9.9 Pareto Principle and Pareto Charts

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9 hours 3 minutes
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Hi, guys. Welcome to analyze Phase Peredo Principle on Parade. Oh, chart. I'm Catherine MacGyver and today you'll be able to understand a parade, a chart and its applications and process improvement.
So before we get started on a parade Oh, chart. Let's talk about the parade. Oh, Principal for a second. So you probably don't know this fine gentleman Wilfredo Peredo. He was an Italian economist in the 18 fifties and sixties who was looking at resource consumption in Italy and proposed that 20% of the
problems, or 20% of the demands, consume 80% of the resource is
his actual original premise had to do with land ownership. He said that 20% of the land, or 20% of the landowners, owned 80% of the land, or the resource is.
So this became what we know as the 80 20 rule, and it pops up quite a bit. It's called the parade. Oh, principal. And it actually didn't exist until Dr Juran came into the picture. He discovered the quote that we're gonna show you on the next page and said, You know what? This applies to quality
and incorporated it into the quality control handbook. So if you think back to our history of
quality and continuous improvement Jurand the man this is one of his contributions He actually was also a super cool guy and actually attributing it Thio
um, Mr Peredo So now we have this parade Oh, principal, also known as the 80 20 Rule that gets thrown around a lot, which then subsequently became a parade Oh, charts
for our continuous improvement use. So
the quote that Dr Duran found is if you're Noah in your arc, is about to sink. Look for the elephants first because you can throw over a bunch of cats, dogs, squirrels and everything else that is just a small animal and your ark will keep sinking. But
if you can find the one elephant to get overboard,
you're in much better shape. So this talks a little bit about our resource prioritization, which, if you remember back to our previous light on hissed a grams we use hissed a grams for us to determine where we want to invest. Our resource is
so Ah Peredo chart is a variant of a hist a gram. It is what we call a stacked, hissed a gram with cumulative percentages. So if you remember his diagrams a cool word for a bar chart. What we're going to be looking at is an organized bar chart that has some cumulative percentages on it toe. Help us identify
where we want to spend our time from a process improvement. Stamberg.
So where the cumulative percentages come in is this is the relative percentage of defects reported. So when we actually look at our Peredo chart, this is going to be the same categories as our previous module. I did tweak the data a little bit to make it more pronounced for you,
but you should recognize everything as our
hissed a gram from our previous model. So when we're looking at a parade, Oh, diagram. What you're going to be looking at is you want to organize everything from largest to smallest. Um, and that'll give us a sense of where that 80% actually happens. So
if you remember from our previous module, we said wrong product received and color isn't uniform is where we're going to invest our time for our improvement activities because they have the highest frequency. Now, if we were to look at the parade. Oh, principal and say that we wanted to deal with 80%.
What we would do is we would come over to our right side,
figure out where 80 is come across, and we realize that we're going to also want to include took too long to get to me. If we can fix these three categories, we can fix 80% of the defects associated with this process. So that's nice.
I'll give you an even easier way to read. Ah, parade on chart.
You want to look for the break. So if you notice if we look at our 1st 3 categories, there is a hinge that happens there, or a break where you start to see a plateau in your data values. So another easy way if you're doing this on the fly and have 30 seconds to read, is
look for the break in your cumulative percentage line,
and anything that is to the left of the break is what you want. Your project team to work on anything that is the right of the break is considered the nominal few. So if you get lucky in a year or so and get to revisit this process, then you'll want to be looking at those. But you want to fix anything that's to the left of the break, which happens to also
generally be
very close to 80%.
So when we're talking about the parade, Oh, principal, remember that it is in fact, a version of the history Graham. But now we're looking to identify and apply the 80 20 rule, so we know that we want to spend. We want that we can get 80% of our improvement efforts from 20% of the defects.
So if you build your history, Graham, you're going to want to sort this build history rams in excel or sauce or,
many tab as the big statistical software. But if you build your history and your one going to want to sort this and look at your cumulative percentages and that'll tell you where your 80% is for your parade, Oh, principal
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