1. Pareto Analysis v2.ppt1 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.

2. Pareto Analysis v2.ppt2 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 Minitab’s 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

3. Pareto Analysis v2.ppt3 Pareto Analysis Examples Example 1 : Minitab’s 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:

4. Pareto Analysis v2.ppt4 Pareto Analysis Example 2 : a series of Pareto charts drill down to more detail: 1st level Analysis gives “Design” as main cause of failure 2nd level Analysis gives breakdown of “Design” Examples

5. Pareto Analysis v2.ppt5 Pareto Analysis Example 3 : if the original Pareto is very flat, be prepared to cut the defects in a different way, here, it is 40:60 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) Examples

6. Pareto Analysis v2.ppt6 Pareto Analysis Example 4 : an extra dimension to Pareto charts - cut defects across another variable - eg work shift: Examples

7. Pareto Analysis v2.ppt7 Pareto Analysis References ASG aTQ training module 7.4 : Measure /Analyse - Pareto & Cause- Effect Revisited 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.