Application of Pareto Charts
At Ducommun Aerostructures we use Pareto charts frequently. They are incorporated into what we call I-Charts, or Information Charts. Pareto Charts are employed because you can analyze them at a glance. The Pareto Chart is a good example of the saying “a picture is worth a thousand words”. We have the Information Charts posted at each work station around the Plant that can be analyzed literally as you are walking by.
One of the Pareto Charts we use is for the types of defects being reported in that particular area. Below the Pareto Chart is an action list of what is being done to correct the top 20% of the defects. In addition to the action item is the name of who is responsible with a due date. This method is very effective for ensuring we utilize the Pareto Chart the way they were intended. Pareto Charts will tell you what needs to be worked on, but then the rest is up to you.
Another Pareto Chart we employ with the I-Charts is a list of the parts being scrapped by dollar amount. Again there is an action list of what is being done to correct the scrap condition on the top 20% with name and date. Pareto analysis not only shows you the most important problem to solve, it also gives you a score showing how severe the problem is.
Above is an example of how we used Pareto analysis at my last company to determine where our biggest problems were. This chart shows the number of rejection tags over a period of time and the department that was responsible for the problem. It is very easy to see that Engineering is far and away the largest contributor of problems resulting in rejection tags. When information is presented to a group in this format there can be little doubt in anybody’s mind what to attach first. The next question to answer is what kind of problems is the Engineering department having. This is a perfect opportunity to investigate the 35 rejection tags that Engineering was responsible for and see if they can be categorized into groups and then create a Pareto Chart. From that chart you can tell exactly what problems to attack first in the Engineering Department. After determining the problem to attach first, you might find that more information needs to be collected and analyzed using Pareto Charts.
Uses of Pareto Charts
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 such as:
- Process improvement efforts
- Skills you want your division to have
- Customer expectations
- Supplier performance
- Investment opportunities
Tips for Using Pareto Charts
- A Pareto Chart can be considered a snapshot of where you are at a given point in time as opposed to a Run Chart that shows change over time. With that in mind, creating a Pareto Chart before and after can show how the impact of improvement efforts.
- Try constructing the Pareto charts using different measurement scales or frequency. You might also try changing cost or time.
- Using Pareto Charts in presentations are very effective because you can show objective data and gain consensus from the group easily.
Conclusion
Pareto Charts should be used whenever you need to break a big problem into smaller pieces. It can help you get the most improvement with the resources available by focusing the effort. The 80/20 Rule can be applied to almost anything, from the science of management to the physical world. Pareto Charts are a good tool to use when the process you are investigating produces data that is 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 they will help identify which problem should be studied, and later to narrow down which causes of the problem to address first.
The Pareto Principle is not always the right tool to use however. Data can always be ranked and made into a Pareto diagram, but sometimes no single bar is dramatically different from the others. In those situations, you need to look for another way to categorize the data.
Overall I find Pareto Charts to be one of the most valuable tools in problem solving. They are easy to construct and easy to communicate effectively what you want to achieve.
References
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