pare to principle

8/8/2019 Pare to Principle

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Pareto Principle

The Vital Few and Trivial Many Rule

Predictable Imbalance

80:20 Rule


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Named after Vilfredo Pareto -an Italian economist

He observed in 1906 that 20%of the Italian population owned80% of Italy's wealth

He then noticed that 20% of thepea pods in his gardenaccounted for 80% of his peacrop each year


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The Pareto Principle

A small number of causes is responsible for alarge percentage of the effect-

-usually a 20-percent to 80-percent ratio.

This basic principle translates well into qualityproblems - most quality problems result from asmall number of causes.

You can apply this ratio to almost anything,from the science of management to the physicalworld


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Addressing the most troublesome 20% of the

problem will solve 80% of it.

Within your process, 20% of the individuals will

cause 80% of your headaches.

Of all the solutions you identify, about 20% are

likely to remain viable after adequate analysis.

80% of the work is usually done by 20% of thepeople.


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80% of the quality can be gotten in 20% of thetime -- perfection takes 5 times longer

20% of the defects cause 80% of the problems.

Project Managers know that 20% of the work

(the first 10% and the last 10%) consume 80%

of the time and resources.


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A Pareto chart is a useful tool for graphically

depicting these and other relationships

It is a simple Histogram style graph that ranks

problems in order of magnitude to determine the

priorities for improvement activities

The goal is to target the largest potential

improvement area then move on to the next, then

next, and in so doing address the area of most

benefit first

The chart can help show you where allocating

time, human, and financial resources will yield

the best results.


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While the rule is not an absolute, one

should use it as a guide and referencepoint to ask whether or not you are truly

focusing on:

20% - The Vital Fewor

80% - The Trivial Many

True progress results from a consistent

focus on the 20% most critical

objectives.

the


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The simplicity of the Pareto concept

makes it prone to be underestimatedand overlooked as a key tool for

quality improvement.

Generally, individuals tend to think they

know the important problem areas

requiring attention

if they really know, why do problem

areas still exist?


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Although the idea is quite

simple, to gain a working

knowledge of the ParetoPrinciple and its application, it

is necessary to understand the

following basic elements:


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Pareto Analysis

Creating an tabular array of representativesample data that ranks the parts to the

whole

with the objective to use the facts to find thehighest concentration of quality

improvement potential in the fewest

number of projects or remedies

Thus achieving the highest return for the

investment.


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Defect Press

22x28

Press

38 2-C

Press

77 5-C

Press

77 4-C

Total

Defects

Color

Variation

550 430 234 476 1690

Misregister 150 27 31 265 473

Hickeys 50 45 80 10 185

Scuffing 10 14 3 60 87

Excess Spray 16 21 30 5 72

Other 30 37 21 30 118

totals 806 574 399 846 2625

% Waste 30.70 21.87 15.20 32.23 100

Pareto Analysis ofPrinting Defects


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Pareto Diagram

The Category Contribution, the causes of

whatever is being investigated, are listed

across the bottom, and a percentage is

assigned for each (Relative Frequency) to

total 100%. A vertical bar chart is

constructed, from left to right, in order of

magnitude, using the percentages for eachcategory.


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Pareto Diagram is a combined barchartand line diagram based on

cumulative percentages.

80% improvement in quality or

performance can reasonably be expectedby eliminating 20% of the causes of

unacceptable quality or performance


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Pareto Diagram of TotalPrinting Defects

0

500

1000

1500

2000

2500

olor

ri

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Mi

regi

ter

Hi

eys

Ot

er

Scuffing

E

xcessSpray

Defect

Totaldefects

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


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0

100

200

300

400

500

600

700

800

Color

aria

ion

isregis

er

Hickeys

her

xcess

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ing

Defect

ess22x28

0

10

20

30

40

50

60

70

80

90

100

0

100

200

300

400

500

Color

aria

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Hickeys

her

isregis

er

Defect

ess38' 2 C

050

100

150

200

250

300

350

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xcess"

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ing

Defect

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ess 77" 5-C

0'

10

'

20

'

30

'

40

'

50

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60

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70

'

80

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90

'

100

'

0

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200

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400

500

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Color

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Defect

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Relative Frequency

[(Category Contribution) / (Total of all

Categories)] x 100 expressed in bar chart

form.


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Cumulative Frequency

[(Relative Frequency ofCategory

Contribution) + (Previous Cumulative

Frequency)] expressed as a line graph


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Break Point

The percentage point on the line graph for

Cumulative Frequency at which there is a

significant decrease in the slope of the

plotted line


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Vital Few

Category Contributions that appear to the

left of the Break Point account for the bulk

of the effect


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Trivial Many

Category Contributions that appear to the

right of the Break Point, which account for

the least of the effect.


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Pareto Diagram Analysis

Pareto analysis provides the mechanism

to control and direct effort by fact, not by

emotion.

It helps to clearly establish top priorities

and to identify both profitable and

unprofitable targets.

In addition to selecting and defining

key quality improvement programs:


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Prioritize problems, goals, and objectives

Identify root causes

Select key customer relations and service programs Select key employee relations improvement

programs

Select and define key performance improvement

programs Address the Vital Few and the Trivial Many causes

of nonconformance

Maximize research and product development time

Verify operating procedures and manufacturingprocesses

Product or services sales and distribution

Allocate physical, financial and human resources


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The value of the Pareto Principle isthat it focuses efforts on the 20 percentthat matters.

Of the things you do during your day,only 20 percent really matter. Those 20percent produce 80 percent of yourresults.

Identify and focus on those things.

For a General Manager


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To Create a Pareto Chart:

Select the items (problems,issues

,actions

,defects, etc.) to be compared.

Select a standard for measurement.

Gather necessary data

Arrange the items on the horizontal axis in a

descending order according to themeasurements you selected.

Draw a bar graph where the height is the

measurement you selected.

pare to principle

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