Named after the Italian economist Vilfredo Pareto, the Pareto chart is a bar graph used to make visible the vital few vs. the trivial many. Vilfredo recognized that 80% of the wealth in Europe was controlled by 20% of the people. This phenomena in is prevalent in many areas of our lives. In Six Sigma, there are 20% of the tools that you will use 80% of the time. Think of your tool box at home. Probably 80% of the tools you rarely use, while 20% of the tools you use all of the time.
Use: Based on the concept of the 80/20 rule, the Pareto chart is useful in providing focus for the process improvement team on the 20% of the causes of an unfavorable response. Think of the equation y = (f)x. Y is the unfavorable response. The x (or x’s) are those factors, or conditions that influence the response in a favorable – or an unfavorable way. It is helpful if the team knows the 20% of the x’s that are influencing the unfavorable y (response). That is where the Pareto chart is useful.
The Pareto chart is a bar graph representation of all of the x’s (factors, or conditions). The way the Pareto chart is arranged, the largest bar is shown on the left-most side. The bars tail off to the right as the x’s are less prevalent. It is best for the team to focus on the largest bar (the bar on the left-most side). It is a good idea for the team to work on cutting that particular bar in half; then it is to try to get rid of all the shorter bars on the right side completely. Once the left-most bar has been cut in half, the next bar to the right is the area of focus. The team would then work on that bar, and so on.
Again, much of Six Sigma and Lean is about visualizing variation and waste. With the Pareto chart, it is easy for the team to see the vital few (the left most bar) vs. working on the right-most bars (i.e., the trivial many). The Pareto chart is easy to construct. The team could even create a Pareto chart on a napkin. It doesn’t have to be fancy. The question that needs to be answered is: What is our biggest area of focus? The Pareto chart is a simple tool to answer that question. Powerful, yet simple.
