Tag Archives: pareto chart

All About Pareto Charts

The Pareto Chart

Simply stated, a Pareto chart is a bar graph that represents problems or opportunities in order of descending magnitude or frequency.

Considered one of the seven key quality and improvement tools, it is named after Vilfredo Pareto, an Italian engineer, sociologist, economist, political scientist, and philosopher. He made several important contributions to economics, particularly in the study of income distribution. He is most well-known for his observation that 80% of the land in Italy was owned by about 20% of the population – now referenced as the “Pareto Principle” or “80/20” rule.

Pareto charts are used for a number of purposes, such as to analyze the frequency of defects in a process, to look at causes in a process, to figure out what the most significant problem in a process is, or to communicate data with others.

Here are seven simple steps for creating a Pareto chart:

  1. Decide what categories you will use to group items
  2. Decide what measurement is appropriate. Common measurements are frequency, quantity, cost and time.
  3. Decide what period of time the Pareto chart will cover: One work cycle? One full day? A week?
  4. Collect the data, recording the category each time, or assemble data that already exist.
  5. Subtotal the measurements for each category.
  6. Determine the appropriate scale for the measurements you have collected. The maximum value will be the largest subtotal from step 5. (If you will do optional steps 8 and 9 below, the maximum value will be the sum of all subtotals from step 5.) Mark the scale on the left side of the chart.
  7. Construct and label bars for each category. Place the tallest at the far left, then the next tallest to its right and so on. If there are many categories with small measurements, they can be grouped as “other.”

Continuous Improvement & Key Charting Tools

In an earlier post we shared thoughts on “Ten Continuous Improvement Tools,” each of which designed to help people  examine current reality from a different angle.

Included in the list are several key charting tools, which are particularly useful for sifting through potentially large quantities of data and translating the data into more useful information. These tools also make the work more “visible,” and give those involved in studying the work a common language.

Here is a list of five key charting tools:

  1. paretoPareto: simple bar chart that ranks and displays data in descending order, and that helps us decide what to work on — the “vital few” vs. the “less important many.”  Often referenced as the 80/20 principle.
  2. runchartRun:  A run chart is a graph that displays data points of some characteristic being measured as they occur over time. It is used to visually display process performance over time and to identify meaningful trends or shifts in the average, thus telling us  “how things are going” and prompting us on what to investigate further.
  3. flowchartFlow: A flow chart is a simple diagram of the steps in a process. It is used to identify actual or ideal paths that a process follows, and shows basic steps and decision points, recycle loops, work and wait times, and can highlight problems or opportunities for improvement
  4. histogramHistogram: A column chart showing the distribution of values by frequency. It is a set of data with a range of measurements. The height of a bar corresponds to the relative frequency of the amount of data in the class.
  5. fishboneFishbone: A charting technique used for identifying all of the possible causes of particular “effect” or problem… for linking conditions for results. A fishbone chart can help us identify root causes of problems by asking the simple question,  “why?”  multiple times.