Pareto Analysis 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
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
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
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
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%
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
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
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
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
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?
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
Pareto AnalysisPareto Analysis
Six Sigma Foundations Continuous Improvement TrainingSix Sigma Foundations Continuous Improvement Training