Pareto Chart in 7 QC Tools

Introduction of Pareto Chart

 - The Pareto Chart is one of the tool in 7 basic tools of quality management.

 - Pareto chart is a chart that contains bar and line graph which is also known as Pareto diagram or Pareto analysis.

 - Bar graph shows number of defects in descending order and line graph shows cumulative percentage of defects.

 - The purpose of pareto diagram is to highlight the highest occurring type of defects.

History of Pareto Chart

 - Italian economist Vilfredo Pareto Created uneven distribution of wealth formula (80% of income went to 20% of the population) in 1897 which later came to be known as 80-20 rule.

 - Dr. J. M. Juran started applying "20% of people cause 80% of problems" principle to defect analysis by separating the "vital few" from "trivial many" and name it pareto chart.

80-20 Rules

 - 80% profit due to 20% of product and services.

 - 80% problems due to 20% of system defects.

 - 80% customer complaints due to 20% of products and service.

 - 80% results from 20% of efforts.

Steps to Construct Pareto Chart

1. Select the category

 - Select the problem category.

 - Let's take A, B, C, etc. defects

2. Data collection

 - Collect the data and select the appropriate measurement to measured the problem.

 - Let's take number of defects.

3. Re-arranging data and calculate cumulative percentage

 - Re-arranges the data in decreasing order and calculate the cumulative percentage.

4. Draw and Label axis, bars, line graph

 - Draw the Axis, bar graph using decreasing order data, line graph using cumulative percentage with label and give title.

5. Identify defects and take action

 - Identify the Top 3-4 defects from pareto chart which have high COPQ and take take necessary corrective actions.

 - In our example B, K, F and C defects as this 4 defects contribution is more than 80%. 

 - We have to take action on this 4 defects by finding root cause and implementing preventive action.

Benefits of Pareto Chart

 - It helps to segregate the causes and problems.

 - It helps you to focus on causes which having high impact after solving.

 - It increase the problem solving skills.

 - It helps to visualize problems quickly.