A few weeks ago I wrote about one of my favorite process tools, the ‘Five Why’s’ approach. Today, I’d like to talk about one of my other favorite tools, the Pareto Chart. It is also a very simple concept that offers insight into how we can break down problems within a process.
In a nutshell, the Pareto Chart measures two things — how many and how often. If you have a process that is prone to errors, you start by categorizing the errors. The categories should be broad enough to capture relevant data, but narrow enough that the types of error is reasonably discrete. If your process has a range of errors, the Pareto Chart will help you focus on the most significant, so you can begin with the most frequent error and work your way through to the least frequent.
Once you’ve decided on the categories, you have to determine the nature of the measurement. It’s best to keep it simple, like a volume or time measure. Then establish how long you will collect this data, making sure the term is long enough that you will have a reasonable set of data to generate the chart.
Next you simply need to create a bar chart that total the results of each category. The category with the larger results will be on the left side of the chart, decreasing towards the right. If you end up with a number of categories with small numbers, group those together as simply ‘Other.’
Now you will calculate the percentage for each category. This is the subtotal of each category divided by the total of all categories. The first point will be the percentage based on the subtotal. The second point is the sum of the first and second point; the third the sum of the previous percentages, and so forth. The last category should equal 100%. This will be plotted above the bar chart created previously.
And there you have a Pareto Chart.
Unfortunately, neither Microsoft Excel nor Mac Numbers have built-in graphs for a Pareto chart. It is possible to build one with some work, but my recommendation would be to find a suitable plug-in or template to create the chart.