Pareto Analysis

Recall the vital few-trivial many rule, 20/80 rule, or Pareto s Law discussed in Chapter 2. The approach introduced here is called Pareto Analysis after Vilfredo Pareto, an Italian sociologist and economist, who is credited as the source (Kuprenas et al 1999, Rose 2005). When agreed-upon quality is not being achieved, Pareto Analysis can be used to identify the most influential causes of substandard performance so these causes can be addressed first. 

Assume that a consulting engineering firm analyzed design projects, over a five-year period, that failed to be profitable. Failed profitability was defined, from a quality 

T able 7.3 Possible causes of poor project performance and the number of surveyed personnel selecting each cause as being the most important. 

Pareto Analysis was used to reduce defects in the manufacturing of spacecraft electronic components. Examples like these suggest many possible applications of Pareto 

Normally the first two bars on the graph will cover very close to 80 percent of the issues plotted. This means that the first two problems will eliminate 80 percent of the issues when they get fixed or corrected. The value of a Pareto analysis is that it has the capability to help direct priorities to the most important areas first. Without this tool it is easy to get preconceived ideas of what the major problems are and go ahead and fix those while they may not be the big problems. This tool helps to create a focus on the correct problems to be resolving. 

I have seen this type of analysis used in supply chain management in several ways. One is to determine which material should be looked at for consolidation or replacement. The products are selected and then the chart can be drawn up in pounds and/or dollars to determine the priorities. I have used both so that I can see any significant changes in the charts. This is a very useful tool to help with managing costs as well. The costs that make up a product price can be analyzed by Pareto analysis to see which are the major ones and then you can begin to look at reduction possibilities. 

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Fig. 6. Pareto analysis of causes of off-standard polymer production.

Q7 PROCESS CHART. PARETO ANALYSIS, CAUSE AND EFFECT DIAGRAM, HISTOGRAM, CORRELATION DIAGRAMS, PROCESS CONTROL CHARTS, CHECK SHEETS... 

The so-called Q7 tools and techniques, Cause and Effect Diagrams, Pareto Analysis, etc. (Bicheno, 1994 Dale and McQuater, 1998 Straker, 1995), are applicable to any stage of the product development process. Indeed they support the working of some of the techniques mentioned, for example using a Pareto chart for prioritizing the potential risks in terms of the RPN index for a design as determined in FMEA (see Appendix III). 

The nonconformity data should be collected and quantified using one of the seven quality tools (see Part 2 Chapter 14), preferably the Pareto analysis. You can then devise a plan to reduce the 20% of causes that account for 80% of the nonconformities. However, take care not to degrade other processes by your actions (see Theorg ofcon-staints in Part 2 Chapter 2). The plan should detail the action to be taken to eliminate the cause and the date by which a specified reduction is to be achieved. You should also monitor the reduction. The appropriate data collection measures therefore need to be in place to gather the data at a rate commensurate with the production schedule. Monthly analysis may be too infrequent analysis by shift may be more appropriate. 

Statistical techniques can be used for a variety of reasons, from sampling product on receipt to market analysis. Any technique that uses statistical theory to reveal information is a statistical technique, but not all applications of statistics are governed by the requirements of this part of the standard. Techniques such as Pareto Analysis and cause and effect diagrams are regarded as statistical techniques in ISO 9000-2 and although numerical data is used, there is no probability theory involved. These techniques are used for problem solving, not for making product acceptance decisions. 

Understanding production process FMEA, Pareto analysis, flow charts [2]... 

The PHA procedure can be conducted using various methodologies. For example, the checklist analysis discussed earlier is an effective methodology. In addition, Pareto analysis, relative ranking, pre-removal risk assessment (PRRA), change analysis, failure mode and effects analysis (FMEA), fault tree analysis, event tree analysis, event and CF charting, PrHA, what-if analysis, and HAZOP can be used in conducting the PHA. 

The answers need an analysis of the s/n ratio. Table 2.17 summarises the Pareto analysis of variance (see Figure 2.7 for the calculations involved) and Figure 2.8 displays the factor plots associated with the calculations. 

By arranging the categories in descending order of importance, we have made the interpretation easy. One can readily determine which areas to work in first. We have separated the vital few from the trivial many. Be careful to avoid misinterpretation. In this example, the major reasons for quality losses are easily seen. However, these may not be the major sources of lost dollars due to poor quality. Another Pareto analysis could be done to establish those causes. Once the charts are completed, you can define and implement improvement efforts. 

Pareto analysis of the topics discussed with the technology steward or with centers of excellence, or researched using the technology manual (assuming it is web-based) X ... 

Cause-and-Effect Diagram Pareto Analysis Technique... 

Example 3. From the toy data of Example 2, plot the associated Pareto cheut. From Example 2, you see that the relative fr uencies and cumulative frequencies have been cedculated. This is, in fact, the Pareto analysis. The resulting Pareto chart is as follows ... 

It is also important to record properly the corrective action performed for Pareto analysis to further enhance the corrective action procedure. 

Figure 3 Pareto Analysis and Assignment of Product Groups to Storage Spaces.

A report should be prepared showing the pounds or number purchased and dollars spent in each area by material and total. The annual purchases made in each group should be calculated. This shows where the largest purchases are. A Pareto analysis can be prepared on the annual purchases. The area that can produce the most return will be obvious from the Pareto analysis. This process will be discussed in Chapter 12. 

Scatter diagrams Histogram Tally sheet Pareto analysis... 

In addition to real-time profiling of various parameters, more advanced analyses such as SPC can be employed to view large data sets in a graphical format. SPC has been applied successfully for decades to help companies reduce variability in manufacturing processes. It is the opinion of this author that SPC has enormous applications throughout healthcare. For example. Figure 57.5 shows how Pareto analysis can be applied to a sample trauma database of over 12,000 records. The Pareto chart maybe frequency or... 

FIGURE 57.5 Statistical process control—Pareto analysis of a sample trauma registry. 

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