Management

Understanding the Hub and Spoke Model

The hub and spoke model has a multitude of applications in business settings from office space layout, to product transport, to network and system IT design.

The hub and spoke model, as the name implies, relies on a central hub, with spokes radiating from the central connection point. You can imagine the hub at the center of a wagon wheel with spokes radiating outward. 

The hub and spoke model has a multitude of applications in business settings from office space layout, to product transport, to network and system IT design.

The design of the hub and spoke layout is used to implement simple integration between many different networks, systems, locations, or goods through one central hub. It is used in all cases to avoid congestion or delays, facilitate communication, and improve efficiency. 

The hub and spoke model presents an alternative for growing businesses across sectors who would otherwise rely on point to point connections and increasing complexity. By creating a simple, integrated solution, the hub and spoke model serves to streamline many complex business systems. Below are the main applications of the hub and spoke system for businesses. 

How the Hub and Spoke Model Works for Networks

Like physical architecture, the hub and spoke model is network architecture that is clean and simple. This streamlined structure improves both sustainability and security. Your IT team will have control of security, removing the need for many external firewalls for each new system that connects. 

Instead of a network on a multitude of 2-way connections, the hub provides a central point of connection, enabling any system on the network to connect securely with any other network system as needed. 

Utilizing the hub and spoke model ensures that all systems are connected to the same central hub. This facilitates inter-departmental communication and coordination. 

Hub and Spoke Model for Enterprises

The real power of the hub and spoke model becomes evident not in inter-company communication but in enterprises with many partners or clients. The business of any size can become the hub, with their partners becoming spokes. 

This enables seamless communication and ease of business transactions with a multitude of partners in a secure environment. This offers robust scalability. As the business grows, more spokes can seamlessly be integrated with the original hub. 

How the Hub and Spoke Model Works for Transport

In transport, the hub becomes a central hand-off point, reducing the length of distance covered by carriers, improving scheduling, and helping drivers and pilots comply with working hours regulations.

Fedex is a famous pioneer of the hub and spoke model in transport, moving all goods to one or two central hubs and then processing to a final destination for the promised next day delivery. This example demonstrates efficiency opportunities the hub and spoke model presents for all types of product delivery. 

The hub and spoke model is also used throughout the airline industry, and is considered the best transport model for delivery of people and goods while reducing costs and optimizing each transport leg. 

How the Hub and Spoke Model Works for Business

With the advent of the global pandemic and the need to work from home, businesses are also increasingly adopting the hub and spoke model for physical workplaces. In this case, the main office is the hub, with employees working at satellite offices, the “spokes”. The satellite offices can be convenient workplaces close to their residence, or work-from-home options.

Many business leaders are predicting that within the next two to three years, we will see as many as two-thirds of all businesses adopt hybrid work arrangements that employ the hub and spoke model. In this model,  employees will work remotely for part of the time and come to the central office part of the time. Initial research has shown that the hub and spoke model can result in cost savings for both employers and employees. 

For employers, this reduces costs, improves efficiency, and meets the demands of employees, who see remote work or hybrid options as a desirable workplace feature. Another major advantage in downsizing to a smaller hub is the reduction of the company’s carbon footprint through energy savings. 

Applying the Hub and Spoke Model 

While creating the hub and spoke model will require some initial planning, the overall cost savings and simplicity of integration make it a good investment for businesses. The application of the hub and spoke model is so broad that certain businesses will apply it to various levels of functioning from office space and employee management, to communication networks, to transport.

The various applications of the hub and spoke model are mutually supportive. The network hub and spoke model facilitates the functioning and integration of the workplace hub and spoke model.

Like the wheel after which it was named, the hub and spoke model has the potential to carry businesses through various stages of technological revolution, transport, and growth. 

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