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:
- List the contributing causes
- Calculate their percentage contribution to the problem
- Order totals from highest to lowest percentage
- Draw the Pareto diagram
- Interpret the results
Steps 1. and 2.
|Contributing causes:||% of hours lost|
|Lack of training of workers causing work to be done badly||4%|
|Parts not ready||34%|
|Wrong instructions given||3%|
|Waiting for tools||7%|
Steps 3. and 4.