Use Pareto Analysis to Solve the Most Important
Problems First
Pareto analysis can be used when you encounter multiple related problems or a common problem with multiple causes. This technique can be used if there are enough occurrences that you can categorize and count them. In other words, this technique does not work if there is just one root cause.
The purpose of Pareto Analysis is to observe the problems and determine their frequency of occurrence. This, in turn, gives you the information you need to prioritize your effort to ensure you are spending your time where it will have the most positive impact.
Pareto Analysis is based on the classic 80/20 rule. That is, in many cases 20% of the problems cause 80% of the occurrences. For example, let’s say you have a problem with a product failure, based on a number of causes. Through observation and collecting metrics, you determine there are eight causes. Rather than attacking the causes randomly, a Pareto Analysis might show that 80% of the problems are caused by the top three causes. This gives you information to know which causes to solve first.
The tool associated with this problem solving technique is the Pareto Diagram. It is a chart, graph or histogram showing each problem and the frequency of occurrence. It is created as follows:
| Developing a Pareto Diagram | ||||||||||||||||||||||
| 1 | Create a table listing all observed problems or causes. For each problem, identify the number of occurrences over a fixed period of time.
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| 2 | Arrange the problems from highest to lowest, based on the number of occurrences. | |||||||||||||||||||||
| 3 | Create a new column for the cumulative total.
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