Pareto Analysis
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Pareto analysis is a statistical technique used to determine the few key causes that create the majority of problems. It separates the vital few causes from the trivial many. A Pareto chart arranges data in descending order of frequency or impact, with the largest categories on the left. This visualizes that 20% of causes often account for 80% of problems. The Pareto principle can be applied to problem solving, to-do lists, relationships, passions, and decluttering to focus on the most impactful 20% of tasks, people, or possessions.
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Pareto Analysis
- 1. Pareto analysis Submitted to Prof. Garima Gupta By: Amey P.Shetti G06172 NICMAR-GOA
- 2. History • Named after Vilfredo Pareto -an Italian economist • He observed in 1906 that 20% of the Italian population owned 80% of Italy's wealth.
- 3. What is it? • One of the 7 tools of Quality Management • Statistical technique in decision making for selection of limited tasks which have significant overall impact
- 4. Pareto Principle • Doing 20% of work generates advantage of 80% of entire job • In terms of quality improvement, large majority of problems (80%) are created by a few key causes (20%). Separating the Vital Few from the Trivial Many
- 5. “pareto Chart” • A Pareto Chart is a series of bars whose heights reflect the frequency or impact of problems. • The bars are arranged in descending order of height from left to right. •Bars on left are relatively more important than the bars on the right •Separates the vital from the trivial
- 7. how is “pareto Chart” ConstruCted ? For example, if a business was investigating the delay associated with processing credit card applications, the data could be grouped into the following categories: no signature, residential address not valid, non-legible handwriting, already a customer, and other.
- 8. Step 1: Record the raw data Analysis sheet Category Frequency No address 9 Non-legible writing 22 Current Customer 15 No Signature 40 Other 8
- 9. Step 2: Order the data Analysis sheet Category Frequency No Signature 40 Non-legible writing 22 Current Customer 15 No address 9 Other 8
- 10. Step 3: Determine the percentage that each category represents. Analysis sheet Category Frequency Percentage No Signature 40 43% Non-legible writing 22 23% Current Customer 15 16% No address 9 10% Other 8 8%
- 11. Step 4: Determine the percentage that each category represents. Analysis sheet Category Frequency Percentage Cumulative Percentage No Signature 40 43% 43% Non-legible writing 22 23% 66% Current Customer 15 16% 82% No address 9 10% 92% Other 8 8% 100%
- 12. Step 5: Prepare & Analyze the diagram
- 13. the Pareto Principle in Work-Life • Problem Solving • To-Do List of the day • Passion • Relationship • Cut the Clutter
- 14. Problem Solving • Pareto Analysis can really help in identifying the most critical problem to solve as well as the level of criticality. • Identify and list problems and their causes.
- 15. To-Do List of the day • Estimate a value % in terms of goal achievement or satisfaction against each of your tasks for the day – email, customer calls, reports, specific tasks. • What 20% of the tasks listed contribute to 80% of the goals you seek to achieve? • Concentrate on these tasks first in your most productive period of the day.
- 16. Passion • certain “activities” account for the greatest amount of happiness and satisfaction. These activities are the ones that we feel most passionately about. • Once you have identified your passions, be very careful of the time spent on those 80% activities that produce little satisfaction for you. • No one really benefits if you are not happy or passionate about what you are doing. • Apply Pareto to not only find your passions but also pursue them by comparing the results against the efforts you need to put in.
- 17. Relationships • 20% of the people you know give you 80% of your joy and support. • Observe your friends, office colleagues and social circle. •Compare that to the amount of stress or joy you are getting in return.
- 18. Cut the Clutter • Most people only use 20% of what they own on a regular basis. • A good part of the other 80% is things we used in the past or we think we may use in the future. • This basically means that about 80% of our possessions just sit around every day, doing nothing more than gathering dust or occupying space. • Take a look at your desk, cupboard, files on your computer – if you have not used something in the past year, it is highly unlikely you will ever use it. Lighten your load – throw, delete, donate that 80%.
- 19. Conclusion • Breaks a big problem down into smaller pieces • Identifies the most significant factors • Shows where to focus efforts & allows better use of limited resources. • Helps to separate the few major problems from the many possible problems.