If we can’t measure something, we do not have the possibility to manage it. Additionally, if we begin to quantify the problems, which we want to take, then we gain awareness of their occurrence.
Here, a very simple tool can support the analysis, thanks to which we are able to illustrate the types of problems in a decreasing manner – Pareto diagram.
It is used as a problem solving supporting tool for example in application of 8D, Kaizen or QRQC methodologies. His only limitation is that it can be used for variable data, but not for attribute data that is used much less frequently. It’s also worth mentioning that it is one of the 7 traditional quality management tools.
The Pareto diagram itself is often defined as the “80/20” rule which states that in many situations around 80% of problems are caused by 20% of factors. When it comes to solving business problems, this is a great method to prioritize the topics that need to be addressed first. Why? Because after making such a diagram, we can easily decide what to do in the first place.
Diagram Pareto description
The easiest way to create a Pareto diagram is to use a graph that can be generated in MS Excel. After entering the appropriate descriptions together with the quantities (important note: at this stage they are not required to be entered in descending order) go to the “Insert chart” section and select “Pareto chart”.
Apart from the fact that the bars will be presented in a descending manner (as shown in the figure below), the Lorenz curve will be additionally created, which will have a percentage scale on the right side. Contrary to the bars, this line will run incrementally, showing the percentage of individual observations.
The last cumulative percentage will always be 100%. Cumulative percentages indicate what percentage of all defects can be corrected when the most important types are resolved.
The graph therefore shows that the first two categories account for 56% of the process problems. Therefore, if we want to achieve a significant reduction of the existing problems, it is enough to focus on eliminating the first two causes.
Diagram Pareto examples
Although it is a tool used primarily in organizations, we must be aware that it also has many uses in private life. A few examples are presented below:
– 80% of the results are achieved through 20% of efforts and workload
– 80% of the company’s profits are related to 20% of the provided products or services
– 80% of accidents are caused by 20% of drivers
– 80% of wealth belongs to 20% of society
Diagram Pareto using advantages
A great accelerator when it comes to diagram Pareto applying is its combination with the information contained in Ishikawa diagram, thanks to which it’s possible to plan systemic actions for recorded issues – see example below.
The undoubted advantages of using the diagram Pareto include, above all, a simple form of data visualization (bars arranged in descending order), which translates into easier communication in teams dedicated to solving problems, additionally indicating what their priorities should be implemented in the first place.
You can download an automatic, editable Excel form for free on the Free Quality Tools
Document name: Pareto Chart – Excel form
