There has been a lot of discussion and discussion regarding the use of methods that you should use to ensure delivery services for e-commerce run effectively. The hub-and-spoke or point-to-point model are two different methods that are seen as contradictory to each other, but which of the two is effective?
Before we continue, let’s find out what the differences are between these two models.
The point-to-point model, also known as delivery and drop off, directly connects several places to several locations directly. For example there will be 16 connections if you want to connect 8 points. But if you use the hub-and-spoke model you only need 8 connections to connect.
Now we will discuss this model in transportation planning. As previously explained, the point-to-point model is a model in which a fleet moves from one place to another without stopping at one particular point. Even when the route is not in the same direction, the delivery destination remains connected without having to make stops.
The advantages of the point-to-point model
Faster travel time
The point-to-point model has the advantage of having shorter journey times for shipments. This model does not require stopping points or changing directions because the existing locations are directly connected. The courier fleet travels continuously to the drop off point.
Will not be affected by delays
If there is a delay in delivery in the point-to-point model, it will not affect the entire existing system. Where in the hub-and-spoke model, delays in delivery will cause a domino effect which will result in other delays.
The point-to-point model is better able to overcome and accommodate errors that occur. The result is that this model is less affected by the delays that occur.
Disadvantages of point-to-point models
It costs quite a lot
In the example above, there are eight nodes along with the connections they require. The more points there are, the more connections will be needed which will make operational costs bigger.
In practice, the point-to-point model requires additional fleets or drivers to manage multiple links. Because of this, many fleets of drivers move on potentially comparable routes where loads can be shared. There is a concern that their efforts are not optimal and not effective.
Despite their common goals, hub-and-spoke models are at the other end of the spectrum.
This model connects several points known as “spokes” and operates transportation and logistics from an operational center known as a “hub”. As a result, shipments will start from one place which will then be forwarded to the Hub and will be placed there or delivered to another point.
The main advantage is that each entity only requires one hub as an operational center. The hub’s role is to organize and direct connections to various points.
Is hub-and-spoke model better than point-to-point
Only need 8 connections if you use the hub-and-spoke model. The benefit of the hub is to balance the existing economies of scale by providing multiple services. For example, you can provide 4 services per day as opposed to only one service. In the hub-and-spoke model, the Hub (central location) and spoke (operational point) are linked by only one network.
This model is often used for international shipments. Many large organizations and companies build networks using a hub-and-spoke model. Some of them are logistics service companies such as DHL, UPS, FedEx, and NimbusPost.
Even so, the hub-and-spoke model is being abandoned by the aviation industry and using the point-to-point model is the future of the aviation model. In fact, the airline company Emirates continues to add jumbo-sized aircraft to their fleet, this may happen because the emirates are aware of something that is not realized by some.
The advantages of the hub-and-spoke model
Connections and economies of scale
A more effective connection system will increase service frequency.
Economies of scale from using the hub
Since there is more traffic in one location, effort and resources can be optimized and can increase the efficiency of the distribution process. By dividing the resources and transportation fleet, maintaining connections, and the number of employees needed. The total fleet you need is less.
Disadvantages of hub-and-spoke models
The model implements power centralization, some connections may experience delays or blockages because there is no connection line that connects directly.
Because the centralized system used and the connections in this network are interconnected with each other, there is a possibility that if a problem occurs it will cause a domino effect.
Because of this, sometimes the delivery time is very affected by other shipments. Problems or obstacles that occur are feared to have a more significant impact.
On-time delivery does have an extraordinary impact on the logistics industry, but this must also be balanced with affordability and existing capabilities.
In order to provide fast and cost-effective delivery services, many forward-looking logistics companies are starting to adopt a hub-and-spoke model where the links between devices are arranged like a wheel. In this case, the hub-and-spoke model is faster and more efficient, helping companies to save on their operational costs.
“New problems require new solutions.” NimbusPost will always be there to accompany you on your online business and e-commerce journey. You can get efficiency in matters of transportation and logistics by partnering with NimbusPost.