Issue trees

Introduction & examples from real consulting projects

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Create Issue tree

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 Issue tree - general
Analysis to be
Area of analysis Suspected problems Possible reasons performed

Possible Reason 1 Analysis 1

Problem 1
Possible Reason 2 Analysis 2

Area 1

Possible Reason 3 Analysis 3

Problem 2
Possible Reason 4 Analysis 4

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Issue tree in Logistics –
examples

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 Issue tree - general
Analysis to be
Area of analysis Suspected problems Possible reasons performed

Possible Reason 1 Analysis 1

Problem 1
Possible Reason 2 Analysis 2

Area 1

Possible Reason 3 Analysis 3

Problem 2
Possible Reason 4 Analysis 4

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 Issue tree – example – chicken meat producer
Analysis to be
Area of analysis Suspected problems Possible reasons performed
Analysis of designed routes, their length
Badly designed routes
and the influence of possible changes

High costs of transport per ton of Analysis of fuel usage and kilometers
Too big fuel usage
goods covered by vehicles

No shipments on the way back Analysis of load carried on the way back

Badly designed method of packaging

Analysis of correlation between type of
which makes the product prone to
packaging and percentage of damaged
damage
Big level of waste and breakage in
Transport
transport
Analysis of time spent on the way and
Speed not adjusted to the product
kilometers covered in that time

Badly organized work and schedule of Analysis of level of overtime, daily

deliveries organization of drivers work
Low usage of resources
Limitation on delivery time of finished Analysis of Clients’ preferences on delivery
goods time

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Issue tree in Retail –
examples

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When you are talking about retail you should have a look a
the following areas

Retail chain development Expansion model

Product Range / Category Range

In-store process
Management

Pricing HR especially trainings

Logistic / Supply Chain

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 Below you can see example of issue tree in Retail Chain
Development
Analysis to be
Area of analysis Suspected problems Possible reasons performed
Low LFL due to cannibalization (on- Analyze the change in sales after opening
line, new stores in old locations) new stores / on-line introduction

Low growth in sales

Analysis of number of openings vs
Few new openings in locations
availability of new places

Increasing rents due not proper usage Analysis of rents vs comparable

of purchasing power competition
Retail chain Decreasing EBITDA of new stores
development Salaries growth vs rotation – comparison
Growing salaries to keep low rotation
with competition

No support from the shopping malls Analysis of contracts with shopping malls

High cost of building new stores

Not optimized formats, expensive Analysis of cost per 1 sq. m, number of
fixtures fixtures, cost per fixtures
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 Issue tree – example – chicken meat producer
Analysis to be
Area of analysis Suspected problems Possible reasons performed
Too many supplier of Category A that Analyze of number of suppliers and their
undermines your purchasing power share in sales vs market

Low margin on Category A

Analysis of Private Labels potential –
Lack of Private Labels
benchmarks and potential supplier

Usage of middlemen instead of direct Analysis of whom we buy from Category B

suppliers and the whole value chain
Product Range Low margin on Category B
Management
Improper planning and allocation by
Analysis of planning and allocation process
stores

Improper planning and allocation by

Analysis of planning and allocation process
stores
High inventory cost
Analysis of lead times, deliverability on-
Non-responsive supply chain
time, level of breakage

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Issue tree example for a
FMCG firm

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When you are talking about FMCG you should have a look a
the following areas

Marketing Supply Chain including Planning & Sourcing

Product Development Customer Data Analysis

Managing Sales Force Competition Analysis

Production Expansion Model

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 Below you can see example of issue tree in FMCG – Sales Force
Management
Analysis to be
Area of analysis Suspected problems Possible reasons performed
Bonus system with a high threshold
Analyze the motivation system
that incentives pushing the product
High sales at the end of the month
The firm is not producing what the Analyze sales forecasting, planning of
customer wants production and return rate

We have set-up too low targets for

Analyze the motivation system
some regions
Sales Force Different market shares in regions
Management
Some regions have different channels Analyze channels per region

Drive with sales force team members,

We have inefficient sales team
analyze processes, tools, efficiency
High cost of sales force in relation
to sales
We have too many overlapping sales Analyze sales per sales representative and
representatives compare with competition
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 Below you can see example of issue tree in FMCG – Production
Area of analysis Suspected problems Possible reasons
A lot of people are required for some
of the processes
We have high production costs
related to labor
We use the people inefficiently
We are very bad at planning and there
is no sales forecasting
Inventory level are extremely high
Production
The machines / part of production are
not linked properly
We are using wrong technology or
machines
We have high waste cost
We are using wrong materials
Analysis to be
performed
Analyze solution used by other firms,
especially automatization
Check the Overall Labor Efficiency (OLE)
and look for bottlenecks
Analyze production planning and
procurement, sales forecasting
Analyze how work is controlled on the
production floor
Analyze waste by technology and
machines. Check planned vs actual
Analyze cost of production by different
type of materials
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