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Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity
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Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Dec 26, 2015

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Roland Joseph
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Page 1: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto AnalysisPareto Analysis

Six Sigma Foundations Continuous Improvement TrainingSix Sigma Foundations Continuous Improvement Training

Six Sigma Simplicity

Page 2: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto Pareto

s Understand what the Pareto law iss Understand what a Pareto diagram iss Understand how to make and interpret

a Pareto diagrams Understand how a simple tool can be

very powerful

s Understand what the Pareto law iss Understand what a Pareto diagram iss Understand how to make and interpret

a Pareto diagrams Understand how a simple tool can be

very powerful

Objectives

Page 3: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto LawPareto Law

s The Pareto law states that a small number of the causes is responsible for a large percentage of the effects.

s It is also called 80 – 20 rule

s The Pareto law states that a small number of the causes is responsible for a large percentage of the effects.

s It is also called 80 – 20 rule

Page 4: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto DiagramPareto Diagram

Definition A data display tool that breaks down discrete observations into separate categories for the purpose of identifying the “vital few” and separating them from the trivial many

Frequency

Reason

C A B E D

Page 5: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto Chart: examplesPareto Chart: examples

15 % of the customers generate 80% of the sales!

Sales Volume by Customer- Roosendal 2001in € 1000

80%

55%

100%

0

10.000

20.000

30.000

40.000

50.000

60.000

Top 20 Next 70 Other 550

0%10%20%30%40%50%60%70%80%90%100%

Page 6: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto & Process improvementPareto & Process improvement

Helps to focus improvement efforts on areas where the largest gains can be made

s Gathers input from all team memberss To logically group potential causes for

defects (X’s)s Tests ideass Helps scope a project

s Gathers input from all team memberss To logically group potential causes for

defects (X’s)s Tests ideass Helps scope a project

Page 7: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Constructing a Pareto diagramConstructing a Pareto diagram

s Define categoriess Choose them based on impacts Assure the “other” category is small

s Sort data in descending orders Plot the datas May need several Pareto’s to hone in on

problems

s Define categoriess Choose them based on impacts Assure the “other” category is small

s Sort data in descending orders Plot the datas May need several Pareto’s to hone in on

problems

Page 8: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto diagram: first levelPareto diagram: first level

66%81%

91%96% 98% 100%

-

50

100

150

200

250

300

350

Missing Screws Missing Clips Leaky Gasket Defective Housing Unconnected Wire Others

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pareto on inspection rejections

Simple and very powerful tool

Page 9: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto diagram: second levelPareto diagram: second level

Any relationship between the numbers of missing screws and the shift?

58%

80%

90%

100%

-

50

100

150

200

250

300

350

Night Evening Afernoon Morning

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Team tests ideas and/or kill ghosts: Pareto on missing screws by shift

Page 10: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto - ExercisePareto - ExerciseMistake Additional

Costs $KContract Engineer

Caused Late Delivery

Split shipment 40 Karen NoCasting reject 20 Pierre NoDriver upgrade 50 Mark YesPipe rework 60 Karen YesCertification 40 Karen YesCertification and Driver upgrade

70 Pierre Yes

Split shipment 20 Mark NoSplit shipment 40 Mark NoDriver upgrade 90 Mark YesCasting reject 20 Pierre NoSplit shipment 50 Mark NoDriver upgrade 90 Mark YesDriver upgrade 10 Mark YesDriver upgrade 10 Mark Yes

In Groups, create Pareto(s) to describe the key problem?

In Groups, create Pareto(s) to describe the key problem?

Page 11: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto Exercise – ExamplesPareto Exercise – Examples

Certif icat ion

Cast ing reject

Pipe rework

Cert ificat io

n and Drive

r upgrade

Split shipment

Driver upgrad

e

40 40 60 70150250 6,6 6,6 9,811,524,641,0

100,0 93,4 86,9 77,0 65,6 41,0

600

500

400

300

200

100

0

100

80

60

40

20

0

Mistake

CountPercentCum %

Perc

ent

Cos

ts

additional costsPareto Chart for Mistake and

MarkKaren

Pierre

360 140 11059,0 23,0 18,0 59,0 82,0 100,0

0

100

200

300

400

500

600

0

20

40

60

80

100

Engineer

CountPercentCum %

Perc

ent

Cos

ts

Pareto Chart for Contract Engineersand additional costs

MarkKaren

Pierre

5 2 162,5 25,0 12,5 62,5 87,5 100,0

0

1

2

3

4

5

6

7

8

0

20

40

60

80

100

Engineer

CountPercentCum %

Perc

ent

Cou

nt

Pareto Chart for ContractEngineers and late deliveries

Driver u

pgrade

Certif icat io

n

Certificat io

n and D

river upgrade

Pipe rework

O thers

5 1 1 1 062,5 12,5 12,5 12,5 0,0 62,5 75,0 87,5 100,0 100,0

0

1

2

3

4

5

6

7

8

0

20

40

60

80

100

Mistakes

CountPercentCum %

Perc

ent

Cou

nt

Pareto Chart for Mistake and Late Deliveries

Page 12: Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity.

Pareto AnalysisPareto Analysis

Six Sigma Foundations Continuous Improvement TrainingSix Sigma Foundations Continuous Improvement Training