PARETO CHARTS

It is a technique for prioritizing possible changes by identifying the problems that will be solved by making this approach in other words it is used to graphically summarize and display the relative importance of the difference between groups of data.

Pareto Charts are based on 80-20 rule i.e. it divides the causes for a problem into vital few and trivial many i.e. 20% of causes generate 80% of the results. With this tool we try to find that 20% of work which will generate 80% of positive results.

STEPS TO USE THE TOOL.

STEP 1:- IDENTIFY AND LIST PROBLEMS
Find out all the existing problems, it may be the defects or customer problems and make a list of them.

STEP 2:- IDENTIFY ROOT CAUSE FOR EACH PROBLEM
Find out the fundamental cause for each problem, use techniques such as BRAINSTORMING, WHY-WHY ANALYSIS, ROOT CAUSE ANALYSIS etc to direct you to exact causes.

STEP 3:- GIVE A SCORE TO PROBLEMS
Now you need to score your problems, scoring depends upon the results you are trying to achieve. If you are looking for cost reduction then you must look for things that cost you extra money.

STEP 4:-GROUP PROBLEMS CAUSED BY SAME CAUSE
Now you need to group the problems that are caused by same root cause. For example:- you can group the problems caused by lack of staff together.

STEP 5:-ADD UP SCORED FOR EACH GROUP
Now add up the scores for each group, the group with top score is your top priority and the one with lowest score is least priority.

STEP 6:-TAKE ACTION
Now you need to take action on your top priority problem.

SOLVED EXAMPLE :-

Now when we see the above chart carefully we will realize that 80% of our problems are caused due to the first two problems i.e. traffic tie-up and woke up late, hence most of our problems are solved by solving these problems.