Pareto Chart

Submitted by:
Kartik Kumar
Mohammed Rushnaiwala
Shantnu Mittal
Preeti Baheti
DFT-5
What is a Pareto Chart
When to use a Pareto chart
Understanding the Pareto Principle
Pareto chart procedure
Pareto chart examples

Presentation
Highlights
What is a Pareto Chart
A Pareto chart is a type of chart that contains both bars and a line graph, where individual
values are represented in descending order by bars, and the cumulative total is represented by
the line.

The lengths of the bars represent frequency or cost (time or money).

In this way the chart visually depicts which situations are more significant.

This cause analysis tool is considered one of the seven basic quality tools.
 When there are many problems
or causes and you want to focus
on the most significant.

When analyzing broad causes

When to Use a
by looking at their specific
components.

Pareto Chart? When communicating with

others about your data

When analyzing data about

the frequency of problems
or causes in a process.
Understanding the Pareto Principle
(The 80/20 Rule)
The 80/20 Rule (also known as the Pareto principle or the law of the vital few & trivial many)
states that, for many events, roughly 80% of the effects come from 20% of the causes.
More generally, the Pareto Principle is the observation (not law) that most things in life are
not distributed evenly.
It means: 20% input creates 80% of the result.
The numbers don’t have to be 20% or 80% exactly.
Example: The 80/20 rule observes that most things have an unequal distribution. Out of 5
things, perhaps 1 will be “cool”. That cool thing/idea/person will result in majority of the
impact of the group.
!
How is it useful?
The Pareto Principle helps you realize that the majority of results come from a minority of
inputs.
For example: if 20% of customers are responsible for 80% of the revenue, that means that the
company should focus on those 20% customers the most.
This makes sure that the workers or the company is not spending time on small details but
the spend time on things/work that will have a bigger effect.
Firstly, The Pareto Principle is an observation, not a law of nature.
The point of the Pareto principle is to recognize that most things in life are not distributed
evenly.
These techniques may or may not make sense – the point is to realize you have the option to
focus on the important 20%.
Don’t think the Pareto Principle means only do 80% of the work needed. It may be true that
80% of a bridge is built in the first 20% of the time, but you still need the rest of the bridge in
order for it to work.
When you are seeking top quality, you need all 100%. When you are trying to optimize your
bang for the buck, focusing on the critical 20% is a time-saver.
Pareto Chart Procedure

Decide what measurement is appropriate. Common measurements are frequency, quantity,

cost and time.
Decide what categories you will use to group items.
Decide what period of time the Pareto chart will cover: One work cycle? One full day?
Collect the data, recording the category each time, or assemble data that already exist.
Subtotal the measurements for each category.
Determine the appropriate scale for the measurements you have collected. The maximum
value will be the largest subtotal from the previous step.

Mark the scale on the left side of the chart.

Construct and label bars for each category. Place the bars in the descending order. If there
are many categories with small measurements, they can be grouped as “other.”

Calculate and draw cumulative sums: add the subtotals for the first and second categories,
and place a dot above the second bar indicating that sum. To that sum add the subtotal for
the third category, and place a dot above the third bar for that new sum. Continue the process
for all the bars. Connect the dots, starting at the top of the first bar. The last dot should reach
100% on the right scale.
Pareto Chart Example

Exhibit 1.6 shows sewing

defects and loose threads
contribute to more than 80%
of total finished garment
defects. It enables in making
subsequent action plan for
addressing these vital causes.
Fishbone Diagram
References
https://in.apparelresources.com/business-news/manufacturing/quality-management-system-in-
apparel-manufacturing-six-sigma-implementation/
https://www.slideshare.net/dsaadeddin/pareto-analysis-55920090
https://asq.org/quality-resources/seven-basic-quality-tools
Thankyou.