Pareto Charts

25 Jul

Over the past month, I have been learning more about Six Sigma because at my current workplace, they have instituted a company-wide Six Sigma Program, where we have a certified instructor and several mentors to assist us through the DMAIC (Define, Measure, Analyze, Improve, and Control) process to not only save the company money and mentor others about the importance of Six Sigma, but in the end we have the opportunity to get green and/or black belt certified.  Sounds like a win-win situation, so I signed up for the challenge! Therefore, I will devote a few blogs over the course of my Six Sigma class to provide you with helpful tips/tricks and what I have learned.  The first topic I will discuss is Pareto Charts, in particular:  what they are, why they are used and ultimately, how to prepare one.

What is a Pareto Diagram? 

  • Pareto diagrams are specialized forms of column graphs and used to prioritize and indentify problems or opportunities, which account for most quality problems in a system
  • The simple process of arranging data may suggest something of important that may otherwise have gone unnoticed
  • Selecting classifications, tabulating data, ordering data, and constructing the Pareto diagram has severed as a useful tool in investigating problems
  • Pareto analysisisalso called the 80-20 rule, meaning that 80 percent of problems are often due to 20 percent of the causes

When are Pareto Diagrams Used?

  • Help analyze a problem/opportunity for improvement from a different perspective/view, as this chart can help paint a clear picture of where the greatest contribution can be made or the lowest hanging fruit
  • Focus the attention on problems or opportunities in a priority order
  • Compare data changes during different time intervals
  • Provide a basis for the construction of a cumulative line

Pareto Chart Template:

How to create a Pareto Chart:

  1. Obtain data from your business for the project/issue you want to further analyze to create your Pareto Chart
  2. Use the above template to open the file in Excel file and go to the Data tab
  3. Sort your data in Column C, Data Tab in descending order.   You should have two columns of data at this point:  one column for the cause categories and another for the values of each category.  Enter the cause categories in the first column of data, which is column B on the spreadsheet.
  4. Enter the values in the second column, with is column C on the spreadsheet
  5. Please note you will need to adjust the total and this template already has the formulas setup to calculate the Percentage and Cumulative Percentage Columns (Columns D & E, Data Tab). It is important that the percentage column equals 100% and the last item in the cumulate percentage equals 100%
  6. Erase any rows that are not needed and adjust formulas as needed
  7. The chart should automatically be populated in your “Pareto Chart” tab

If you have any questions or comments, please use the comment section below, as I would enjoy hearing from you!

Image Credit


One response to “Pareto Charts

  1. niveda

    October 28, 2012 at 10:15 am

    hi i want the answer to this question- how Pareto chart helps to project manager to plan a project?


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