Inventory Management System: A Systems Thinking Approach for Nike

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Systems Thinking
Nike

Contents
Systems Thinking...................................................................................................................................3
The Proposed system thinking design...................................................................................................4
System thinking Process........................................................................................................................6
Nike Proposed Solution.........................................................................................................................6

Systems Thinking
The main encouragement and motivation of developing this framework comes from the fact
that the inventory management has become the one of the major challenge to organization.
The involvement of various factors, need for information and various constraints have
resulted in making the inventory management a complex process. For effective inventory
management the company must have information about its competitors. This will help the
company in timely delivery of its products. For e.g. if Nike tries to reduce its inventory costs,
but the main policy of the company is to offer products so that it can meet the demand of
its customers, then the overall solution cannot satisfy the company’s targets. The main aim
of the proposed solution is to promote thinking, understand and analyse the inventory
problems rather than telling what need to be done in terms of solutions (Mingers and
White, 2010).
Figure 1: Systems thinking framework
Source: 1: Semantic Scholar
Essential Data: Information such as company’s business, key success factors, policy that can
improve inventory management problem (Vidal and Marle, 2012). Information about the

raw products, type of items, cost inventory management, storage facility requirement,
delivery channel information, demand and supply information etc.
Figure 2: Essential Systems Thinking Information
Source: Semantic Scholar
System thinking Process
Recognize suffering: The first step is to recognize the current suffering of the organization.
The best way of determining the situation is to compare the profit and current process of
the company to the main goals and targets of the company. If there is significant difference
than it can be concluded the company is suffering from inventory management problem.
Analyse Cause of Suffering: In order to understand the factors that are causing problems to
Nike’s inventory management, the company should analyse demand, supply, availability of
raw items, effectiveness of current management and decision making process (Mingers,
2014).
Propose solutions: The solutions should be able to remove most of the problems within the
inventory management systems.
Application of CATWOE Analysis
CATWOE analysis is a simple method used to find solutions to problems. The main components of a
CATWOE analysis are;
Customers: Nike main customers are people that are interested in sports. Company need to target
young people.

Actors: Here actor is referred to employees of the company. They are the people who help in
organization transformation process. They carryout work and are responsible for implementation of
change.
Transformation Process: It is referred to changes that lead to transformation of the organization.
Nike can adopt analytics and better customer’s service for increasing product sales.
World view: It is referred to the influence of other factors that surrounds an organization. It is
regarded as most important part of CATWOE analysis.
Owners: It refers to owners or investor of the organization. They are people who make decisions
within organization.
Environmental Constraints: These are real environment factors that may influence or limit a system.
It includes factors such as regulations, financial constraints etc.
Nike Proposed Solution
 Fixed Order Quantity System: The fixed order strategy will help the company in
removing the forecast errors. Through this the company will be able to meet the
current and future demand. The system is capable of understanding the change in
demand.
 Joint Ordering of Raw material: Through the process of joint ordering the company
can order large number of products from same supplier.
 Analysis of the company data through analytic tools: The third solution is to analyse
the previous data of the company by using the advance analytics tools.
It can be concluded that the best solution for effective management of company
inventory management system is to use advance analytical tools and algorithms. This
will provide essential data and information about current and future demand of
products. This will also help in analysing the raw product requirements. Analysis of data
will also give important insights about the most popular products for the company. By
this company can use various strategies to promote its most popular products (Leveson,
2011). Proper supply channel will make sure that customers will be able to get their
demand fulfilled.
Part B

References
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for designing
business architecture. Elsevier.
Leveson, N.G., 2011. Applying systems thinking to analyze and learn from events. Safety
science, 49(1), pp.55-64.
Mingers, J., 2014. Systems thinking, critical realism and philosophy: A confluence of ideas.
Routledge.
Vidal, L.A. and Marle, F., 2012. A systems thinking approach for project vulnerability
management. Kybernetes, 41(1/2), pp.206-228.
Luhmann, N., Baecker, D. and Gilgen, P., 2013. Introduction to systems theory. Cambridge: Polity.
Mingers, J. and White, L., 2010. A review of the recent contribution of systems thinking to operational
research and management science. European journal of operational research, 207(3), pp.1147-1161.