Tools & Techniques - Pareto Charts
Abstract
Vilfredo Pareto was an Italian economist credited with establishing the Pareto Principle. Pareto charts provide facts and insights necessary for setting priorities. Pareto charts assist teams to focus on the smaller number of the causes of problems in order to aid in decision making. Pareto charts organize and display information. They are a form of vertical bar chart. Attributes are discussed. Suggestions on when to use a Pareto chart are made. Pareto analysis is one way to determine major causes of particular problems. A review is provided with suggestions for alternatives. The Pareto chart is a valuable decision making tool. Tools & Techniques
Pareto Charts As a decision-making tool, the Pareto chart provides facts and insights necessary for setting priorities. Vilfredo Pareto was an Italian economist credited with establishing what is now widely known as the Pareto Principle. It is also known as the "80/20 Rule" (iSixSigma, 2006). When Pareto discovered the principle in 1906, he established that 80% of the land in Italy was owned by 20% of the population. Later, Pareto discovered his principle was valid in other parts of his life, such as gardening. For example, 80% of his garden peas were produced by 20% of the peapods. The "80/20 Rule is not literal. The ratios may vary. Rather than an even 80% to 20% ratio the exact percentage may be 82% to 18%, or 78% to 22%. However as a rule of thumb ' it is common practice to refer to an 80% to 20% ratio. On their website showing examples of the Pareto charts and the 80/20 Rule, iSixSigma provides several examples of common applications for the 80/20 Rule"
80% of process defects arise from 20% of the process issues. 20% of your sales force produces 80% of your company revenues. 80% of delays in schedule arise from 20% of the possible causes of the delays. 80% of customer complaints arise from 20% of your products or services.
Pareto charts assist teams to focus on the
Vilfredo Pareto was an Italian economist credited with establishing the Pareto Principle. Pareto charts provide facts and insights necessary for setting priorities. Pareto charts assist teams to focus on the smaller number of the causes of problems in order to aid in decision making. Pareto charts organize and display information. They are a form of vertical bar chart. Attributes are discussed. Suggestions on when to use a Pareto chart are made. Pareto analysis is one way to determine major causes of particular problems. A review is provided with suggestions for alternatives. The Pareto chart is a valuable decision making tool. Tools & Techniques
Pareto Charts As a decision-making tool, the Pareto chart provides facts and insights necessary for setting priorities. Vilfredo Pareto was an Italian economist credited with establishing what is now widely known as the Pareto Principle. It is also known as the "80/20 Rule" (iSixSigma, 2006). When Pareto discovered the principle in 1906, he established that 80% of the land in Italy was owned by 20% of the population. Later, Pareto discovered his principle was valid in other parts of his life, such as gardening. For example, 80% of his garden peas were produced by 20% of the peapods. The "80/20 Rule is not literal. The ratios may vary. Rather than an even 80% to 20% ratio the exact percentage may be 82% to 18%, or 78% to 22%. However as a rule of thumb ' it is common practice to refer to an 80% to 20% ratio. On their website showing examples of the Pareto charts and the 80/20 Rule, iSixSigma provides several examples of common applications for the 80/20 Rule"
80% of process defects arise from 20% of the process issues. 20% of your sales force produces 80% of your company revenues. 80% of delays in schedule arise from 20% of the possible causes of the delays. 80% of customer complaints arise from 20% of your products or services.
Pareto charts assist teams to focus on the
References: Coast Guard Process Improvement Guide, (2005). Change Navigators, Inc. Retrieved from http://web2.concordia.ca/quality/tools/19pareto.pdf Retrieved October 21, 2006 from http://www.isixsigma.com/library/content/ Retrieved October 22, 2006 from www.qualityamerica.com Retrieved October 23, 2006 from http://asq.org /learn-about-quality/ cause-analysis-tools/overview/pareto.html Retrieved October 23, 2006 from http://www.toolpack.com/quality/paretocharts.html Retrieved October 23, 2006 from http://www.toolpack.com/quality/paretocharts.html