroamidjojo_960x960.jpg
Darsono Tjokroamidjojo

Darsono Tjokroamidjojo, PhD, project management professional (PMP) and PMI Agile-certified practitioner (PMI-ACP) is a Director in NTT DATA’s Supply Chain Consulting Integrated Demand & Supply Planning practice. He brings more than 15 years of experience in leading critical transformation programs across a variety of industry verticals. Darsono also provides thought leadership in the transformation of supply chain planning, strategy and execution. He currently leads North American delivery excellence in technology implementation and project management office (PMO) methodology.

Related Blog Posts