What is a Pareto Chart?
Also called: Pareto diagram, Pareto analysis
Variations: weighted Pareto chart, comparative Pareto charts
A Pareto chart is a bar graph. The lengths of the bars represent frequency or cost (time or money), and are arranged with longest bars on the left and the shortest to the right. In this way the chart visually depicts which situations are more significant. This cause analysis tool is considered one of the seven basic quality tools.
- When to use a Pareto chart
- Pareto chart procedure
- Pareto chart examples
- Create a Pareto chart
- Pareto chart resources
- 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
- When analyzing broad causes by looking at their specific components
- When communicating with others about your data
- Decide what categories you will use to group items.
- Decide what measurement is appropriate. Common measurements are frequency, quantity, cost and time.
- Decide what period of time the Pareto chart will cover: One work cycle? One full day? A week?
- Collect the data, recording the category each time, or assemble data that already exist.
- Subtotal the measurements for each category.
- Determine the appropriate scale for the measurements you have collected. The maximum value will be the largest subtotal from step 5. (If you will 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.
- Construct and label bars for each category. Place the tallest 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.”
- 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.
- 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.
Note: Steps 8 and 9 are optional but are useful for analysis and communication.
Figure 1 shows how many customer complaints were received in each of five categories.
Figure 2 takes the largest category, "documents," from Figure 1, breaks it down into six categories of document-related complaints, and shows cumulative values.
If all complaints cause equal distress to the customer, working on eliminating document-related complaints would have the most impact, and of those, working on quality certificates should be most fruitful.
Figure 1: Pareto Chart, Customer Complaints
Figure 2: Pareto Chart, Document Complaints
Use the 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.
Pareto Chart Template Example
Don't Misuse The Pareto Principle (Six Sigma Forum Magazine) Four commonly held misconceptions of the Pareto principle are discussed that have prevented some companies from realizing the true potential of the principle.
The 3-D Pareto Chart (Quality Progress) This article discusses the traditional Pareto chart, a version called the trending Pareto chart, and the extension of the data from a trending Pareto chart to a 3-D format.
Budgetary Bandage (Quality Progress) Faced with rising costs of delivering wound care to patients, a public healthcare system in Canada launched an improvement project to find savings, utilizing DMAIC, Pareto charts, and other Six Sigma methodologies.
Adapted from The Quality Toolbox, ASQ Quality Press.