The application of design criteria for locating a hub configured supply chain for a restaurant cluster in the Stellenbosch area

Abstract

Restaurants, in general, utilise numerous suppliers. Normally they deliver on different days in the week and at different times during the day, logistically not an optimum approach. Not only does the current practice cause frequent interruptions, but by segregating the food supply chain unnecessary traffic is generated. This article investigated the need for developing a third party supplier hub, the best positioning of that hub and the most economical routes to the customers. With the aim of providing non-franchised restaurants with the necessary leverage to become market leaders, the hub is planned to only service the restaurants within the vicinity of the Stellenbosch area. In such a hub-configured supply chain, the suppliers would be delivering to the proposed hub, from where once-off deliveries to all the restaurants may be made on days and/or times determined by them. In order to investigate the benefits of providing such a hub structure, a systematic implementation approach was used. The first step was to do market research in order to establish the need for such a hub. That is, the viability of the hub from a restaurant’s perspective was established. The next step entailed the investigation of the design criteria needed in determining a favourable hub location. Four possible hub locations were identified. The Clark and Wright’s savings algorithm was then used to determine the optimal hub location and the feasibility of the results was verified with the aid of a global positioning system (GPS) device. The last steps followed involved the determination of an effective hub floor plan that may be utilised, possible products that can be supplied to the restaurants and the necessary assets needed to provide the hub’s service. Finally, by incorporating all these facets, a cost analysis was done to determine the hub’s profitability.