The Pareto Chart

The Pareto Chart is regarded as one of the seven basic tools in quality management alongside with the Check sheet, Control Chart, Flowchart, Histogram, Ishikawa Diagram and Scatter Diagram.

A Pareto chart or Pareto distribution diagram is an effective quality tool that shows the contribution of each cause to an effect or outcome. This chart is consisted of bars which are arranged in a descending order according to their frequency/occurrence/cost from left to right. Meaning that your graph will show the longest bar on the left and the shortest to the right. The vertical axis on the right represents the cumulative percentage (equals to 100%) which demonstrated in form of a concave line. The last dot in the line should reach 100%.

Life is Not Fair-Deal With It. At the beginning of the 20th century, Vilfredo Pareto, an Italian economist and engineer, studied the relationship between population and wealth. He observed that 80% of the wealth in Italy is controlled by 20% of the people only. Out of this rule, a principle was created saying that 80% of the errors, or failures, or problems we have to deal with in life, or business, or economics are resulted from 20% of the causes. Like saying that 80% of the delays in transportation systems are resulted from 20% of potential causes. But, can this rule be considered as law? In fact no. Yet, it is helping quality professionals and business leaders around the globe to prioritize the decisions they are making by choosing the ones with the greatest influence.

When to use it. Use Pareto chart to help you analyze data concerning the frequency of defects or nonconformity in processes. Also, when there are many causes for the same problem where you have to focus on the most significant ones and finally, to communicate the results or outcomes in a professional and understandable way.

How To Create a Pareto Chart. First, Identify the purpose of your analysis and determine the causes and the measurements required. Then, select the relative time frame and start collecting the data accordingly. After that, analyze the figures you’ve gotten and build your chart. For more info on how to build you chart please go to: https://asq.org/learn-about-quality/cause-analysis-tools/overview/pareto.html you may also use the free template available there.

Critics. The Pareto principle as well its chart have always been criticized for the validity of the rule (80/20 rule) and it effectiveness as a quality improvement concept. Especially that the chart disregards giving any insights about the root causes of the defects. This neglection of the indirect or sub-causes may make the analysis less reliable and doubtful. To avoid this issue, you may combine more than quality tool. Pareto chart may work well with the Ishikawa Diagram.