diff --git a/designs/physical-topology.md b/designs/physical-topology.md
new file mode 100644
index 0000000..678356b
--- /dev/null
+++ b/designs/physical-topology.md
@@ -0,0 +1,180 @@
+# Physical Topology for Inventory Items
+
+Author: Benjamin Fair <benjaminfair>
+
+Other contributors:
+    Ed Tanous <edtanous>
+
+Created: June 1, 2022
+
+## Problem Description
+Complex systems may contain many inventory objects (such as chassis, power
+supplies, cables, fans, etc.) with different types of relationships among these
+objects. For instance, one chassis can contain another, be powered by a set of
+power supplies, connect to cables, and be cooled by fans. OpenBMC does not
+currently have a standard way to represent these types of relationships.
+
+## Background and References
+This builds on a [prior
+proposal](https://gerrit.openbmc.org/c/openbmc/docs/+/41468), but specifies
+using Associations for all relationships (Proposal II) rather than path
+hierarchies (Proposal I).
+
+The main driver of this design is Redfish, particularly the Links section of the
+[Chassis schema](https://redfish.dmtf.org/schemas/Chassis.v1_20_0.json).
+
+Changes to phosphor-dbus-interfaces documenting new Associations have been
+[proposed](https://gerrit.openbmc.org/c/openbmc/phosphor-dbus-interfaces/+/46806)
+but not yet merged until consensus can be reached on the design.
+
+This design was initially discussed in
+[Discord](https://discord.com/channels/775381525260664832/819741065531359263/964321666790477924),
+where some initial consensus was reached.
+
+## Requirements
+* Must represent one-to-many relationships from chassis inventory objects which:
+    * Connect to cables
+    * Contain other chassis and/or are contained by a chassis
+    * Contain storage drives
+    * Are cooled by fans
+    * Are powered by power supplies
+    * Contain processors such as CPUs
+    * Contain memory such as DIMMs
+* Must support relationships which are predefined, detected at runtime, or a
+  combination of both
+    * Runtime detection could include I2C bus scanning, USB enumeration, and/or
+      MCTP discovery
+
+### Optional goals (beyond initial implementation)
+* Non-chassis inventory objects may also need one-to-many relationships
+    * CPUs have CPU cores and associated PCIe slots
+    * CPU cores have threads
+
+## Proposed Design
+The design affects three layers of the OpenBMC architecture:
+phosphor-dbus-interfaces, inventory managers, and inventory consumers such as
+bmcweb.
+
+### phosphor-dbus-interfaces
+In the interface definition for Chassis inventory items, we add an association
+definition for each of the relationship types listed above and corresponding
+association definitions for the other item types linking back to a Chassis item.
+
+### Inventory Managers
+#### phosphor-inventory-manager
+phosphor-inventory-manager already has support for exporting custom
+Associations, so no changes are needed here.
+
+#### entity-manager
+For entity-manager, we add new `Exposes` stanzas for the upstream and downstream
+ports in the JSON configurations. The upstream port has a connector type (such
+as a backplane connector, power input, etc). The downstream port has type
+`DownstreamPort` and a `ConnectsToType` property that refers to the upstream
+port based on its type.
+
+New code in entity-manager matches these properties and exposes associations on
+D-Bus based on the types of the inventory objects involved. Two Chassis objects
+will have `chassisContains` and `chassisContainedBy`, a Chassis and PowerSupply
+will have `poweredBy` and `powers` respectively, etc.
+
+Example JSON configurations:
+
+superchassis.json
+```
+{
+    "Exposes": [
+        {
+            "Name": "MyConnector",
+            "Type": "BackplaneConnector"
+        }
+    ],
+    "Name": "Superchassis",
+    "Probe": "TRUE",
+    "Type": "Chassis"
+}
+```
+
+subchassis.json:
+```
+{
+    "Exposes": [
+        {
+            "ConnectsToType": "BackplaneConnector",
+            "Name": "MyDownstreamPort",
+            "Type": "DownstreamPort"
+        }
+    ],
+    "Name": "Subchassis",
+    "Probe": "TRUE",
+    "Type": "Chassis"
+}
+```
+
+#### Other inventory managers
+If there are other daemons on the system exporting inventory objects, they can
+choose to include the same Associations that phosphor-inventory-manager and
+entity-manager use.
+
+### Inventory consumers
+When a daemon such as bmcweb wants to determine what other inventory items have
+a relationship to a specific item, it makes a query to the object mapper which
+returns a list of all associated items and the relationship types between them.
+
+Example `busctl` calls:
+```
+$ busctl get-property xyz.openbmc_project.ObjectMapper \
+/xyz/openbmc_project/inventory/system/chassis/Superchassis/chassisContains \
+xyz.openbmc_project.Association endpoints
+
+as 1 "/xyz/openbmc_project/inventory/system/chassis/Subchassis"
+
+$ busctl get-property xyz.openbmc_project.ObjectMapper \
+/xyz/openbmc_project/inventory/system/chassis/Subchassis/chassisContainedBy \
+xyz.openbmc_project.Association endpoints
+
+as 1 "/xyz/openbmc_project/inventory/system/chassis/Superchassis"
+```
+
+## Alternatives Considered
+### Path hierarchies
+An alternative proposal involves encoding the topological relationships between
+inventory items using D-Bus path names. As an example, a chassis object
+underneath another would be contained by that parent chassis. This works for
+simple relationships which fit into a tree structure, but breaks down when more
+complicated relationships are introduced such as cables or fans and power
+supplies shared by multiple objects or soldered CPUs which are "part of" instead
+of "contained by" a chassis. Introducing separate trays with their own topology
+further complicates the path hierarchy approach.
+
+A potential compromise would be allowing a combination of path hierarchies and
+associations to communicate topology, but this significantly increases the
+complexity of consumers of this information since they would have to support
+both approaches and figure out a way to resolve conflicting information.
+
+Associations are the only approach that fits all use cases, so we should start
+with this method. If the additional complexity of path hierarchies is needed in
+the future, it can be added as a separate design in the future.
+
+To improve usability for humans inspecting a system, there could also be a
+dedicated tool to query for Associations of a specific type and present a
+hierarchical view of the current topology. Additionally,
+phosphor-inventory-manager configurations can organize their D-Bus objects in
+whatever way makes sense to the author of those configurations, but the
+Association properties would still need to be present in order for inventory
+consumers to understand the topology.
+
+## Impacts
+This new API will be documented in phosphor-dbus-interfaces as described above.
+If no topology information is added to configuration files for entity-manager or
+phosphor-inventory-manager, then the D-Bus interfaces exported by them will not
+change. If consumers of inventory data such as bmcweb do not find the new
+associations, then their output such as Redfish will not change either.
+
+### Organizational
+Does this repository require a new repository?  No - all changes will go in
+existing repositories.
+
+## Testing
+All new code in entity-manager and bmcweb will be unit tested using existing
+frameworks and infrastructure. We will add new end-to-end tests in
+openbmc-test-automation to ensure the Redfish output is correct.