What is the Real Problem in NML Management ? We don’t know how to prioritize our task We can’t Prioritize because we have no Data We have no Data because we don’t care about it

The 80/20 Rule Understanding the Pareto Principle : 20% of the input creates 80% of the result 20% of the workers produce 80% of the result 20% of the customers create 80% of the revenue there’s a common misconception that the numbers 20 and 80 must add to 100 — they don’t! Vital Few, Trivial Many

Pareto was an Italian engineer, sociologist, engineersociologist economisteconomist, political scientist, and philosopher. philosopher Pareto Chart also popular as a 80/20 rules This is one of the tools of 7 QC History of Pareto Chart

Si.Problem TitleNo. of Complaints 1Unsolved Technical Problem 60 2Repeat Complain 15 3Warranty Rejection 9 4Higher Spare Cost 75 5Unavailability of Spares 45 6Higher repairing time 33 7Bad behaviour of Staffs 18 8Improper Management 15 9Dirty Environment 12 10Demanding Bribe 6 Total Complaints288 Customer Complaint Analysis of CSD (Aug,15)

Si.Problem TitleNo. of Complaints 4Higher Spare Cost 75 1Unsolved Technical Problem 60 5Unavailability of Spares 45 6Higher repairing time 33 7Bad behaviour of Staffs 18 2Repeat Complain 15 8Improper Management 15 9Dirty Environment 12 3Warranty Rejection 9 10Demanding Bribe 6 Total Complaints288 Step-1 Sort highest to lowest value

Step-2 Calculate Percentile value Si.Problem TitleNo. of Complaints% 4Higher Spare Cost7526% 1Unsolved Technical Problem6021% 5Unavailability of Spares4516% 6Higher repairing time3311% 7Bad behaviour of Staffs186% 2Repeat Complain155% 8Improper Management155% 9Dirty Environment124% 3Warranty Rejection93% 10Demanding Bribe62% Total Complaints288100% Formula: Higher spare cost (%)= (75÷288) ×100 =26%

Step-3 Calculate Cumulative percentile Problem TitleNo. of Complaints%Cumulative % Higher Spare Cost7526% Unsolved Technical Problem6021%47% Unavailability of Spares4516%63% Higher repairing time3311%74% Bad behaviour of Staffs186%80% Repeat Complain155%85% Improper Management155%91% Dirty Environment124%95% Warranty Rejection93%98% Demanding Bribe62%100% Total Complaints288100% Formula of Cumulative % : successive additions, for example- Unsolved Technical Problem= 21% + % of Higher Spare Cost= 21% + 26% = 47%

Step-4 Find the 80% effect Problem TitleNo. of Complaints%Cumulative % Higher Spare Cost7526% Unsolved Technical Problem6021%47% Unavailability of Spares4516%63% Higher repairing time3311%74% Bad behaviour of Staffs186%80% Repeat Complain155%85% Improper Management155%91% Dirty Environment124%95% Warranty Rejection93%98% Demanding Bribe62%100% Total Complaints288100%

Graphical presentation of Pareto Chart

When to Use a Pareto Chart? Many problems or causes and you want to focus on the most significant Data Analysis: Time, Process, Budget Quality Control and improvement

Areas of Implementation Customer dissatisfaction area Complain Desk Production plant

Data Collection Method Register Book/ Old records Complain Box IT Data Interview/ Phone call/ Survey Build your own system to collect Data

Pareto Chart – Elements Pareto chart are a type of bar chart in which the horizontal axis represents categories rather than continuous scale. The height of the bars can represent a count or percent of error or defect. By arranging the bars form largest to smallest, a Pareto chart can help you determine which categories will yield the biggest gains if addressed, and which are only minor contributors to the problem.

Pareto Chart A B C D E F (Count)(%) (Category) 2 3 Cumulative percentage

Pareto Chart - Procedure 1.Collect data on different categories of problem. Recommended to use stratification factors. 2.Tabulate the scores. Determined the count for each category. 3.Arrange the data in order of decreasing size. 4.Calculate total number of occurrence 5.Calculate the percentage and the cumulative percentage for each category.

Pareto Chart – Procedure cont~ 6.Sort the problem by frequency. Highest to the most left of the chart except for “Other” to the most right. 7.Draw vertical axis and divided into increments equal to total number of problem observed. 8.Draw bar for each category, starting with the largest and working down. 9.Add the cumulative percentage line if necessary.

Pareto Table – Raw Data 12

Pareto Table - Result

Pareto Chart - Result

Pareto Principle – 80/20 Rule A B C D E F (Count)(%) Less than 20% of the categories account 80% of the count The Pareto chart shows that just few categories of the problem account for the most occurrences. Focus your improvement effort on those categories.

Pareto Principle Does Not Hold Pareto chart shows that no cause you have identified is more important than any other. Think and use other stratification factors you may not have considered, collect data if necessary and create another Pareto based on new stratification factors. A B C D E F (Count) (%) It takes more than 20% of the categories to account for 80% of the count.

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