Journal of Korean Society of Industrial and Systems Engineering (산업경영시스템학회지)

Society of Korea Industrial and System Engineering (한국산업경영시스템학회)
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Locational Preferences for Regional Distribution Center : Focused on Asian Hub Airports

지역거점물류센터 입지선정에 관한 연구 : 아시아 지역 허브 공항을 중심으로

  • Song, Jae-Gil (Graduate School of Logistics, Incheon National University) ;
  • Bhang, Wan Hyuk (Graduate School of Logistics, Incheon National University) ;
  • Song, Sang Hwa (Graduate School of Logistics, Incheon National University)
  • 송재길 (인천대학교 동북아물류대학원) ;
  • 방완혁 (인천대학교 동북아물류대학원) ;
  • 송상화 (인천대학교 동북아물류대학원)
  • Received : 2016.05.09
  • Accepted : 2016.06.10
  • Published : 2016.06.30
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Abstract

As supply chains are globalized, multinational companies are trying to optimize distribution networks using a hub and spoke structure. In this hub and spoke network structure, multinational companies locate regional distribution centers at hub airports, which serve demands in their corresponding regions. Especially when customers put higher priority on the service lead-time, hinterlands of international hub airports become ideal candidate locations for the regional hub distribution centers. By utilizing excellent airport and logistics services from hub airports, regional distribution centers in the hub airports can match supply with demand efficiently. In addition, regional hub distribution centers may increase air cargo volume of each airport, which is helpful in the current extremely competitive airport industry. In this paper, we classified locational preferences into three primary categories including demand, service and risk and applied the analytic hierarchy process methodology to prioritize factors of locational preferences. Primary preference factors include secondary factors. Demand factor contains access to current and prospect markets. Service factor comprises airport and logistics perspectives. Service factor in terms of airport operations includes secondary factors such as airport service and connectivity. Service factor in terms of logistics operations contains infrastructure and logistics operations efficiency. Risk factor consists of country and business risks. We also evaluated competitiveness of Asian hub airports in terms of candidate location for regional hub distribution centers. The candidate hub airports include Singapore, Hong Kong, Shanghai, Narita and Incheon. Based on the analytic hierarchy process analysis, we derived strategic implications for hub airports to attract multinational companies' regional hub distribution centers.

Keywords

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