Have you noticed that you’ve been making less profit lately, your customer base isn’t growing, and your employees are giving notice? Perhaps you could spot other difficulties in your company? The causes of the poor condition in a company are not always obvious, which is why the Ishikawa diagram was created to help identify them. In the following article, we’ll explain how to perform a cause-and-effect analysis of a company’s problems!
Ishikawa diagram – table of contents:
- What is an Ishikawa diagram?
- Types of Ishikawa diagram
- Ishikawa diagram – cause and effect analysis
- Advantages and disadvantages of the Ishikawa diagram
What is an Ishikawa diagram?
An Ishikawa diagram is a tool that pictorially indicates the causes and effects of a given difficulty. As a result, it makes it easier to analyze the processes of a business, whether it is about production, marketing activities, future activities or any challenges faced by entrepreneurs.
Types of Ishikawa diagrams
There are several ways in which to perform a cause-and-effect analysis. The most popular is undoubtedly the so-called 6M, but the 3M, 8P, 4S diagrams are also applicable. The choice of a particular type depends on the issue we are addressing or the industry within which we operate.
6M is responsible for the six factors it is designed to analyze. These include the following:
- Manpower (people) – refers to the people involved in the process, their attitudes and competencies;
- Materials – includes all tools, resources necessary for the implementation of processes, whether they are of sufficient quality;
- Machinery (machines) – is associated with technological facilities and equipment through which products are created and services are performed, determining their efficiency and carrying out repairs;
- Methods (methods used) – refers to the procedures and methods of production, implementation of services, whether the methods of performance measurement provide reliable and correct information about the processes, whether there are so-called bottlenecks ?;
- Management (way of managing) – that is, deciding on. style of communication, the delegation of tasks, and planning of activities within the enterprise;
- Mother Nature or Environment – includes all external factors that affect the business, e.g., regulations, geographic location, random events, etc.
A simplified version of the above method is 3M. It is limited to only 3 aspects:
- Manpower (people);
- Machinery (machines);
It is useful for less complex processes that do not need to be inspected and refined as often.
This model is the most extensive of all those presented here. 8P is responsible for:
- People – who becomes involved in the process and how are they involved?
- Procedures (procedures) – what are the recommendations, rules for the company’s processes? Do they fulfill their function?
- Places (location) -where the company activities take place, are there better places to carry them out?
- Policies (rules) – what standards are in place at the company, or facility? Are they followed?
- Processes (processes) – what are the steps in the process and do they ensure productivity?
- Price (price) – what is the ratio of the company’s expenses to the profits made?
- Promotion (promotion) – what is the company’s marketing strategy? How are products or services marketed?
- Product (product) – what goods are produced/what services are offered? How can they be improved?
It is typically used in service industries. It includes 4 elements:
- Suppliers (suppliers) – from whom do we obtain goods?
- Systems (systems) – what processes occur in the company and what can be improved in them?
- Skills – what skills of the team are valuable to us, and what skills should we develop?
- Surroundings – what is the customer’s experience with our company, what to change to improve the service?
Ishikawa diagram – cause and effect analysis
To create an Ishikawa diagram, follow the steps outlined below. We will illustrate it with an example from the e-commerce industry (our online store).
- Identify the problem
- Determine categories of causes
Or – what are the noticeable consequences of the company’s malfunction? These could be issues related to poor production quality, falling profits, low profitability, etc. Determining the problem will not always come easy, so it is worthwhile from time to time to analyze individual elements of the processes (e.g., sales) and listen to customer feedback, and encourage employees to report errors, brainstorm.
These are the areas we analyze. Apply any of the above classifications – 6M, 3M, 8P or 4S – for this purpose. Match them to your needs and the industry you operate in. In this example, we decided on the 6M model:
- People – what difficulties do you notice within your staff?
- Management – what mistakes are made at the management level (may include how to communicate with employees, control individual processes)?
- Environment – does the company comply with regulations? Have any recent external events beyond our control harmed the operation of the online store?
- Methods – what deficiencies are noticed during the customer’s buying process?
- Machines – is the website running smoothly and is it safe for users’ personal data?
- Materials – does the company have several channels of communication with the customer? Is the platform integrated with other portals?
At this stage, recognize which aspects you should pay attention to and determine the causes of the company’s low profitability. Consider each element of the 6M model. The cause will not always be apparent at first glance – use the technique of asking “why” a problem occurs five times to find out the main reason.
It should more or less look like the one below. Understanding the links between effects and causes should allow you to apply appropriate solutions to the issue. This can include using tools specific to the strategy of lean management.
Advantages and disadvantages of the Ishikawa diagram
Like any method of analysis, it has its strengths and weaknesses. In this case, we distinguish among others:
- It facilitates the detection of the causes of existing problems, and weaknesses in the company;
- It comes in handy during team meetings, brainstorming;
- It Improves communication with the team;
- It helps when formulating a new corporate strategy or making adjustments;
- It is transparent and simple to execute.
- It requires full commitment and sincerity on the part of team members;
- Too much focus on the wrong areas, overlooking key ones;
- They are sometimes time-consuming – it can take some time to find the causes of a given situation;
- With more complex problems, the cause-and-effect analysis may not be enough.
The Ishikawa diagram is a universal analysis tool to apply in various branches of business. With it, you will minimize the risk of incurring costs and losses within the processes, and if you take preventive measures – you will eliminate errors and increase the efficiency and profits of the company.
Read also: How to implement Agile in your company?