0:01 in lead six sigma we often use pareto
0:03 charts to help us better understand our process
0:04 process
0:06 it shows us where the most common source
0:07 of defects are
0:09 and we want to address those now before
0:11 we jump in we mentioned if you're
0:12 interested in a free white belt
0:14 certification course
0:15 you can access one at sixsigmasociety.org
0:18 sixsigmasociety.org
0:20 now let's talk about the pareto chart so
0:22 really what it does it helps us display
0:25 and sort the causes of process defects
0:27 what are the source of those things
0:28 and it follows something called the 80
0:30 20 rule
0:31 now first let me give you a few examples
0:33 of this 80 20 rule so you get some idea of
0:33 of
0:36 what we're talking about here so 80 of traffic
0:37 traffic
0:40 tends to be on 20 of roads so there's a
0:41 small percentage of roads where most of
0:43 the traffic exists
0:45 and eighty percent of wealth is in the
0:48 hands of twenty percent of people
0:50 and eighty percent of sales come from
0:52 twenty percent of our customers
0:53 given all the revenue our company may
0:55 generate on an annual basis
0:57 the truth is that most of that comes
1:00 from a small subset of our customers
1:02 now in lean six sigma we would say that
1:04 eighty percent of our defects
1:06 come from twenty percent of our inputs
1:08 we may have lots of inputs to our process
1:08 process
1:10 but there's probably a small portion of
1:12 them that are contributing to the
1:14 defects that we're seeing
1:16 so here's an example let's say that
1:17 we're seeing shipment delays in a
1:18 shipment process
1:20 that's a defect and we're trying to
1:22 understand what's causing that what's
1:24 contributing to it
1:26 and so we track data about shipment
1:27 delays and what's causing them and this
1:29 is what we see
1:31 most of the time a shipment gets delayed
1:32 it's caused by payment issues
1:34 so with a pareto chart it's going to be sorted
1:35 sorted
1:38 by the most occurring issue on the left
1:40 and the least occurring issue on the right
1:40 right
1:43 so we've got payment issues stockouts
1:45 inspections and local traffic
1:46 that are contributing to the shipment
1:48 delays but it looks like
1:50 payment issues are the most occurring issue
1:52 issue
1:54 here's a question we could adjust our
1:56 shipment process to avoid local traffic
1:57 in this case
1:59 but would it help and so if we go back
2:00 to our pareto chart
2:02 to look at the sources of those defects
2:04 we see that local traffic is really just
2:05 a small contributor
2:08 to those shipment delay defects and so
2:09 it's probably not going to help us that much
2:10 much
2:12 operator chart helps us to think about
2:14 what our priorities should be
2:15 we ought to try to address payment
2:18 issues first to solve most of those
2:21 defects okay and i really like this cartoon
2:23 cartoon
2:26 so it's showing a pareto chart and
2:28 you can see that the biggest priorities
2:30 are actually falling on top are going to
2:31 fall on top
2:33 of the guy who's getting too caught up
2:35 in the small details the things that
2:36 just don't matter as much
2:38 some causes are just not worth our time
2:40 a pareto chart is a great way to prioritize
2:41 prioritize
2:43 where we should focus our improvements
2:45 so here's another example this is going
2:47 to be talked about in a separate video
2:48 when we walk through pareto charts in
2:51 microsoft excel let's imagine you
2:53 own properties in new york city and
2:54 you're trying to
2:56 analyze complaints submitted by your tenants
2:57 tenants
2:58 because what you want to do is try to
3:01 minimize those complaints to keep
3:03 customers and tenants coming back and to
3:04 make your
3:06 properties desirable and so you
3:08 prioritize the complaints on a pareto
3:09 chart you sort it
3:12 and you see that a good portion of the complaints
3:12 complaints
3:15 are coming from unsanitary conditions the
3:16 the
3:18 it's just not clean and issues with
3:19 paint plaster maybe there's paint that's
3:21 peeling or something like that
3:22 and so if you're trying to figure out
3:24 okay what can i do what should i start with
3:25 with
3:26 if i'm trying to address defects
3:28 minimize those complaints and make my
3:29 properties more attractive
3:31 you'd want to start with those issues on
3:33 the left-hand side
3:35 focus there first and then kind of work
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