Pareto Analysis What it is

Pareto Analysis is used to record and analyse data relating to a problem in such a way as to highlight the most significant areas, inputs or issues. Pareto Analysis often reveals that a small number of failures are responsible for the bulk of quality costs, a phenomenon called the Pareto Principle. This pattern is also called the 80/20 rule and shows itself in many ways. For example: 80% of sales are generated by 20% of customers. 80% of Quality costs are caused by 20% of the problems. 20% of stock lines will account for 80% of the value of the stock. A Pareto diagram allows data to be displayed as a bar chart and enables the main contributors to a problem to be highlighted. As a basic Quality Improvement tool, Pareto Analysis can: define categories of defects which cause a particular output (product, service, unit) to be defective; count the frequency of occurrence of each defect; display graphically as a bar chart, sorted in descending order, by frequency of defect; use a second y axis to show the cumulative % of defects .

Pareto Analysis

Pareto Analysis How to use it

1. Gather facts about the problem, using Check Sheets or Brainstorming, depending on the availability of information. 2. Rank the contributions to the problem in order of frequency. 3. Draw the value (errors, facts, etc) as a bar chart. 4. It can also be helpful to add a line showing the cumulative percentage of errors as each category is added. This helps to identify the categories contributing to 80% of the problem. 5. Review the chart if an 80/20 combination is not obvious, you may need to redefine your classifications and go back to Stage 1 or 2.

Examples
When possible, use Minitabs version, as an industry standard, rather than creating one in Excel - refer to Example 1 in this section Use a series of Pareto charts to drill down to more detail - Example 2 Recognise the 80: 20 principle but if the original Pareto is very flat be prepared to cut the defects in a different way, say 40:60 - Example 3 Minitab gives an extra dimension to Pareto Analysis - Example 4

Pareto Analysis

Pareto Analysis Examples

Example 1 : Minitabs version of Pareto is used as an industry standard. It gives summary information and starts the cumulative % count at the top of the first bar:

Pareto of D3 Small Engine Card Faults

100 80 60 40 200 100 0
c. e d air val pe d d ard an or ted ep o m d aulty ng Fitte c t. S oint dere atpl f itte h Bo s e i p. d is s f it mic R Rem oble hort nec t ation rs e Mis ug g tF l J e s l a a o H e M no ary Pr S on min the m en Mis om et E ed t S ing t o L r a r n l e m o h g e o C a D n t e n O pt po Cmp ng Cot Me ef or nts n ouch pon not t Lon Wir d Ec utio hioko Sold ulty Cont o D Joi t T om gs Cm Com T Fa ink y on r eca Wr pt n L p C e e P m L m 141 139 C69 52 22 C 20 20 17 17 17 B 16 13 10 10 10 8 6 5 29

600 500

300

20 0

Defect
Count Percent Cum %

23 23

22 45

11 56

8 65

4 68

3 71

3 75

3 77

3 80

3 83

3 85

2 87

2 89

2 91

2 92

1 94

1 95

95 100

Pareto Analysis

Percent

Count

400

Pareto Analysis Examples

Example 2 : a series of Pareto charts drill down to more detail:
Fault by Main Cause
100 70 60 50 80 60 40 20 0
n s ig De t en on mp Co ild Bu er Oth

40 30 20 10 0

1st level Analysis gives Design as main cause of failure 2nd level Analysis gives breakdown of Design

Defect
Count Percent Cum %

57 75.0 75.0

13 17.1 92.1

4 5.3 97.4

2 2.6 100.0

Design Faults
100 50 80 40

Percent

Count

Count

60 30 20 10 0 40 20 0
ec nn Co t le du Mo e r qu To tor Mo s ld Co rt Sta n Tra u sd od rM ce ule IC AS n atio libr Ca IOP n Imo

Defect
Count Percent Cum %

21 36.8 36.8

10 17.5 54.4

8 14.0 68.4

8 14.0 82.5

5 8.8 91.2

3 5.3 96.5

2 3.5 100.0

Pareto Analysis

Percent

Pareto Analysis Examples

Example 3 : if the original Pareto is very flat, be prepared to cut the defects in a different way, here, it is 40:60
Pareto Chart for Child11
100 200 80 60 100 40 20 0 0
7E 3 - 10 82 4- 4 16 77 82 88 46 80 95 ers 27 6-7 C7 C6 C7 C7 C7 C7 -81 7 6 C C C C C C 4 Oth 4 -6 KD KD KD KD KD KD -56 40 -56 0 40 4

Defect
Count Percent Cum %

18 7.6 7.6

13 5.5 13.0

11 4.6 17.6

11 4.6 22.3

11 4.6 26.9

10 4.2 31.1

9 3.8 34.9

9 3.8 38.7

8 3.4 42.0

138 58.0 100.0

At first glance, this looks unhelpful. But of 238 data points, most were counts of 1 or 2. A full Pareto would be very flat. Therefore after the first cumulative 42% of defects (100) , the balance of defects (138) are blocked together as others. This enables us to see that a top 9 of defects can be analysed - most are S-clip problems (links between ICs and PCB)

Pareto Analysis

Percent

Count

Pareto Analysis Examples

Example 4 : an extra dimension to Pareto charts - cut defects across another variable - eg work shift:

Pareto Chart for Flaws

Day
15 15

Evening

Scratch

Count

10

Count

Peel 10

5 Other

Night
15 Count 10 5 Count 15 10 5

Weekend

Smudge

Pareto Analysis

Pareto Analysis How it helps

Pareto Analysis is a useful tool to: identify and prioritise major problem areas based on frequency of occurrence; separate the vital few from the useful many things to do; identify major causes and effects. The technique is often used in conjunction with Brainstorming and Cause and Effect Analysis. HINT ! The most frequent is not always the most important! Be aware of the impact of other causes on Customers or goals.

References
ASG aTQ training module 7.4 : Measure /Analyse - Pareto & CauseEffect Revisited

Pareto Analysis