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Pareto Analysis – the 80-20 rule

Pareto Analysis using Pareto charts are one of the powerful 7 QC tools used by all industries to find out the root causes of an issue / problem. 

It is also known as 80-20 rule. It provides the trend called Critical few and trivial many. Let us say if we have totally 24 findings after an internal audit has been performed. We might observe that out of 24 finding around 19 findings are attributed to project management , configuration and metrics areas. Balance 6 are distributed among balance other  areas like risk, training, vendor management, testing etc.

Though it is called 80-20 it need not necessarily be exactly 80%. We mean here that we do not have to have few critical areas contributing to 80 % effect. It can be even around 70%. the focus is to find out which are the few real pain areas that causes for non conformities and findings impacting 80%.  In the following table we find that CMP1,QPM1and PMP1 contribute closer to 80% of the total findings reported after Internal Audit. These are all just cause codes. Like QPM1 can be metric not meeting the objective, CPM1 – configuration audit has not benn done and PMP1 no proper planning and so on.

Once we know these critical factors, we can initiate Corrective action and ensure these do not occur again in future audits. These Critical few causes can further be drilled down to arrive at Pareto trends for each of the process areas so that we can actually reach out for the exact cause or sub cause and eliminate them from the root.

The pareto table and chart to represent the table findings are given below.
pareto tablepaerto


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