Strategy & Planning

Pareto Chart (80/20)

Rank causes by size and find the vital few that account for most of the effect.

How to use this worksheet
  1. Collect counts or costs per category for one period: defects by type, complaints by reason, revenue by customer.
  2. Enter each category and its value. Use real data, not estimates, and make the categories mutually exclusive.
  3. The chart sorts the bars and shows the cumulative percentage. The items up to the dashed line at 80% are the vital few.
  4. Pick the first one or two and work on them. Collect data again after the change to check the effect.
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Data

One row per category.

Prompts

Ask yourself

  • Are the categories mutually exclusive?
  • Is frequency the right measure, or should you weigh by cost?

Pareto chart

Before you finish

About Pareto

The Pareto principle is named after Vilfredo Pareto, who observed that roughly 80% of Italy's land was owned by 20% of the people. Joseph Juran applied it to quality as "the vital few and the useful many".

The 80/20 split is a rule of thumb, not a law. What matters is that causes are rarely equal, so working on the biggest few gets you most of the gain.

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