Pareto Chart
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A Pareto chart combines bar and line graphs to show which factors contribute most to a problem, guiding improvement priorities.
Definition
A Pareto chart is a bar graph with categories ordered from highest to lowest frequency or impact, combined with a cumulative percentage line. Based on the Pareto Principle (roughly 80% of effects come from 20% of causes), the chart identifies the "vital few" factors that contribute most to a problem, separating them from the "trivial many." This prioritization focuses improvement efforts where they'll have the greatest impact rather than spreading effort across all causes equally.
Examples
A Pareto chart of defect types showed that three of twelve categories accounted for 78% of total defects. Focusing improvement efforts on these three types—rather than all twelve equally—provided the fastest return. After addressing the top three, a new Pareto chart identified the next priorities.
Key Points
- The vital few (typically 20%) cause most of the impact (typically 80%)
- Pareto charts guide where to focus limited improvement resources
- After addressing top causes, create a new Pareto—the landscape shifts
- The cumulative line shows when you've captured most of the impact
Common Misconceptions
The 80/20 ratio is exact. The Pareto Principle is a heuristic, not a law. The actual ratio varies—sometimes 70/30, sometimes 90/10. The principle is that a minority of causes typically creates a majority of impact.
Address only the top causes. After addressing the vital few, create a new Pareto. Previously minor causes may become the new priorities. The stratification continually shifts as problems are solved.