Your SEO optimized title page contents

A Guide to Pareto chart

The Pareto chart provides a graphic depiction of the Pareto principle, a theory maintaining that 80% of the output in a given situation or system is produced by 20% of the input.

When to use a Pareto Chart:

It is mainly used in quality management related processes. Along with quality management, this tool can also be used with other situations such as:

  • When you have a lot of data and you want to analyze it.
  • When you want to identify the main cause for most of the problems.
  • When communicating data with stakeholders.
  • When you want to prioritize tasks.
  • When you want to see the relative importance of data.

What are the Benefits of Pareto Analysis?

  • The chart helps you segregate the problems and their causes.
  • It helps you focus on solving the few causes which are generating the maximum amount of problems.
  • It shows you the problems to focus on and get the greatest improvement.
  • This chart helps visualize problems quickly, so this is a good visual communication tool as well.

Limitations of Pareto Analysis:

  • The Pareto principle is a rule of thumb which is not a universal law and cannot be applied in all cases.
  • It does not help you find the root cause of the problem, so you will need another tool such as root cause analysis to use it effectively.
  • If there are many problems you may need more sub-Pareto charts to segregate, which sometimes may be cumbersome.
  • Though a Pareto chart can show you the frequency of a problem, it cannot show you the severity.
  • The Pareto analysis focuses on past data which might not be significant to current or future scenarios.

How to Draw a Pareto Chart?
Drawing a Pareto chart is very easy. The important step is to collect the correct data.

The steps to drawing a Pareto chart are as follows:

  • Select the category of causes you want to group issues in.
  • Determine the measure, for example, frequency, cost, time, etc.
  • Determine the period to collect the data; for example, one cycle, one day, or one week.
  • Collect the data.
  • Segregate the data as per their categories.
  • Draw a bar chart with causes on the x-axis and the number of occurrences on the y-axis.
  • Now draw the bar with the highest number of occurrences at the far-left and label the category.
  • Repeat the procedure until you complete all identified categories.
  • The category with the lowest number of defects will be at the far-right.

 

The procedure to draw this line is as follows:

  • Find the percentage of each category.
  • Add the percentage of the first and second bar and put a dot on the second bar.
  • Now add the percentage of the third bar and place a dot at the top of the third bar.
  • Continue the process until all bars are covered.
  • Connect all the dots.
  • Now the cumulative sum line is drawn. Make sure that the bar at the far-right has a percentage of 100%.