Distribution method optimization:inventory flexibility

This report presents the outcome of the Logistics Design Project carried out for Nike Inc. This project has two goals: create a model to measure a flexibility aspect of the inventory usage in different Nike distribution channels, and analyze opportunities of changing the decision model of splitting those distribution channels in a more optimal way to increase a flexibility level there. Corresponding to the defined goals a thorough analysis of the processes involved in Nike's supply chain is developed in this report to reveal all cost drivers influencing inventory flexibility. These cost drivers are incorporated into the inflexibility risk model designed to measure costs generated in the supply chain due to limited inventory flexibility in some of the Nike distribution channels. Technical requirements for creating a software tool to measure actual costs accordingly to the designed model are described in this report as well. The decision level and the decision moment of the splitting of the distribution flows are analyzed on a high qualitative level in the second part of this report. Corresponding design options are presented for changing the decision model and thorough analysis is done to assess each of them. A conceptual design for a new decision model, which incorporates benefits of moving to a higher decision level and benefits of postponing the decision moment of the split, is presented based on the conducted analysis. Further recommendations regarding the future steps are finally presented