Juran’s philosophy follows the THE PARETO
observations of economist Vilfredo PRINCIPLE
Pareto
Also widely
known as the
Pareto’s studies showed that 80% of 80/20 rule
the land in Italy was owned by 20% of
the population
Juran realized the 80/20 rule could also
be applied to quality issues
THE PARETO PRINCIPLE
Pareto principle - the 80-20 law states, for many events, roughly 80% of the
effects follow from 20% of the causes
In 1941, Juran was introduced to the work of Vilfredo Pareto and applied the
concept to quality issues
According to Juran, 80% of the problems in an organization are caused by
20% of the causes
This is also known as the rule of the "Vital few and the Trivial Many"
Juran, later preferred "the Vital Few and the Useful Many" suggesting that
the remaining 80% of the causes must not be completely ignored
Juran coined the phrase…
“The Vital Few and The Trivial Many”
He believed, a small percentage of Example
root causes can result in a high
20% of an organization’s
percentage of problems or defects products may account for
80% of its profits
or
20% of team members may
The principle applies in other contribute to 80% of
contexts making it a universal successful results in a
principle given project
WHEN TO USE A PARETO CHART
When analyzing data about the frequency of problems or causes in
a process
When there are many problems or causes and you want to focus
on the most significant
When analyzing broad causes by looking at their specific
components
When communicating with others about your data
EXAMPLE
Pareto Chart and
Graph
IN TERMS OF QUALITY CONTROL…
Pareto analysis can help identify
which factors account for the
greatest effects in terms of scrap,
repairs or cost, and this
information can in turn be used to
drive improvement in processes
HOW TO MAKE A PARETO CHART
Step 1 Step 6
Develop a list of problems, items or causes to be compared. List the items on the horizontal axis of a graph from highest to lowest.
Label the left vertical axis with the numbers (frequency, time or cost),
Step 2
then label the right vertical axis with the cumulative percentages (the
Develop a standard measure for comparing the items.
cumulative total should equal 100 percent). Draw in the bars for each
How often it occurs: frequency (e.g., utilization, complications, errors) item.
How long it takes: time
How many resources it uses: cost Step 7
Draw a line graph of the cumulative percentages. The first point on the
Step 3 line graph should line up with the top of the first bar. Excel offers
Choose a timeframe for collecting the data. simple charting tools you can use to make your graphs, or you can do
Step 4 them with paper and pencil.
Tally, for each item, how often it occurred (or cost or total time it Step 8
took). Then, add these amounts to determine the grand total for all Analyze the diagram by identifying those items that appear to account
items. Find the percent of each item in the grand total by taking the for most of the difficulty. Do this by looking for a clear breakpoint in
sum of the item, dividing it by the grand total and multiplying by 100. the line graph, where it starts to level off quickly. If there is not a
Step 5 breakpoint, identify those items that account for 50 percent or more
List the items being compared in decreasing order of the measure of of the effect. If there appears to be no pattern (the bars are essentially
comparison: e.g., the most frequent to the least frequent. The all of the same height), think of some factors that may affect the
cumulative percent for an item is the sum of that item’s percent of the outcome, such as day of week, shift, age group of patients, home
total and that of all the other items that come before it in the ordering village. Then, subdivide the data and draw separate Pareto charts for
by rank. each subgroup to see if a pattern emerges.
IMAGES FOR STEP 4 & 5
PARETO ANALYSIS STEP BY STEP
BY D U N C A N H A U G H E Y
Pareto Analysis is a statistical technique in decision-making used for the • We can apply the 80/20 rule to almost anything:
selection of a limited number of tasks that produce significant overall – 80% of customer complaints arise from 20% of
effect.
your products and services.
– 80% of delays in the schedule result from 20% of
It uses the Pareto Principle (also known as the 80/20 rule) the idea that
by doing 20% of the work you can generate 80% of the benefit of doing the possible causes of the delays.
the entire job. – 20% of your products and services account for
80% of your profit.
Take quality improvement, for example, a vast majority of problems – 20% of your sales force produces 80% of your
(80%) are produced by a few key causes (20%). company revenues.
– 20% of a systems defects cause 80% of its
problems.
This technique is also called the vital few and the trivial many. • The Pareto Principle has many applications in
quality control. It is the basis for the Pareto
In the late 1940s Romanian-born American engineer and management diagram, one of the key tools used in total quality
consultant, Joseph M. Juran suggested the principle and named it after control and Six Sigma.
Italian economist Vilfredo Pareto, who observed that 80% of income in
Italy went to 20% of the population. • In PMBOK, Pareto ordering is used to guide
corrective action and to help the project team
Pareto later carried out surveys in some other countries and found to take steps to fix the problems that are causing
his surprise that a similar distribution applied. the greatest number of defects first
MAJOR RECURRING THEMES
Customer focus and satisfaction
Leadership and management responsibility
Involvement of people and stakeholder engagement
Process approach and policy compliance and auditing
System approach to management
Continuous improvement
Factual approach to decision making and standards/regulatory compliance
Mutually beneficial supplier relationships
VIDEO LINKS
• Steve Jobs on Joseph Juran and Quality
– Steve Jobs on Joseph Juran and Quality - YouTube
• How to Set Goals: 80/20 Rule for Goal Setting | Brian Tracy
– https://www.youtube.com/watch?app=desktop&v=cdiApKj3QPg&t=298s
• How to Instantly Be More Productive – The 80/20 Principle by Richard Koch
– https://www.youtube.com/watch?app=desktop&v=V28B_xOJzK4
