What is the difference between a causal and a resultant loss?

A causal loss is the problem itself, such as a breakdown or a changeover. A resultant loss is what it sets off elsewhere, such as operators waiting, overtime or scrap at the restart. Cost deployment traces resultant costs back to their causal loss and ranks the causal losses.

What are matrices A, B, C, D and E in cost deployment?

A shows which loss happens in which process and how much. B links resultant losses to the causal losses behind them. C turns the losses into cost. D matches each causal loss with a method or pillar to attack it. E compares the improvement cost with the expected saving.

What is transformation cost?

The cost of turning material into product in the plant or area for the period: labor, energy, maintenance, depreciation and indirect materials. Raw material is usually left out. Losses are often shown as a share of it, and the reduction target can be set against it.

How do you avoid double counting resultant losses?

Give every hour, part or kWh one row only, and let each resultant row keep its own cost so the total is counted once. Then add each resultant cost to its causal loss in a separate traced column, which has the same total and is the one you rank.

Free template

Updated October 1, 2026

Cost deployment matrix

Q: What is cost deployment in WCM?

Cost deployment is the World Class Manufacturing method that puts a money value on every loss so improvement goes where the cost is highest. Losses are measured by process, split into causal and resultant losses, costed with agreed unit rates and matched with the methods and projects that recover them.

Cost deployment is the World Class Manufacturing (WCM) method that puts a money value on every loss in a plant, so improvement goes where the cost is highest. Losses are measured by process, split into causal losses (the problem itself, such as a breakdown) and the resultant losses they set off (such as operators waiting), turned into money with agreed unit costs, and matched with the methods and projects that recover them. The work is usually laid out in matrices labelled A to E. Page 1 of this template has the unit costs and matrices A and B: the quantity of each loss in each process, and which losses are causal or resultant. Page 2 is matrix C, the cost of each loss by process with the cost traced back to the causal losses, a rank and a Pareto. Page 3 has matrices D and E for methods, projects, benefit ÷ cost and payback, and a worked example. The Excel version does all the arithmetic, checks the causal links, ranks the causal losses, draws the Pareto and works out each project's saving, benefit ÷ cost and payback.

Free to use: print it, copy it and edit it for your team. Enter your name and work email once to download.

Page 1 of the cost deployment matrix: fields for area, period, months covered, transformation cost and who prepared it, a unit cost strip for machine hours, labor hours, scrapped parts, kWh and money, a table of ten loss rows by eight processes with each loss's unit, causal or resultant and the causal loss it comes from, and the seven steps of cost deployment. — Unit costsMatrix A: losses by processMatrix B: causal and resultantMatrix C: cost of lossesTraced cost and rankParetoMatrices D and EBenefit ÷ cost and payback

When to use it

When to use a cost deployment matrix

When a plant or area starts World Class Manufacturing and needs to decide which losses its pillars attack first.
Once a year, or each budget cycle, to set the loss reduction target and choose the improvement projects.
When improvement teams are busy but the savings do not show in the cost figures.
To put losses measured in hours, parts and kilowatt-hours on one money scale.

How to fill it in

1
Agree the transformation cost and the unit costs
With Finance: the area's transformation cost for the period (labor, energy, maintenance, depreciation and indirect materials; raw material is usually left out) and the cost of one machine hour, one labor hour, one scrapped part and one kWh.
2
List the losses and measure where they happen (matrix A)
One row per loss type, one column per process in flow order. Write the quantity in the row's unit from downtime logs, scrap records and meters, all for the same period.
3
Mark causal and resultant losses (matrix B)
A causal loss is the problem itself, such as a breakdown. A resultant loss is what it sets off, such as operators waiting or scrap at the restart. For each resultant row, write the number of the causal loss it comes from.
4
Turn the quantities into money (matrix C)
Each cell is quantity × unit cost. Every row keeps its own cost, so the total is counted once. The traced column adds each resultant loss to its causal loss, and the causal losses are ranked by that figure.
5
Choose methods and projects (matrices D and E)
For the biggest causal losses, pick the method or pillar that attacks each one, estimate the reduction and the improvement cost, and compare benefit ÷ cost and payback.
6
Plan, follow up and measure again
Give each project an owner and dates. Fill in the matrix again next period: a project worked when its loss goes down on the cost matrix, not when the project closes.

The method

The seven steps of cost deployment and their matrices

As commonly described, following Yamashina and Kubo's manufacturing cost deployment. Sources label the last step differently; the order of the work is the same.

Step	Matrix	What you do
1. Transformation cost and target	Before the matrices	Total cost of the area for the period, and the reduction target
2. Identify the losses	A	Which loss happens in which process, and how much
3. Separate causal and resultant losses	B	Which losses are set off by another loss
4. Cost of the losses	C	Quantity × unit cost, by loss and by process
5. Methods to recover them	D	The method or pillar that attacks each causal loss
6. Improvement cost and expected saving	E	Improvement cost against the expected saving: benefit ÷ cost and payback
7. Plan and follow up	F in some descriptions	Owners, dates and the saving checked against the plan

1. Transformation cost and target
Matrix
Before the matrices
What you do
Total cost of the area for the period, and the reduction target
2. Identify the losses
Matrix
A
What you do
Which loss happens in which process, and how much
3. Separate causal and resultant losses
Matrix
B
What you do
Which losses are set off by another loss
4. Cost of the losses
Matrix
C
What you do
Quantity × unit cost, by loss and by process
5. Methods to recover them
Matrix
D
What you do
The method or pillar that attacks each causal loss
6. Improvement cost and expected saving
Matrix
E
What you do
Improvement cost against the expected saving: benefit ÷ cost and payback
7. Plan and follow up
Matrix
F in some descriptions
What you do
Owners, dates and the saving checked against the plan

A filled-in example

Illustrative, not a benchmark

An example: one month in a stamped and welded parts area with six processes and eight losses (illustrative numbers).

Unit costs: machine hour $120, labor hour $40, scrapped part $8, kWh $0.12. Transformation cost for the month: $420,000.
Breakdowns: 50 machine hours = $6,000 of their own, plus 136 hours of operators idle during breakdowns, a resultant loss, at $40 = $5,440. Traced to breakdowns: $11,440.
Setup and changeover: 42 machine hours = $5,040, plus 400 parts of startup scrap after changeovers = $3,200. Traced: $8,240.
Defects scrapped: 1,000 parts = $8,000. Rework $4,400, short stops and reduced speed $4,320, compressed air leaks $1,440.
Total loss $37,840, 9.0% of transformation cost. The top three causal losses are 73% of it. Welding (32.6%) and stamping (28.0%) carry the most.

On their own cost, scrapped parts looked like the biggest loss; traced to their causes, breakdowns and changeovers came first. Four projects (a PM plan, SMED, poka-yoke and air leak repair) are expected to save $128,544 a year for $58,000: benefit ÷ cost 2.22 and payback 5.4 months. The air leak project has the best ratio (3.46) but the smallest saving.

Common mistakes

Counting resultant losses twice
If idle operator hours sit in the breakdown cost and again in a waiting row, the total is inflated. Give each hour one row and trace resultant costs to their cause.
Ranking the resultant losses
Overtime and idle labor are where the money shows, not where it starts. Rank the causal losses, or the projects will treat symptoms.
Unit costs nobody agreed
If Finance does not recognize the machine hour rate, nobody will believe the savings. Agree the rates once and keep them for the year.
Stopping at the matrix
A ranked list without owners, dates and a check next period changes nothing. Matrices D and E and the follow-up turn a cost into a saving.

Download the template

Free to use: print it, copy it and edit it for your team. Enter your name and work email once to download.

Run this template in LeanSuite

In LeanSuite, Loss and Cost Management takes your loss data from a spreadsheet, ERP or MES, sorts each record into a cost bucket and a causal or resultant loss, and builds a loss tree that puts a cost on every causal loss and ranks the biggest improvement opportunities.

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