A Pareto Chart is “a series of bars whose heights reflect the frequency or impact of problems. The bars are arranged in descending order of height from left to right. This means the categories represented by the tall bars on the left are relatively more significant than those on the right”.
The chart gets its name from the Pareto Principle, which postulates that 80 percent of the problems come from 20 percent of the causes.
When to use
A Pareto Chart is a good tool to use when the process you are investigating produces data that are broken down into categories and you can count the number of times each category occurs.
No matter where you are in your process improvement efforts, Pareto Charts can be helpful, “. . . early on to identify which problem should be studied, later to narrow down which causes of the problem to address first.
Since they draw everyone’s attention to the ‘vital few’ important factors.
In general, teams should focus their attention first on the biggest problems—those with the highest bars.
Making problem-solving decisions isn’t the only use of the Pareto Principle. Since Pareto Charts convey information in a way that enables you to see clearly the choices that should be made, they can be used to set priorities for many practical applications in your command.
How to use it?
To construct a Pareto Chart, you need to start with meaningful data that you have collected and categorized.
Record the raw data. List each category and its associated data count.
Order the data. Prepare an analysis sheet, putting the categories in order and placing the one with the largest count first.
Label the left-hand vertical axis. Make sure the labels are spaced in equal intervals from 0 to a round number equal to or just larger than the total of all counts. Provide a caption to describe the unit of measurement being used.
Label the horizontal axis. Make the widths of all of the bars the same and label the categories from largest to smallest. An “other” category can be used last to capture several smaller sets of data. Provide a caption to describe them. If the contributor names are long, label the axis A, B, C, etc. and provide a key.
Plot a bar for each category. The height of each bar should equal the count for that category. The widths of the bars should be identical.
Find the cumulative counts. Each category’s cumulative count is the count for that category added to the counts for all larger categories.
Add a cumulative line. This is optional. Label the right axis from 0 to 100%, and line up the 100% with the grand total on the left axis. For each category, put a dot as high as the cumulative total and in line with the right edge of that category’s bar. Connect all the dots with straight lines.