BBB International Business Practice Exam 2025 – All-in-One Guide to Master Your Business Certification!

The "Hub and Spoke" model in logistics refers to a transportation system where a central hub serves as the focal point for the distribution of goods to various destinations. In this model, goods are consolidated at the hub, which allows for more efficient sorting, storage, and distribution to multiple spokes—each representing different routes or destinations. This centralization helps streamline operations, reducing transportation costs and improving delivery times.

The effectiveness of the Hub and Spoke model lies in its ability to optimize routes; rather than having multiple direct routes between various locations, goods are first sent to a central station and then dispatched to their final destinations. This method enhances the management of inventory and facilitates better coordination across different transportation modes.

Understanding how this model operates is essential for businesses looking to improve their logistics strategies, as it demonstrates how centralization can lead to operational efficiencies and cost savings in managing the supply chain.