Pareto Principle: The 80/20 Rule

• The Pareto principle, also known as the 80/20 rule, states that roughly 80% of effects come from 20% of causes
• Vilfredo Pareto introduced this in the late 19th century, observing that 80% of Italy's land was owned by 20% of the population

Key Applications of the Pareto Principle

• In business and productivity, 80% of profits come from 20% of customers
• 80% of results come from 20% of efforts, focusing on high-impact tasks
• In quality control, 80% of defects come from 20% of problems, often used in Six Sigma
• In time management, 20% of tasks contribute to 80% of success, emphasizing prioritization
• In economics and wealth distribution, 80% of wealth is held by 20% of the population

Pareto Analysis (80/20 Analysis)

• Pareto Analysis is a technique to identify the most significant factors in decision-making
• It involves ranking problems or causes by their impact

Steps

• Identify and list problems
• Determine the root causes of these problems
• Score or quantify the impact of each problem
• Group and prioritize the top 20% of causes that lead to 80% of the issues
• Take action on the critical few causes identified

Limitations

• The ratio may not always be exactly 80/20 and could vary
• It doesn't account for interactions between different causes
• Overemphasis on the "vital few" may lead to neglecting other factors

Cause and Effect Diagram

• A Cause and Effect Diagram, also known as an Ishikawa or Fishbone Diagram, is a visual tool
• It is used to identify and analyze potential causes of a specific problem or effect
• It helps teams systematically explore factors contributing to an issue

Structure of a Cause and Effect Diagram

• Head (Effect): The problem or outcome being analyzed
• Bones (Major Categories): Branches representing main categories of potential causes
• Sub-branches (Root Causes): Detailed factors under each category

Common Categories (6Ms - Used in Manufacturing)

• Man (People): Skills, training, human error
• Machine (Equipment): Machinery failures, maintenance
• Material (Raw Inputs): Quality, defects, supply issues
• Method (Process): Procedures, workflow, standards
• Measurement (Inspection/Testing): Accuracy, calibration
• Environment (External Factors): Temperature, workplace conditions

Steps to Create a Cause and Effect Diagram

• Define the problem (effect) and write it at the "head" of the fish
• Identify major categories
• Brainstorm possible causes by asking "Why?" repeatedly (5 Whys technique)
• Organize causes under relevant categories
• Analyze and prioritize root causes, validating with data if possible

Benefits

• Visualizes all possible causes in one place
• Encourages team brainstorming
• Helps identify root causes rather than symptoms
• Useful in quality control, Six Sigma, and Lean methodologies

Check sheet

• A check sheet, also called a checklist or tally sheet, is a tool to collect and organize data efficiently
• It records the frequency of events, defects, or tasks, aiding in quality control and process improvement

Types of Check Sheets

• Defect Location Check Sheet: Marks defects on a diagram
• Frequency Distribution Check Sheet: Tracks how often defects occur
• Task Verification Check Sheet: Ensures all steps in a process are completed
• Defect Type Check Sheet: Categorizes defects by type

How to Create a Check Sheet

• Define the purpose: what data needs collecting
• Choose categories: list possible defects, tasks, or events
• Design the sheet: use tables, diagrams, or marks
• Test and refine: ensure it's easy to use and captures data
• Collect data: record occurrences

Benefits of Check Sheets

• Quick and easy data collection
• Helps identify patterns in defects/issues
• Useful for Pareto analysis (prioritizing major problems)
• Supports Six Sigma and Lean Manufacturing

Histogram

• A histogram is a graphical representation of the distribution of numerical data
• It uses bars to show the frequency of data points within specific ranges
• It helps visualize patterns, central tendencies, and variations in continuous data

When to Use a Histogram

• To analyze process performance
• To identify data distribution (normal, skewed, bimodal)
• To spot outliers or unusual variations
• To compare before and after process improvement

Common Histogram Shapes & Meanings

• Normal Distribution (Bell Curve): Symmetric, peaks in the middle
• Skewed Right/Left: Tail extends to the right (positive skew) or left (negative skew)
• Bimodal: Two peaks
• Uniform: Equal frequency across bins

Why Use a Histogram

• Identifies variation in processes
• Helps detect outliers or non-normal distributions
• Supports data-driven decisions

Scatter Diagram

• A scatter diagram is a data visualization tool that displays values for two variables as points on a two-dimensional plane

Key Features of a Scatter Diagram

• X-axis (Horizontal): Represents the independent variable
• Y-axis (Vertical): Represents the dependent variable
• Dots/Points: Each dot corresponds to one data point

Uses of a Scatter Diagram

• Identify correlations (positive, negative, or no correlation)
• Detect patterns, trends, or clusters in data
• Spot outliers
• Help in regression analysis

When to Use

• Comparing two continuous variables
• Checking for cause-and-effect relationships

Stratification

• Stratification, in data analysis and quality control, is a method of dividing data into subgroups (strata)
• It’s based on shared characteristics to identify patterns, root causes, or variations

Key Points

• Purpose: Uncover hidden trends by analyzing data layer by layer
• Reduce variability by addressing issues in specific strata
• Improve decision-making with targeted insights

How It Works

• Split data into meaningful categories by shift, machine, or region
• Compare performance across strata to spot differences

Common Stratification Factors

• Time (hour/day/shift)
• Location (region/branch)
• Equipment (machine/model)
• Demographics (age/gender)

When to Use

• When data seems chaotic, stratification reveals hidden patterns
• Before Pareto or Fishbone analysis to pinpoint root causes