Franchises and chains guide
Packaging buying hub: how it works for a network
A packaging buying hub pools the needs of every location in a network to obtain a single price, then splits the goods between the addresses. It can be built in-house by head office, or delegated to a supplier.
The four functions of a buying hub
Negotiating. The volumes of every location are added together before approaching the factories, and it is that total that sets the price, not the order of the largest store.
Storing. A pooled production run must be warehoused somewhere while it is consumed.
Splitting. Each location receives the quantity it needs, at its own pace, which requires tracking consumption store by store.
Invoicing. One commercial contact, one invoicing rule for the whole network.
In-house or delegated
| In-house hub | Delegated hub | |
|---|---|---|
| Initial investment | Warehouse, stock management tool, staff | None |
| Cash flow | The network funds production and stock | Carried by the supplier |
| Time to set up | Several months | A few weeks |
| Skills required | Purchasing, supply chain, logistics | The supplier's |
| Main risk | Badly estimated stock stays on the network's hands | Dependence on the supplier, to be framed by contract |
The three conditions for it to work
Enough volume. Below a certain number of locations, pooling does not offset the cost of the organisation.
A fixed product list. As long as each location orders different formats, there is nothing to pool. The first step of a buying hub is not to buy, it is to cut the number of references.
Known consumption. You do not produce an annual volume without knowing what each address actually consumes per month.
What it changes on price
The price of a customised package falls with the quantity produced in one run. A location ordering on its own pays the rate for its own run. The same location, inside a buying hub, pays the rate for the whole network's run. The gap widens with the number of addresses, and that is the point of the exercise.
Frequently asked questions
From how many locations does a buying hub make sense?
There is no universal threshold: it depends on the volume consumed per address and the number of references. The right indicator is not the number of stores but the total annual volume per reference.
Do you need a warehouse to build a hub?
Yes if it is in-house. No if it is delegated to a supplier who carries the stock and handles the splitting.
Does a buying hub force franchisees to order?
It depends on the franchise agreement. Many networks work with a recommended supplier rather than an obligation, the negotiated price usually being enough to convince.
How long does it take to set up a hub?
Delegated: the time to fix the product list, approve the artwork and launch the first production run. In-house, add the warehouse, the tooling and the hiring.
Pack On Demand by Publifood
We consolidate your network's volumes, we produce, we store and we deliver each location on demand. One box delivered, one box invoiced, even when it carries your brand.
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