ABB Basic Quality Tools Series

Pareto Analysis
Identifying the vital few causes of the majority of
problems

ABB Group 9AKK105151D0110

15 July 2010, Slide 1
 Pareto Analysis Content
What is it for?
A graphical method of comparing and sorting a set of measures.
Pareto Analysis uses the 80/20 Rule to select the vital few items for
further action

Where could I use it?

When selecting problems, causes or solutions to take forward for
further action.
When you want to visibly demonstrate priorities.
How do I use it?
Identify items to compare
Hours Lost due to Core Cutting Defects

Choose measurement units 80

Plan the measurement 60

Measure as planned

40
Plot the chart
Select the focus 20

Take action
0
Burr Bent Dent Scratch Shape
Risks and how to avoid them
Example

ABB Group 9AKK105151D0110

15 July 2010, Slide 2
 Pareto Analysis - What is it for?
Uses of this tool:
When you are faced with a set of measurements to compare, Pareto Analysis can be used to
prioritise these and highlight those which are most important.
The visual output from Pareto Analysis is useful in situations where you want to communicate your
findings and explain its significance to others.

Expected Benefits:
Pareto Analysis helps you focus on the most important actions and thus leads to the best solutions
and the optimum return from your efforts and investments.

ABB Group 9AKK105151D0110

15 July 2010, Slide 3
 Pareto Analysis - Where could I use it?
Background: Uses:
Pareto Analysis is named after the 19th The most common use of the tool is during
Century Italian Economist, Vilfredo Pareto, problem analysis to find those sub-problems
who noticed that approximately 80% of the which, when addressed, will return the greatest
wealth of the country was owned by 20% of benefits.
the people. He also noted that this pattern
Pareto Analysis can also be used in any general
repeated itself : of the 20% rich people, 80%
situation where you want to prioritise action. For
of the wealth that they held was owned by
example, you could use it when selecting
20% of these people.
potential solutions, by comparing their cost-
In the 20th Century, Joseph Juran noticed benefit ratios.
that this rule can be applied to business
You can also use it in a team situation to show
situations to help focus action on the vital
results of voting.
few items.
This underlying principle is also known as
The 80/20 Rule.

ABB Group 9AKK105151D0110

15 July 2010, Slide 4
 Pareto Analysis - How do I use it?
Procedure and Guidance Notes
Identify the items to be analysed and charted. For example Damaged seats
Identify Items These should be a single complete group that can be measured in the
to compare same way.

Find a measurement unit this that will lead to the highest bar being the A weighting factor may be used to ensure the
Choose
most important to address. highest number is the most important.
measurement This is often a count of something. For example, Number of defects multiplied by
units cost of repair.
Determine how many items must be measured to build a If possible aim for around 50 items, as this will
Plan the representative chart. give a statistically repeatable chart.
measurement Plan the detail of the work, including who will measure what, how, for If you repeat the measurement, keep all
how long, and so on. conditions as similar as possible.
Carry out the measurement as planned.
Measure A Check Sheet can be used to manually record measurements.
as planned

Plot the results in vertical bars, sorted with the highest bar on the left. If there are a lot of items that would lead to a
long tail of small bars, you can combine these
Plot the chart into an others bar (which still should be
positioned on the right of the chart).

Choose the number of bars which you will address further (this is If all bars are of a similar height, it is difficult to
Select usually one or two). find the right focus. In this case it can worth
the focus repeating the exercise using different
measurement units.

Take the work to the next stage by acting on your findings. If the bar selected is big, you can find a further
focus by breaking this down into a sub-Pareto
Take action chart.

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15 July 2010, Slide 5
 Pareto Analysis - Risks and how to avoid them
Risks :
Selecting the wrong items, such as jumping to
conclusions rather than using proven facts.
Using measures which lead to the highest bar on
the chart indicating something that is not the most
appropriate item to address.
Assuming the people who are doing the
measurement are motivated and able to do this.
Ending up with things that are too-big to address.
Last-minute changes that are based on intuition
rather than measurements and known facts.
ABB Group 9AKK105151D0110
15 July 2010, Slide 6
Steps to avoid them :
Take care to start with the right problem.
Remember that the focus is to find the most
important item, so get measurements right.
Educate the people who are doing the
measurements and check with their managers
that they can do this extra work.
Carefully consider the effort you will need to
address the selected items. If this will be too
much, then take another step to find a lower-
level focus.
Be very careful when taking intuitive leaps. It is
often better to trust a process which can later be
verified.
 Pareto Analysis - Example
1. Identify Items
Item to measure: Core cutting defects
3. Plan the measurement
2. Choose measurement units
Measurement alternatives:
Type of defect
Location of defect
Customer impact of defect
Hours lost due to defect

5. Plot the chart

4. Measure as planned Hours Lost due to Core Cutting Defects

Core Cutting Defect Hours

80
Type of Defect Hours Lost
Shape 2 60

Burr 65
40
Dent 30
Scratch 5 20
Bent 53
0
Total 155
Burr Bent Dent Scratch Shape

6. Select the focus

7. Take action

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15 July 2010, Slide 7