ASQ — Seven Basic Quality Tools: The Pareto Chart (2)

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This second article introduces the Pareto Chart, a bar graph where the lengths of the bars represent frequency or cost (time or money). They are arranged so that the longest bars are on the left and the shortest to the right making the chart visually depict which situations are more significant.

This series of articles presents the 7 Basic Quality Tools for Process Improvement used in the field. These are defined as instruments or techniques to support and improve the activities of quality management and improvement. ASQ has made available to the members and the public a huge amount of information on the "quality" body of knowledge (BOK). It is only meant to be a starting point, but oh so useful.

When to Use a Pareto Chart:

  • When analyzing data about the frequency of problems or causes in a process;
  • When there are many problems or causes and you want to focus on the most significant ones;
  • When analyzing broad causes by looking at their specific components;
  • When communicating with others about your data.

Pareto Chart Procedure:

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1. Decide what categories you will use to group items.Decide what measurement is appropriate.
2. 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. Do a subtotal of the measurements for each category.
6. Determine the appropriate scale for the measurements that you have collected. The maximum value will be the largest subtotal from step 5 (If you 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 one 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.”
Note: Steps 8 and 9 are optional but are useful for analysis and communication.
8. Calculate the percentage for each category (the subtotal for that category divided by the total for all categories). Draw a right vertical axis and label it with percentages. Be sure the two scales match. For example, the left measurement that corresponds to one-half should be exactly opposite 50% on the right scale.
9. 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 Examples:

In this example, data was collected to analyze the various customer complaints at a distribution house, more specifically the number of complaints into five categories, including one for small numbers as "Other". The resulting bar chart was then ordered so as to visually show the categories by decreasing number of complaints (see Figure 1). In a second analysis, the "Documents" complaints were then grouped into six categories (see Figure 2).
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Figure 1 Pareto chart of Customer Complaints received in each of five categories. Figure 2 Pareto Chart of the "documents" category of Figure 1. It shows six categories
of document-related complaints and cumulative values.

Review: If all the complaints cause equal distress to the customer, working on eliminating the document-related complaints would have the most impact and of those, working on quality certificates would probably have the most fruitful impact.

Creating a Pareto Chart:

You can use the following Pareto chart template (Excel) to create a Pareto chart and analyze the occurrences of up to 10 defects by entering the defects on the check sheet.

§ This News post was adapted by J.P. Amiel, ASQ Senior, CQA ret., Web committee Chair, from content at ASQ's Quality Resources pages, which are excerpted and adapted from The Quality Toolbox, Second Edition, ASQ Quality Press.

History: The inventor of the Pareto chart is Joseph Juran, one of the founders of the quality approach. In 1941, during a benchmarking tour on the subject of quality management, he met with the managers of General Motors. On this occasion, he recalled the work of Vilfredo Pareto mentioned by his statistician colleague Walter A. Shewhart, when they were both working at the Hawthorne laboratories of Western Electric. Vilfredo Pareto, an Italian economist, had made a study of the distribution of wealth in Italy, showing that 80 percent of the wealth was held by 20 percent of the population. This observation is now known as the 80/20 law or Pareto principle. Juran derived the idea that, for a phenomenon, 20% of the causes produce 80% of the effects. For example, for a stock of products on sale, 80% of the turnover is generated by 20% of the products. He used this model, diverting it from its original purpose, but kept the name of its original author. (Wikipedia)


ASQ References:

Quality tools  ► Quality tools A to Z  ► Download quality templates and Excel tools  ► Quality tools resources  ► Quality glossary


Here is a list of the articles in this series:

Article Title
ASQ — Seven Basic Quality Tools: The Series
ASQ — Basic (And Not So Basic) Quality Tools Resources
ASQ — Seven Basic Quality Tools: The Check Sheet And The Histogram (1)
ASQ — Seven Basic Quality Tools: The Pareto Chart (2)
ASQ — Seven Basic Quality Tools: The Control Chart (3)
ASQ — Seven Basic Quality Tools: The Fish Bone Diagram (4)
ASQ — Seven Basic Quality Tools: The Scatter Diagram (5)
ASQ — Seven Basic Quality Tools: Stratification (6)
News Montreal Section 08/08/2022 10:20am CDT

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