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Definition
The Pareto chart is a combination of: - A bar chart where plotted values are sorted in descending order.
- A line graph which display cumulative percentage of all values
This chart was first used by Joseph M. Juran to show the manufacturing problems repartition and identify which ones to solve first to obtain most of the total objective. This chart is named after Vilfredo Pareto, founder of 80 20 law or Pareto principle. The Pareto chart is used in logistics to know which few items or products, we have to focus on in priority to get most of the excepted results. Example of Pareto Chart For example, we have a warehouse of 1000m2 where 12 different items are stored.Our objective is to reduce by 15% the used m2 to receive more goods. The repartition of m2 per items is the following: In this table, we calculated the % of each items and the cumulative % regarding the total surface. | | Surface m2 | % of Total m2 | Cumulative % of total m2 | | Item 1 | 490 | 49% | 49% | | Item 2 | 200 | 20% | 69% | | Item 3 | 100 | 10% | 79% | | Item 4 | 50 | 5% | 84% | | Item 5 | 40 | 4% | 88% | | Item 6 | 40 | 4% | 92% | | Item 7 | 30 | 3% | 95% | | Item 8 | 15 | 2% | 97% | | Item 9 | 12 | 1% | 98% | | Item 10 | 11 | 1% | 99% | | Item 11 | 10 | 1% | 100% | | Item 12 | 2 | 0,2% | 100% |
Which gives the following Pareto Chart:
This Pareto chart shows that if we focus on reducing the m2 used by Items 1, 2 and 3, which represent 80% of the total m2 and reduced their surface by 20% for example, we will achieve a 16% reduction of the total m2. And this, only by working on 3 items instead of 12. Widely used in Logistics but also in Quality, this tool is an easy and fast way to prioritise items to be focused on and save time and resources.
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