Pareto Chart

PARETO CHART
Creating Value through Process & People Development

+ 91 9589004005 | dinesh@ekpahlakadam.com | www. ekpahlakadam. com
Problem Solving & Decision Making
History of Pareto Chart
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In 1896 Vilfredo Pareto made the famous observation that 20 % of the population owned 80 % of the property in
Italy (80% of the land in Italy was owned by 20% of the population).
In 1905 Mr. Max O Lorenz gave the Lorenz Curve concept - A graphical representation of the cumulative distribution
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function of the empirical probability distribution of wealth.
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In the 1940s, Dr. Joseph M. Juran combined both, the 80~20 principle (Vital few & Trivial many) and Lorenz Curve
concept as cumulative contribution, he named it as "Pareto Diagram”.
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Vilfredo Pareto,
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Born in Paris, France
Max Otto Lorenz
An Italian engineer, Born in Paris, France
sociologist, economist Joseph M Juran
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economist
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Born in Braila, Romania
Romanian-American
engineer & consultant
EK Pahla Kadam, Creating Value through Process & People Development Dinesh Sharma│dinesh@ekpahlakadam.com │ +91 9589004005
General Concepts

❑ Pareto Chart is one of the 7 Basic QC Tools used for Problem Solving
❑ There are two types of Pareto Chart
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➢ Pareto by Phenomenon
➢ Pareto by Cause
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❑ 80 : 20 Rule – 20% of Problems / Actions contributes 80% in performance
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❑ Pareto Chart is a combination of Bar and Line Graph Ek Pahla Kadam
❑ Pareto Chart is also known as Compound Graph

General Concepts
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❑ Pareto Chart has a total 3 Axis
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➢ One X-Axis for an item of study
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➢ Two Y-Axis for count and % contribution
• Primary Y-Axis for Count/frequency/sum Ek Pahla Kadam
• Secondary Y-Axis for cumulative % contribution
❑ Count of Causes / Phenomenon are shown in descending order through bars

❑ The “OTHERS” category always comes at end irrespective of its count.
❑ Their Cumulative % Contribution is shown through a line graph,

it is also known as Lorenz Curve
Steps for Making Pareto Diagram

1. Organize data of cause / phenomenon in descending
Cause Wise Pareto
order
S. Problem / % Cumulative %
Count / Value

2. Calculate % contribution of each item No. Defect / Loss Contribution Contribution
1 Defect 3 475 32% 32%

3. Calculate cumulative % contribution of all items 2 Defect 2 389 26% 58%
3 Defect 5 294 20% 77%
4. Put cause / phenomenon on X-Axis
4 Defect 1 82 5% 83%
5. Plot count or frequency of cause / phenomenon on 5 Defect 5 71 5% 87%
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primary Y-Axis
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6
7
Defect 9
Defect 7
46
37
3%
2%
90%
93%
6. Plot cumulative % contribution on secondary Y-Axis 8 Defect 8 24 2% 95%
9 Defect 6 21 1% 96%
7. Add chart title, data period, axis title and data labels
10 Others 61 4% 100%
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8. Identify VITAL FEW
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TOTAL 1500 100%
Pareto Chart & Its Components
Ek Pahla Kadam Primary Y- Axis Phenomenon Wise Pareto - No. of Defect

Ek Pahla Kadam Secondary Y- Axis
(Period Jan-18 to Mar-18) 100%
95% 96% 100%
93%
1400 87%
90% Ek Pahla Kadam
83%

77%
Count / PPM/ Sum / PPM / INR / Hours
1200 Always put a suitable titele, specify 80%
Cumulative Contribution
period and data source Pareto.
1000 i.e. Jan-18 to Mar-18
58%
% Contribution
60%
No. of Count
800 32% Cumulative %

Curve Many small items put
600 475 together as Others - To 40%
Ek Pahla Kadam be always shown at end

389
400 294
20%
200
82 71 46 61
37 24 21
0 0%
Defect 3
Defect 2
Defect 5
Defect 1
Defect 5
Defect 9
Defect 7
Defect 8
Defect 6
Others
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Ek Pahla Kadam Vital Few Defect (Problem / Phenomenon / Cause / Loss)

Ek Pahla Kadam Useful Many
Steps for Making Pareto Diagram

1) Many times, CAUSE WISE Data is not available to make Pareto, In such Case
✓ Make Pareto for the phenomenon or consider the previous level cause

✓ Then based on phenomenon prioritization, prioritize the cause/root cause
✓ Or conduct a survey among subject matter experts for valid causes and make Pareto
2) Important Points to be ensured

✓ The maximum value of the primary Y-Axis scale must be equal to the sum of all the
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counts/frequencies
✓ The gap between Bars must be zero
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✓ The first point of the cumulative % line graph should start
Ek Pahla Kadamat the top edge of the first Bar

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Pareto Chart – Common Mistakes in Preparation
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Cause Wise Pareto - Assemply Line 1 Breakdown
83%
87%
91%
95% 97% 99% 100%
100%
Ek Pahla Kadam Cause Wise Pareto - Assemply Line 1 Breakdown
Period : Jan 20 ~ Jun 20
82.7%
87.4%
91.5%
94.5% 97.0% 98.6% 100.0%
1
1000
77% 77.2%
1200 80% 0.8
Mistake - 1 800
No. of Count
No. of Count
1000 Mistake - 2
% Contribution
58% Period Missing 57.6%
% Contribution
60% 31.7% 0.6
800 32% 600
Lonrenz Curve Starting at wrong place
475
Primary Y-Axis Scale Incorrect
600 475 40% 389 0.4

400
389 294
400 294
20% 200 0.2
200 82 82 71
71 46 37 61 46 37 61
24 21 24 21
0 0% 0 0
Cause 1
Cause 2
Cause 3
Cause 4
Cause 5
Cause 6
Cause 7
Cause 8
Cause 1
Cause 2
Cause 3
Cause 4
Cause 5
Cause 6
Cause 7
Cause 8
Cause 9
Cause 9
Others
Others
Vital Few Defect Vital Few Defect

Cause Wise Pareto - Assemply Line 1 Breakdown Cause Wise Pareto - Assemply Line 1 Breakdown
Period : Jan 20 ~ Jun 20 Period : Jan 20 ~ Jun 20
98.6% 100.0% 98.6% 100.0%
94.5% 97.0% 94.5% 97.0%
91.5% 1 91.5% 1
1400
87.4% 1400 87.4%
82.7% 82.7%
1200 77.2% 77.2%
0.8 1200 0.8
1000
No. of Count
No. of Count
57.6% 1000 57.6%
% Contribution
% Contribution
800
31.7% 0.6 Mistake - 4 0.6
Mistake - 3 800 31.7%
"Others" not shown at end
600 475 Gab between Bars 0.4 600 475 0.4
389 389
400 294 400 294
0.2 0.2
200 200
82 71 82

46 37 61 71 46 37 61
24 21 24 21
0 0 0 0
Cause 1
Cause 2
Cause 3
Cause 4
Cause 5
Cause 6
Cause 7
Cause 8
Cause 1
Cause 2
Cause 3
Cause 4
Cause 5
Cause 6
Cause 7
Cause 9
Cause 8
Cause 9
Others
Others
Vital Few Defect Vital Few Defect
Pareto Chart Shapes & Interpretation
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Cliff Pareto
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New Mountain Pareto
• One primary factor • 2 or 3 primary factors
• Easy to establish priorities • Priorities depend on cost/ease of improvement
• Selection is obvious • 80% of problems are due to 20% of factors
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• We may need to address all primary factors
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Old Mountain Pareto
• No primary factors
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Valley Pareto
• Final “miscellaneous” category is a major category
• Not useful to prioritize • May need to select another variable to categorize
• Need to categorize using a different variable • Can’t address miscellaneous
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Pareto (Prioritization) Exercise
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❑ You are the health officer of Zone 121-A/3 - Rewari
❑ There is a big issue of Fever in the Zone
S. No.
1
2
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NCR Zone 1A Fever Data Year 2020
Fever Type
Malaria
Viral
Fever Code
M
V
Number of
cases
180
140
%
36
28
Cumulative
Contribution Contribution
36
64
❑ You need to reduce it by 50 % next year 3 Dengue D 90 18 82
❑ The previous year’s fever data is available for analysis 4 Chamki C 30 6 88

5 Typhoid T 20 4 92
Make Pareto
❑ You need to analyze and prioritize where to focus

6 Chikungunya CG 10 2 94
Make Pareto Table

❑ Make Pareto Diagram and Identify Vital Few 7 Infection I 10 2 96
8 Pneumonia N 5 1 97
9 Others O 15 3 100
Year 2020 Fever Cases Zone 121-A/3 - Rewari
Collect Data
Total 500 100

Fever TypeSymbol No. of Cases
Chamki C 30
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Chikungunya
Dengue
Infection
CG
D
I
10
90
10
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Prioritise
Malaria M 180
Others O 15
Focus on Malaria, Viral,

Pneumonia P 5
and Dengue to get
Typhoid T 20 maximum reduction
Viral V 140 with lessor resources.
Use of Pareto
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❑ Pareto Chart is used for prioritization purposes
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❑ It is used to identify Vital Few items
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❑ ~ 20 % items which contribute ~ 80 % in problem or improvement
❑ To achieve maximum improvement with lesser resources

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Thank You
dinesh@ekpahlakadam.com ekpahklakadam.com
© EK PAHLA KADAM +91 9589004005 Gurugram, Haryana

Pareto Chart - Problem Solving Prioritization

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Creating Value through Process & People Development

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam An American

Ek Pahla Kadam Ek Pahla Kadam

❑ There are two types of Pareto Chart

Ek Pahla Kadam Ek Pahla Kadam

❑ Count of Causes / Phenomenon are shown in descending order through bars

❑ Their Cumulative % Contribution is shown through a line graph,

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Ek Pahla Kadam

1 Defect 3 475 32% 32%

5. Plot count or frequency of cause / phenomenon on 5 Defect 5 71 5% 87%

Ek Pahla Kadam Primary Y- Axis Phenomenon Wise Pareto - No. of Defect

Ek Pahla Kadam Ek Pahla Kadam

1200 Always put a suitable titele, specify 80%

800 32% Cumulative %

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Vital Few Defect (Problem / Phenomenon / Cause / Loss)

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Ek Pahla Kadam

2) Important Points to be ensured

Ek Pahla Kadamat the top edge of the first Bar

Ek Pahla Kadam 1400

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam • Easy to reach consensus

Ek Pahla Kadam Ek Pahla Kadam

❑ The previous year’s fever data is available for analysis 4 Chamki C 30 6 88

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Make Pareto Table

Total 500 100

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❑ To achieve maximum improvement with lesser resources

Ek Pahla Kadam Ek Pahla Kadam

Ek Pahla Kadam Ek Pahla Kadam

© EK PAHLA KADAM +91 9589004005 Gurugram, Haryana

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