As you may recall from earlier columns, effective business performance management implementations are all about driving down the performance management pyramid from vision to strategies to objectives to critical success factors (CSFs) and finally to key performance indicators (KPIs). In our continuing effort to identify those important 10 to 15 KPIs, we will explore another Six Sigma technique called root cause analysis that uses a "cause and effect" diagram to discover all the processes driving a specific CSF. Because the diagram itself can look like the skeleton of a fish, the moniker of "fishbone" diagram has gained wide acceptance, and we will use this going forward (see Figure 1). However, if you want to impress your colleagues, you can use the more technical Six Sigma parlance - the Ishikawa diagram, named after Professor Kaoru Ishikawa of Tokyo University who developed this approach in 1943 to resolve steel production problems. Although the original intent of the fishbone diagram was to generate a comprehensive list of possible causes for manufacturing problems and defects, we will finesse the technique to identify the relationship between CSFs and KPIs.

For our case study, we will focus on supply chain management (SCM), and show how the fishbone diagram allows us to think through all those cause components that potentially influence SCM productivity and help identify the candidate metrics for KPIs. Creation of an effective fishbone diagram includes the following steps:

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