I Said Pareto Chart … Not Potato Chart!
Does this sound familiar? You were hired for the new managementposition. You were tasked to turn the numbers around. You take
some time reviewing the current situation. Now it’s time to take
a look at the current processes and get your staff together to
analyze the data. You tell them that you want to brainstorm;
work on a few mind maps, whip out a couple Ishikawa’s to get
started and then have them bring Pareto charts relative to their
respective functions.
One of your department heads looks at you and asks “Ishiwhat?”
“You know,” you reply, “a fishbone diagram.” Still blank stares.
“Cause and effect?” you say as you scribble out a trout carcass
on your white board. Still nothing. You’re starting to think
the elevator doesn’t go all the way to the top. You’ve got your
work cut out for you. So you decide to punt. “Ok, let’s just
start with the Pareto charts,” you concede. “Sir, what is a
potato chart?” asks another supervisor. “Let’s take a five
minute stretch break and then meet back in here so that I can
welcome you to the world of Pareto charts.
A Pareto chart looks similar to a bar chart. It has columns and
it also has a line graph. Generally number of occurrences
(frequency) is listed on the left side and percentage on the
right. This type of chart is used to graphically summarize and
display the relative importance of the differences between groups
of data. For example, perhaps you have determined, or at least
speculate that your widgets are being rejected due to – improper
fittings, defective sorting machine, too large or too small, or
other. If you look at the reports or studies and gather data on
each of these reasons for failure, you can then plug the numbers
into a chart. You may have assumed the reason for rejection was
because the widgets were too large to fit through the tunnel.
However your numbers may actually show (the data will validate)
that indeed there was nothing wrong with the size of the widget,
but rather the sorter was bent, thereby causing the good pieces
to bounce into the reject bin.
Typically you isolate five categories to measure. A Pareto chart
can be constructed by separating the data into categories. Let’s
look at another example. If your business was investigating the
delay associated with processing mortgage applications, you could
group the data into the following categories: No signature,
address not valid, illegible handwriting, existing customer and
other.
The left-side vertical axis of the Pareto chart is labeled
Frequency (the number of counts for each category), the
right-side vertical axis of the Pareto chart is the cumulative
percentage, and the horizontal axis of the Pareto chart is
labeled with the group names (categories) of your response
variables. Are you getting the idea? Your bottom row will be
labeled: No signature, address not valid, illegible handwriting,
existing customer and other. Each title will have a
corresponding column associated with it.
Next determine the number of data points that reside within each
group and construct the Pareto chart in a spreadsheet program;
Excel works very well for these types of charts. The difference
between a Pareto and a typical bar chart is that the Pareto chart
is ordered in descending occurrence importance.
Once you have your Pareto constructed and you can visually see
what the data is telling you, and you will be able to answer a
few questions. You will be able to determine the largest issues
facing your team, department or business; you will be able to see
what 20% of sources are causing 80% of the problems; and lastly
you will know where you should focus your efforts to achieve the
greatest improvements.
No more guess work. You won’t be needlessly wasting more time and
money trying to fix problems that weren’t broken. Call a staff
meeting and get to work on your potato, er a Pareto Charts!
Articles By
George Whitecraft
posted by George @ 2:39 PM
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