Case Study Of Supply Hub For Cost Reduction At A Company

Supply Hub has been successfully used by numerous organizations to achieve supplychain excellence through cost effectiveness and superior utilization of resource. This thesisaddresses how supply hub can be used to optimize the supply chain process and achieve thecost saving.A Group is a leading home and general merchandise retailer in Europe, with5distribution centers and60cross docks in Europe. In the past A Group has managed itscapacity and distribution from a regional perspective while this method has historicallyproduced very good results, the size of the company and the challenges ahead justify now amore global approach. To fully leverage A Group’s global scale, a strategic plan of supplyhubs in AP region was introduced to squeeze excess costs from the supply chain in2011. Asan innovative logistics strategy，supply hub help A company to achieve cost reduction andstreamline the global supply chains. The warehousing cost was reduced with lower storageand handling cost. Various value added service was introduced in the supply hub to allowconsolidate orders from multiple vendors and ship directly to stores so as to reducetransportation cost. Inventory cost reduction was achieved by implementation of vendormanaged inventory program in the supply.By studying the case, this paper analyze the impact of supply hub strategy to totallogistics cost and the supply chain process, present a cost management module on globallogistics management.