A loss tree breaks a total loss into smaller parts, level by level, from the plant to an area, a line, a machine, a type of loss and a cause. It shows which part of the loss is largest so that effort goes to the cause worth fixing first.

What is the stop rule?

Under each parent, rank the items from largest to smallest and keep drilling while the items before the current one add up to less than the cut-off, commonly 80%. The rest are parked. It is a convention, not a standard, and you can change the cut-off.

How is a loss tree different from a Pareto chart?

A Pareto chart ranks one list of categories. A loss tree repeats that ranking at every level, so the biggest area leads to its biggest line, then its biggest machine and cause. It ends at a specific cause, not at a bar chart.

What is the difference between causal and resultant losses?

A causal loss happens in the process, such as a breakdown, a changeover or scrap. A resultant loss is the cost that follows elsewhere, such as overtime or expedited freight. Drill into the causal losses and use the resultant ones to price the saving.

How many levels should a loss tree have?

This worksheet uses six: plant, area, line, machine, loss type and cause. Stop earlier if you reach something one team can fix. A shorter tree is fine; an item that is still vague is not.

Free template

Updated October 25, 2026

Loss tree worksheet

A loss tree is a breakdown of a total loss, in hours, units or dollars, into smaller and smaller parts: plant, area, line, machine, type of loss and finally cause. The aim is to find the one cause worth fixing first without trying to fix everything. This worksheet lists every item with its parent, works out its share of the parent and a running total among its siblings, and applies a stop rule: keep drilling under the largest items until together they cover your cut-off, usually 80%, then park the rest. The Excel version does the sums, checks that the pieces add up to their parent and tells you for each item whether to park it, drill down or act. The PDF has the blank tree, a one-page guide with a starter list of loss definitions, and a worked example.

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 loss tree worksheet — Six-level loss treeShare of parent and running totalStop rule per itemChildren-add-up checkLoss definitionsWorked example

Filled-in Loss tree worksheet: an invented bottling plant with 1,900 hours of loss — The same sheet filled in with the worked example (page 3 of the PDF, illustrative numbers). Open full size (opens the picture in a new tab)

When to use it

When to use a loss tree

When you have a large loss figure, such as downtime hours or scrap cost, and nobody agrees where to start.
To choose which of several lines, machines or loss types gets the next improvement project.
To show a plant or finance team that the effort goes where the money is, with the numbers behind it.
At the start of a cost or loss programme, to set a baseline that later savings are measured against.
Not for finding the root cause itself. Once the tree reaches a cause someone can act on, use 5 whys, a fishbone or an A3.

How to fill it in

1
Pick one unit and one period
Choose hours, dollars or units and a period, such as the last twelve months. Every loss in the tree uses that unit, so convert minutes to hours and scrap to dollars first.
2
Enter the plant total
The first row is the whole loss with level 1 and no parent. Everything else hangs from it, so it also gives the base for each item's share of the total.
3
Split it under the biggest items
List the areas, then the lines under the biggest areas, then machines, loss types and causes. Give each item an ID and its parent's ID. The items under one parent should add up to it; add an Other row rather than leave a gap.
4
Read the share and the running total
Each item shows its share of its parent and the cumulative share of the largest siblings down to it. The first few items that together reach your cut-off are where the loss is.
5
Follow the stop rule
Drill under the items marked Drill down. Park the ones below the cut-off. When an item is a cause one team can fix as it stands, mark it Y, give it an owner and a project or quick kaizen number.
6
Agree the definitions
Use the definitions sheet so that minor stop, changeover or rework mean the same thing to everyone who feeds numbers into the tree.

A filled-in example

Illustrative, not a benchmark

An invented bottling plant loses 1,900 hours a year. The tree is drilled only under the biggest item at each level.

Filling is 1,020 of the 1,900 hours and packing is 540. The warehouse and utilities are 340 and fall below the 80% cut-off, so they are parked.
Under filling, filler line 2 is 722 hours, 38% of the whole plant. Its monoblock is 700 of those.
On the monoblock, minor stops are 427 hours, 61% of the machine's loss. Changeover is 140 and also stays in play; breakdowns and start-up waste are parked.
Under minor stops, cap-feed jams are 299 hours, 70% of the minor stops and 15.7% of the plant total.

Cap-feed jams are a cause one team can fix, so the tree stops there and the next step is a quick kaizen on the cap feed, not another level of analysis.

Common mistakes

Mixing units
Hours in one branch and dollars in another cannot be compared or added. Convert everything to one unit before the numbers go in.
Children that do not add up
If the items under a parent do not total the parent, either a loss is missing or the data come from different periods. Add an Other row and find out what it holds.
Drilling everywhere
A tree that goes six levels deep under every branch takes weeks and finds nothing new. Drill under the large items only and park the rest.
Stopping too early
A line or a loss type is where to look, not what to fix. Keep going until the item names a cause that someone can change.
Counting a loss twice
A stop and the overtime that recovers it are the same loss seen twice. Stratify the causal losses and price the saving once.

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

LeanSuite's Loss and Cost Management imports your loss data, shows a loss tree that puts a cost on each loss, and tracks the savings as you remove them.

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