Pareto Charts Overview
Purpose:
The purpose of the Pareto chart is to prioritize problems - to decide what problems must be addressed. No company has enough resources to tackle every problem, so they must prioritize. The purpose of this report is to inform the reader of the Pareto principles and how it can be applied to the manufacturing environment. I will try to answer commonly asked questions regarding the Pareto process.
Pareto Principle:
The Pareto concept was developed by the Italian economist Vilfredo Pareto describing the frequency distribution of any given characteristic of a population. Also called the 20-80 rule, he determined that a small percentage of any given group (20%) account for a high amount of a certain characteristic (80%). For instance in the BYU Law parking lot, there are basically 9 different colors of cars: white, blue, red, black, tan, silver, brown, yellow, and green. I decided to illustrate the Pareto principle by the different colors of cars. All colors are not created equally. Out of the nine different colors, three (red, blue, and white) make up about 64% of the cars. The same principle can be applied to all aspects of manufacturing. The Pareto chart is especially helpful in improving manufacturing processes.
Where do I begin?
The important thing is to begin. Start somewhere. Choose a process that is not producing the yields you would like it to produce. Are there an excess amount of parts that you are having to rework or scrap? Why? What are the reasons for scrapping those parts? Make a list of the causes of the problem. Don't worry about narrowing the list because it will narrow itself. Keep track of the number of scrapped or reworked parts and what the reason is. In the example above, I wanted to know what color of car was most popular. I could have also counted cars by their brand, or their type (compact, subcompact, etc.) It doesn't really matter. As the data begins to come in, then you can make more decisions.
What do I do next?
After you have collected a sufficient amount of data, chart what you have. In my example, I used the number of cars. This is a great method. However, you may want to keep track of the cost of each product failure. For example, if you have a milling operation, and scratching the surface of the product causes the most reworks, but it only costs $2 to correct, whereas milling an uneven surface, while occurring less often, is actually more expensive to correct. That is something that you must decide, whether to go by cost or total numbers. If you don't know which to choose, then do both.
There may be times where different products come off the same production line. In this instance, it may be important to keep charts on the different products. For instance, there may be 10 scraps out of 10,000 of product A; whereas with product B, there may be 8 scraps out of 100. If you were to group the whole process together, the problem with product B might not be discovered. Be aware of grouping products together that come from the same process.
Now you should have an idea of what problems are most troublesome. There should be two or three problems that stick out. Focus on those problems causing the greatest number of reworks or those problems which are the costliest.
After you feel you have improved the process, do another Pareto chart and find out if your improvements worked. If they did, great! and your Pareto chart shows some new problems that must be worked on. Continually improve on the problem that is causing the greatest harm.
Conclusion
You can't choose the wrong process or the wrong problem to run a Pareto chart on. The most important thing in improving quality is to start somewhere, doing something. As you begin using the Pareto chart to decide where your problems are, you will discover many things about your processes and will come because you will know where to improve.