Pareto analysis

This analytical tool is named after the 19th century Italian economist, Vilfredo Pareto, who observed that 80% of his country’s wealth was distributed amongst 20% of the population. This idea was developed by Dr JM Juran, who drew attention to the phenomenon of the “vital few” issues and the “trivial many”. He considered that 80% of the “failure costs” resulted from 20% of the causes of failure.

Pareto analysis is a means of recording the contributing causes of a situation, enabling the most significant aspects to be identified so that action can be concentrated where it will produce most benefit.

There are 5 steps to Pareto Analysis:

  1. List the contributing causes
  2. Calculate their percentage contribution to the problem
  3. Order totals from highest to lowest percentage
  4. Draw the Pareto diagram
  5. Interpret the results

Steps 1. and 2.

Contributing causes:  % of hours lost
Lack of training of workers causing work to be done badly 4%
Workers sickness 12%
Parts not ready 34%
Defective parts 40%
Wrong instructions given 3%
Waiting for tools 7%

Steps 3. and 4.

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