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A9. Pareto Chart and the 80-20 Rule

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hi there we are now on the third

graphical analysis tool that we will

cover inside your Lean Six Sigma yellow

belt curriculum this time we will have

Pareto chart Pareto chart is mainly used

for priorities Ishod but let's look into

the details for us to better understand

how to use this new Pareto chart is a

set of bar charts where the bars are

arranged in descending order of

magnitude the bars may represent defect

categories locations departments and

others the problem-solving tool that

involves ranking of potential problem

areas or sources of variation according

to their contribution to Aust or total

variation typically 80% of the effect

comes from the 20% of the possible causes

causes

meaning 80% of the problem has accounted

to 20% of the causes or the factors so

efforts are best spent on this vital few

causes temporarily ignoring the trivial

many causes as said earlier it is a

prioritization tool now we're looking

for 80% of the problem which is

accounted to 20% of this factors let's

say you have 10 possible root causes

probably two or three among those 10

root causes is contributing around 80%

of the problem so you might want to

focus your energy in your efforts on

solving those problems that we call

vital view this is most commonly used

for a prioritization of resources and

also for validation of root causes now

let's study the anatomy of a Pareto

chart as you can see here this is the

category on the x-axis and this contains

the bar chart the data which is arranged

in descending order containing the

frequency of the categories and this one

is the cumulative line cumulative

percentage line meaning we are adding up

the contribution of this one to get this

point and this one and this one to get

this point this one this one and this

one to get this point

so on and so forth until it reaches the

100% summation of contribution so we're

finding the 80% of cumulative

contribution of the factors that is

being presented here so let's practice

Pareto chart using it is study about

floss pin floss a quality engineer for

an automotive supply company wants to

decrease the number of car door panels

that are rejected because of paint flaws

the engineer wants to determine whether

a relationship exists between the type

of paint floss and the ship during which

the door panels are mean but in this

case we will use Pareto chart to

determine what particular type of paint

flow is affecting the operations now

let's go to the worksheet and then let's

click flow our data is represented by

log data meaning there is a lock for one

scratch one scratch pill deal not

summarized so you don't have to worry

just copy it and go to Minitab create

another new worksheet and then you can

close this paste your data so you have a

data that that's in-text okay now we

want to go to Pareto chart so click that

and then find quality tools then you

will see para to chart on the second level

level

click para to child in a Pareto chart

you will be asked to provide at least

the number of defects or attribute data

and the frequency now because we don't

have any frequency so you can see here

if we click this field there will be no

data that can be assigned to this but if

you can click this one there will be the

flaws so you only have to do is double

left-click floss okay now there is an

option here that will ask you if there

are too many factors that are available

let's say 50 but the other factors don't

have any value that is significant

can actually combine them into the 95

percent remaining cumulative percentage

or if you don't want to do that just

click don't combine visually we click

combine so that we can consolidate those

none significant factors so click OK

then there is your palette a chart by Flo

Flo

so let's study the output palette to

chart again this axis talks about the

frequency of problems this is the

cumulative percentage line and this axis

talks about the categories of the

problem we have ill scratch other and

smudge because we only have four

categories then we don't need the other

consolidated factor here ok so let's

focus on the numbers we have 15 for pill

13 for scratch 6 for other and smudge 6

so we have here the individual

percentage contribution and here is the

cumulative percentage contribution so 37

bring down 37 here 37 plus 32 0.5 will

give you 70 70 plus 15 will give you 85

and 85 plus 15 will give you 100 now

this is the cumulative percentage using

Pareto chart we are asked to determine

the 80 percent of contribution that is

accounted to 20 percent of the factors

in Pareto chart analysis we can use

three possible algorithms or heuristics

as to decide which are the vital few

factors first we can check on the

cumulative percentage and look for the

cumulative percentage that is near 80

percent so for this case we have 85

maybe we have 85 therefore we can say

that the vital few factor includes till

scratch and other okay but as you can

see if we will use this for

prioritization it's a little bit weird

because 3 out of 4 has been

now if you will look into the cumulative

line if you will look closely to this

there is what we call the breaking point

here they the breaking point

it breaks the tone of your cumulative

line just like what happened here

meaning even the closest to 80 is 85

here you have to consider the breaking

point here it tells you that inside out

including this one the other you have to

stop here on pill and scratch because it

gives you the idea of the majority of

the problem surrounded to minority so

for you to be able to satisfy the rule

of thumb or the arbitrary points that is

being given to us when you use Pareto

chart analysis so far now we will focus

on this pill and scratch as are vital

few causes it so happened that we have

the breaking point that is why we

haven't chosen 85 pass the start of our

vital view so when we have this you will

refer to this and then get whichever is

in close to the left so that is scratch

and then pill okay so that is how you

prioritize and how you use Pareto chart

for prioritization purposes

now let's look at another example we

have a clothing manufacturer traveler

number and type of defects in a line of

clothing so our source data could be

found including defect so let's go to

excel this one then you have to copy

this all of these columns and then we

have to create another worksheet and

then close this one okay okay we have to

copy paste now we will be doing another

set of Pareto charts so we have to go to

stat let then quality tools we have

Pareto chart here you have to erase

floss okay so we are asked to where is

the data of defects or attribute data in

the defect categories is in c1

so you have to double-click see one now

we are asked where are the frequencies

so we have the count of each defects on

c2 so we have to click see two and down

then choose okay now we have our title

chart scroll down little okay now let's

focus on the categories we have each

count here the data is here the

percentage and the cumulative percentage

we want to understand how we can

prioritize the problem-solving

initiative therefore you have to figure

out the vital few causes we have to find

on the cumulative percentage a

percentage that is near 80 so we found

out that it's eighty two point five

eighty two point five so that's third

one two three

meaning the vital few causes include

missing button stitching errors in loose

thread okay

we don't have any clear breaking point

here so we have to use another method so

eighty two point five now we can use the

method that is by tracing on the

cumulative percentage line so on the

cumulative percentage line you have to

pick 80 and then chase it to the left

until it reaches or it touches the

cumulative percentage line when it

intersects with document the percentage

line trapped it down to what particular

causes will it fall it fell on loose

trail so our right of yukos's now is

missing but on stitching errors in loose

thread meaning eighty percent of the

problems on to almost 20% of the causes

or lesser so this is how you use Pareto

chart for your prioritization activities

there are cases that frequency is not

enough for prioritization let's see what

if those who has higher frequency only

reflects less cost to the organization

and those who have smaller frequency has

higher causing back into the

organization so this is where

the value of this particular people here

will come into the picture as you can

see the defect categories provided as

well as the heart are this is the usual

data table that we have for a Pareto

chart but in case that we want to check

the cost contribution then you have to

put cost per accordance on the third

goal loop and then get the product of

count times cost that is 217 times point

17 which will give you 36 point 89 and

then you reach 180 1.89 for hemming

errors okay so this is now total cost

rather than frequency now let's create

another control chart so if you want to

rerun a function you just have to click

we just have to hold ctrl and press E

and then the last dialog box will appear

so let's replace count this time we want

to check the Pareto effect using total

cost that is c4 so you have to replace

count by c4 and then you just have to

click OK now we have this now what do we

see we have a different type of vital

view now we have a different set of

vital fuel now now if we want to have a

side-by-side comparison we just have to

click this chart and then click this

drop down button and then click layout

tool let's reduce the number of columns

to 1 and let's get this chart okay so we

now have two charts here and then finish

now we have two charts this is the first

chart that we did and this is the second

chart that we need comparing them we

have different sets now of vital view we

will based on frequencies the vital few

are missing but on stitching errors in

whose thread but if we will use total

cost it is different now we have fabric

floss hemming error and stitching errors

now using that particular example we

have seen the effect of combining

frequency and cost

now in actual application you have to be

very careful in doing Pareto chart of

course is a critical component to what

you are doing so this is how you use for

at a chart in analyzing and prioritizing

your problem categories or your sources

of problem later on when you do your

case study you can also use this

whenever you want to prioritize your

list of potential root causes now when

using Pareto chart there are things to

consider data collected during a short

period of time specially from an

unstable process may lead to incorrect

conclusions because the data may not be

reliable you may get a misleading idea

of the distribution of defects and

causes when the process is not in

control the causes may be unstable at

the vital few problems may change from

week to week short periods of time may

not be representative of your process as

a whole so before you get the data we

have to check first the process

stability so for you to have a more

clear picture of the problem now if you

are dealing with data collected during

long periods of time there can be

changes examine the data for

certification are changes in the problem

distribution over time if there has been

a change then you move that data and

start a new choose categories carefully

if your initial predator analysis does

that yield useful results that is you

cannot see any potato child effect that

would help you then rerun it and ensure

that your categories are meaningful and

that your other category is not too

large this is the combined category

because if that's the case maybe there

is something that is wrong with the data

collection or the analysis itself choose

weighing criteria carefully for example

we use cost per gear cost me be a more

useful measure for prioritization the

number of occurrences

especially when the cost of various

defects differ concentrating on the

problems with the highest frequency

should decrease the total number of

items needing rework concentrating on

the problems with the highest score

should increase the financial benefits

of the improvement so you have the

balance between the two there are always

work around and just have to figure out

what are those for you to find the

balance last the goal of a Pareto

analysis is to obtain maximum reward

from the quality efforts but that

doesn't mean that small this whole

problem should be ignored until the

larger problems are so so this is by

applying quick Queens so that during the

analysis period until we are reading the

major improvements to be done we are

doing something for us to improve little

by little so that our tips that you have

to consider when you're using Pareto chart

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