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Introduction
This study is done to analyze the two tools for strategic
management which are Ishikawas Fishbone Diagram and Pareto
Objectives:
Also referred as fish bone diagrams because they resemble a fish skeleton,
with the "ribs" representing the causes of an event and the final outcome
showing at the head of the skeleton.
Define the
Problem
Brainstorm
To define the problem for which the root cause has to be identified
Gathers ideas from people who are potential contributors, to seek the various
causes of the problems
Mckinsey 7s Framework
Categorize 4Ps of Service Industry, 6 Ms Manufacturing Industry, Process Steps
Fishbone Diagram
Man
Method
Machine
Another
Sample Text
Effect
Mother of Nature
(Environment)
Management
Materials
No IT Facility
No Technical Support Haphazard
Under Utilization
High Cost
No Professionalism
Too Many Inventories
No Storage
High Cost
Unavailability
Misdirected People
Lack of Specification
High Cost
Overstocking
Many Suppliers
No Specification
No EOS
High Lead Time
Faulty Ordering
No Orientation
Underperforming
No Coordination
Power War
Inefficient
Supply Chain
Management
Lack of Trust
Disappointment
Hidden Cost
Short Budget
No Innovation
Resistant to Change
Protectionism
Duplicity
Supplies Cost
Stockout
Unsound Set-Up
Rivalry
No Employee Orientation
No Material Manager
Inefficient Management
Advantages
Determine root causes
Encourage group
discussionbrainstorming
Easy to read format
Disadvantages
When problem is
simple or already
known
Team size is small
Communication
problems
Time constraint
PARETO
Pareto 80 20 Rule
BACKGROUND
OVERVIEW
Pareto Principle
00
20
0
25
80
80
Steps to be analyze-Pareto
1. Identify and List the Problem
2. Identify Root causes- brainstorms,5 Whys, cause & effect analysis
3. Score the Problems
4. Group Problems together by root cause
5. Add up the scores for each group
6. Take action
Pareto 80 20 Rule
HOW
1. Record raw data
2. Prepare analysis sheet and categorize the data
3. Determine the percentage of each category
EXAMPLE
Delay in processing credit card application
Category
Frequency
Percentage
Cumulative Percentage
No signature
40
43%
43%
Non-legible writing
22
23%
66%
Current Customer
15
16%
82%
No Address
10%
92%
Other
8%
100%
Vital Few
80% Line
Trivial Many
Results
Line at 80% on the y-axis running parallel to the x-axis. This point on the xaxis separates the important causes on the left (vital few) from the less
important causes on the right (trivial many).
It enables you to see what 20% of cases are causing 80% of the problems
and where efforts should be focussed to achieve the greatest improvement.
In this case, we can see that no signature, illegible and current customer
should be the focus.
BENEFITS
A Pareto chart breaks a big problem down into smaller pieces, identifies the most
significant factors, shows where to focus efforts, and allows better use of limited
resources
Focus on activities that produce the best outcomes for you, professionally and
personally
Mistaken application
Conclusion
We have explained Ishikawa Diagram and Pareto concept and also how to
apply the strategy tools.