Overview
Pareto analysis is based on the observation that the majority of a product’s defects (80%) arise from a small number of causes (20%).
Also known as
- Pareto principle.
- 80/20 principle.
The tool
The 80/20 principle is a generalisation, rather than a hard and fast rule.
Knowing where the most common problems arise allows analysts to:
- Address these problems (as part of Cause and Effect analysis)
- Speed up rates of repair, by having repairers look for and fix or rule out the most obvious problems first.
In order for meaningful conclusions to be drawn, Pareto analysis requires a comprehensive set of categories and a large dataset. The use of a small number of categories or observations may lead to inaccurate conclusions.
The model does not recognise that minor problems may escalate over time to become major issues.
Pareto Chart
Patterns can be identified by using a Pareto Chart which you can create in Excel. It can be found in the Statistical Chart/Histogram groups. Excel will automatically order the bars in the chart according to the count of errors.
Why use it
- Pareto analysis can be used as part of, or in conjunction with, cause and effect analysis (aka Root Cause Analysis), to highlight the most important among a set of a factors which cause problems.
- Pareto analysis enables users to identify precise patterns and proportions by measuring and charting numbers and frequencies of different types of faults.