Managing Hub and Spoke Networks: A Military Case Comparing Time and Cost

(ProQuest: ... denotes formulae omitted.)INTRODUCTIONSupply chain management by definition is a complex endeavor requiring the integration of key business processes from the end-user through the original supplier (Lambert, Cooper, u0026 Pagh, 1998). Managing this complexity while achieving supply chain efficiencies is especially challenging (Blecker, Kersten, u0026 Meyer, 2005). One of the most challenging aspects for managers is the design of the logistics network (Manzini, Accorsi, u0026 Bortolini, 2014). As demand patterns change so to must the networks required to efficiently satisfy those demands. Thus, managers increasingly need tools and methodologies to help them quickly evaluate and select the best network options. This need for tools and methodologies to quickly assess network designs served as the motivation for this research. More specifically, this study examines the use of an optimization-based methodology to assist managers in assessing facility location options. Facility location decisions are a central issue in the design of all logistics distribution networks.To be useful for managers, any tool or proposed methodology must accommodate multiple objectives. Thus, the multiple objective linear programming (MOLP) approach seems well suited to the task. The MOLP approach examined here considers network cost and time individually, or in combination providing managers the ability to quickly complete an initial network analysis and consider the trade-offs of available options.To explore the effectiveness of the proposed MOLP approach, this paper will utilize it to examine facility location options for a military logistics distribution network. While both military and for-profit businesses seek distribution network designs that reduce cost and/or time required to provide or receive supply, the military decision maker faces added challenges. For example, logistics networks supporting a traditional retail operation remain relatively stable for extended periods of time, while networks supporting military contingencies and humanitarian relief efforts require logistics networks be designed, established, and retired with little to no notice. Thus, military supply chain managers increasingly value tools and methodologies for designing efficient and effective logistics networks. If shown to be effective in the military environment, the proposed MOLP approach is certain to have implications that extend well beyond. In fact, a number of studies (Boone, Craighead, Hanna, u0026 Nair, 2013; Russell u0026 Saldanha, 2003; Skipper, Bell, Cunningham, u0026 Mattioda, 2010) highlight the point that as the private sector is forced to deal with challenges similar to those found in the military, firms should look more often to leverage the experience of the military when selecting supply chain practices and strategies.THEORETICAL PERSPECTIVEOne key lesson firms can glean from the military is to value the distribution network as a key resource and means by which one can gain a competitive advantage. This ideal is further highlighted by resource orchestration theory which seeks to explain how firms can use their assets, or resources, more effectively (Simon, 2010; Sirmon, Hitt, Ireland, u0026 Gilbert, 2011). The theory posits that whether or not an organization has all of the resources that it may need, it is more important to examine how the resources are managed (Ketchen, Wowak, u0026 Craighead, 2014) across time as internal and external environments change (Sirmon u0026 Hitt, 2009). Because the distribution network can have such a significant impact on the organizationu0027s performance (Chopra, 2003), and the network itself can provide a competitive advantage (Liotta, Stecca, u0026 Kaihara, 2015), the network is a resource (Ndofor, Sirmon, u0026 He, 2011). Organizations that manage and utilize this resource more effectively should develop a competitive advantage.BACKGROUNDIncreasing the efficiency and effectiveness of the distribution network is a key objective of the military. …