Building a Pareto chart. Pareto Chart in Practice

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

No one wants to waste energy. We strive with all our might to improve the efficiency of our own, subordinates, enterprises, equipment in the end. And it doesn't matter at what cost we achieve it. One of the simplest and most understandable methods for evaluating efficiency is the construction of a Pareto chart.

History of the "magic" proportion

At the end of the 19th century, a certain Wilfredo Pareto, who studied economics, decided to investigate the structure of the distribution of material we alth among the British. The result stunned him: it turned out that 20% of the population of England own 80% of the we alth of the whole country. More in-depth studies have shown that the principle "the few own more" applies to the remaining 20% of we alth: 5% owns 50% of the capital, and 10% - 65% of all material we alth. The amazed scientist began to test his theory on residents of other European countries, and came to the same results - the construction of the Pareto diagram gave the same frequency distribution.

However, he cannot generalize the obtained data and formulate a certain regularity.managed. Therefore, the theory remained unnoticed. They turned to her again in 1949. George C. Zipf, a professor at Harvard, discovered a pattern that about 80% of the result comes from only 20% of the effort. At the same time, the American Joseph Yuran, dealing with the problem of the production of defective products, again received a proportion of 80/20. After publishing the results of his research, Juran formulated the law of "the little that matters." Thus, the Pareto law was rediscovered and received a clear formulation.

However, in the US, industrialists were not yet ready to accept the Pareto rule, and Juran left to lecture in Japan. There, the heads of the enterprises agreed with the conclusions of the scientist, and the concept of "Pareto diagram in quality management" appeared. It should be noted that until the 1970s, this technique was used only in Japan. And only after almost 20 years, when products made in Japan became a serious competitive threat to American goods, Juran was invited to the USA to get acquainted with the Pareto theory.

Pareto's law and life

By accepting the statement that 20% of effort brings 80% of the result, a person can completely rethink what is happening. Most of us think that the more movements (efforts) we make, the more success we will achieve in life. We believe that all our acquaintances are equally important (and necessary) to us, that all clients bring equal income, and, accordingly, it is necessary to expend equal efforts on contacts with everyone.

However, after thinking and studying the data of the Pareto chart, we come to different conclusions. Wewe redistribute efforts and literally become freer and happier. Work no longer seems so exhausting, and communication with friends is painful. By studying the cause-and-effect relationships of our actions, we come to the conclusion that a very small part of the activity gave a truly significant result. And everything else is superficial and unnecessary.

Pareto Law in marketing

In the early 60s of the twentieth century, IBM employees discovered that computers spend maximum time processing a minimum number of operations. The identification of these time-consuming tasks made it possible to significantly increase the speed of the technique. And this means that the Pareto chart, an example of which was taken as a basis by technicians from IBM, made it possible to bypass competitors and increase sales.

In general, when managers accept the fact that a small number of customers bring maximum profit, the company begins to progress noticeably - both in terms of sales growth and in terms of increasing staff loy alty (after all, recognizing the fact that not every customer is the same, releases a lot of managerial energy). In addition, the study of the Pareto chart allows you to focus on those products and industries that will give the maximum increase in income and allow the company to win in all competitive wars.

Come to terms and accept

As we have already noted, the most difficult thing is to accept the fact that 80% of our actions do not bring the expected result. Business leaders often demand from their managers absolutely the same attitude towards all buyers, and after all, the analysis of the Pareto chart will give the usual result for sales: the bulk of customers provide the active work of managers, but not the income of the enterprise.

That's why they say that leaders need to come to terms with the idea of "free time" of subordinates. It is necessary to unify work with the majority of customers, develop general principles for communicating with them and servicing their orders. This will allow us to focus on large customers and significantly increase sales.

Production quality analysis

In 1979, the Japanese Union of Engineers and Scientists supplemented the list of recommended methods for controlling the quality of enterprise products with the analysis of the Pareto chart. Practitioners have developed two types of analysis: based on the results of activities and on the causes of problems.

The first one is used when the task is to identify the main problems leading to undesirable results. The second is designed to find the root cause of a company's poor performance. In both cases, it is necessary to build a Pareto diagram for a visual understanding of the essence of the processes taking place in the enterprise and the efficient allocation of resources.

Actually, the analysis requires little: to clearly formulate the problem, to identify as much as possible all the factors of influence and, having collected certain statistical material, to name the root causes of the problem that has arisen. For clarity, all statistical data is displayed inchart form. Next, it is necessary to take measures to eliminate (change) the negative elements of the activity.

From theory to practice

Easy to say - use the Pareto method. But what steps should be taken, where to start, in order to really effectively analyze the situation? How to build a Pareto chart? Here you can not do without experience and intuition, but a beginner should not be afraid to analyze. At the first stage, it is necessary to understand what questions (problems, causes) to investigate; how to classify them and what information to collect.

It is at this stage that inexperienced analysts have fears: have I taken everything into account, and how revealing will the collected information be, etc. But, applying the Pareto law to our activities, remember: 80% of activity will give only 20% result. Therefore, you should not be afraid, and at first you should record in as much detail as possible all the reasons for what is happening. Over time, you will learn to intuitively identify really significant sources of problems.

After deciding on the collection of information, it is necessary to develop cards for recording statistical data. Usually these are questionnaires or tables in which data are entered that are recorded at certain time intervals. Then these data are summarized and applied to the plane in the form of points. To speed up, it is necessary to enlarge (combine) the most similar indicators even at the stage of processing the information received.

Putting information on paper

To build a Pareto chart, you need to prepare a table in which to enter the ranked research results. Attake into account the frequency of the emerging feature. The data in the table should be entered in descending order (again, in order to speed up the process).

Preparation of the chart construction plane implies the application of two vertical measurement scales and one horizontal one. The left vertical axis determines the number of manifestations of a particular factor, and the right characterizes the percentage. All factors are plotted on the horizontal axis in descending order of frequencies. The end result should be a bar chart.

Then you should draw a cumulative curve - connect the points above the columns that determine the percentage value of the factor (focusing on the right axis), the curve. Pareto chart built! Next, you should analyze the result, identify the "little that matters" and optimize the activities of the enterprise.

Important

• Only a few parameters need to be improved; do not grab everything at once.
• First of all, it is necessary to deal with those resources (causes) that have the greatest impact on the productivity of the company.



• Throughout the charting process, analysis should be done, trying to discard everything of little importance. Even without experience, the analyst intuitively understands what is really important and what is not.

Pareto's Law can be used everywhere

Modern theories claim that there is a universal assessment methodology"everything and everything" - Pareto chart. An example in an enterprise of any industry will not surprise anyone. Modern specialists have transferred the proportion of 80/20 to all areas of our lives.

In self-realization, for example, it is recommended to do what is given simply and easily. It is these minimal efforts that can give the maximum result. Time management offers to analyze your employment for the day and identify "useless" actions. You will be truly surprised to find a lot of free time.

It's even more interesting to apply the Pareto law in your personal life. After reviewing the list of contacts on your phone, you can easily identify those 20% of the right and interesting people who help you develop. Psychologists recommend getting rid of the remaining 80% of connections. And what can we say about the things that surround us in everyday life! The opinion that a thing that is not in demand during the year will never be useful is not new.

Use the Pareto law - and life will become more interesting and colorful!