Pareto charts: a quality / diagnostic tool

Pareto analysis is one way to figure out what the major causes are for particular problems. While it has mostly been used by quality assurance people and others in the quality movement, pareto analysis is also useful for organizational development, because it is common in manufacturing, and because it is a clever system.

Typically, Pareto analysis is used both to kick off problem solving (not always for quality or statisical process control!) and to identify root causes of problems (the basic, underlying issue which is causing the problem, as opposed to the "apparent" issue which may, in itself, be caused by something else - for example, replacing a defective voltage regulator which is allowing batteries to be damaged, rather than simply replacing the batteries). Pareto charts are useful because most problems tend to come from one or two processes or components, rather than from a large number of causes.

A Pareto chart is simply a histogram, where the horizontal axis shows categories (process or material problems), the vertical Y axis shows the number or proportion of incidents, and the vertical axis shows the cumulative percentage of incidents. Each bar in the graph shows the proportion of errors caused by each issue or process.

The hard part is generally collecting the information to be used in the chart. Then categories of information must be set up, along with their incidence. Usually, they are set up in descending order, so that the most common issue or process shows up first. The categories should be specific enough to be actionable.

If no clear cause appears, you can change the categories to see if that works. Otherwise, the first few bars should generally be targeted.