
The Pareto diagram is a graphical overview of the process problems, in ranking order of the most frequent, down to the least frequent, in descending order from left to right. Thus, the Pareto diagram illustrates the frequency of fault types. Using a Pareto, you can decide which fault is the most serious or most frequent offender. The basic underlying rule behind Pareto's law is that in almost every case, 80% of the total problems incurred are caused by 20% of the problem cause types; such as people, machines, parts, processes, and other factors related to the production of the product. Therefore, by concentrating on the major problems first, you can eliminate the majority of your problems. The few items that have the largest amount of occurrence is your more frequent problem, than are the many items that only happen once in a while. This is called the "vital few over the trivial many" rule. Quite often, once you cure several of the "big hitters" you also eliminate some of the smaller problems at the same time.
So then, what exactly is a Pareto diagram? The Pareto prioritizes problem areas. Sometimes a quality problem is so cluttered with so many smaller problems, it is difficult to know just where to begin the solving process. Let's take an example. Below is a table from a manufacturing process that charted all of their quality problems. While the original defect chart listed many problems at various stages of the process, the overall problems were grouped into five main process areas. In the left column is the name of the process where the defects occur. In the next column is the amount of defects recorded from their daily check sheets, recorded during a one week period. In the third column is the percent of defectives from the overall production (N = 2165). In the fourth and final column, is the percent of the total defects. That is, for example, of all the defects recorded (416), poor Caulking is 47.6% of the entire problem. It should be obvious then, where the primary problem is and what should be focused upon first.
Figure 1 From the chart above (figure 1), you can now create a Pareto chart in which you can graphically display the quality problems. There is special software on the market that makes Pareto diagrams, however, an Excel barchart will basically create the same display. The below bar chart reflects the above information charted in Excel. Pareto Example The left vertical axis (border) shows the number of defects for each defective category, and the right vertical axis shows the percentage of each defect of the total defects. The horizontal axis (bottom) lists the defective items starting with the most frequent one on the left (Caulking), progressing over to the least frequent occurrence on the right side (Torque). Therefore, the Pareto diagram visually indicates which problem should be solved first, or in this case, the Caulking problem. With this bar graph, it is easier to see which defects are most important of all the defects that exist. If we solve all or most of the problems in Caulking, it could affect some of the problems observed in connecting, gapping, fitting, and torque. During the "brainstorming" session (we'll cover this later), it is wise to ask, "Does the Caulking problem have any impact on the other problems listed?" In some cases it might. If there was proper caulking, would part of the "Gapping" problem be eliminated?" If there were proper caulking, would the "Torque" have a better value and thus not be part of the defects? Sometimes your major problems have impact on the smaller problems. Several problem areas may all be attributed to ONE ROOT CAUSE, even though several failure modes are observed. For this reason, it is always wise to choose the most frequent problem first. 
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It is now time for you to try and make a Pareto Chart to practice your new knowledge. Again, it is really best if you use graph paper. We will use the Production Defect Check Sheet from the "Check Sheet" lesson, to build your Pareto. For your convenience, that chart can be found at Production Defect Check Sheet. From the Production Defect Check Sheet above, you will need to total the number of occurrences (N) then divide each individual defect by (N) to determine the percentage of overall defects, that each defective item represents. When you are finished, check your answers against "Check Your Work" below. There is one more important item I need to explain to you. There are really two styles of Pareto charts used out in the field. The method explained above in this lesson is the same in either form, with the exception of the percentage line on the graph itself. The difference is in how the graph is represented. If you look at the Pareto Example above, you will see that the percentage of each defect is represented individually, and thus the trend goes downward from left to right. The true form, or most correct form, for the Pareto is to have your percentage curve be an accummulation of total percentage at each bar. That is, the total of the first defect and the total of the second defect would be the plotted amount above the second bar; the total of the first, second and third, would be plotted above the third bar, and so on. Therefore, as you went from left to right, your curve would be getting larger until you reached 100% of the total defects. In this way, you can see that from items 1  2, or from 1  3, it would represent the total percentage of those few items, in relation to all the defects produced. So that you can understand further, Click Here to see an example.

Hopefully, you actually did spend the time and tried to make a Pareto chart. The best way to understand it, is to actually create one yourself. You Learn Best by Doing it Yourself!!
Your figure calculations and your finished Pareto Chart should resemble the final product I have prepared for you. Click HERE to check your final product.

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