C3.3.4.6 Pareto Analysis


Pareto Analysis

Pareto was a 19th Century Italian economist – studied distribution of wealth & income. He found that the vast majority of wealth was held by a small percentage of the population: Approximately: 80% of wealth was held by 20% of population. This is then applied as a principle – Pareto‟s“80/20” rule: “80% of the problems are due to 20% of the causes”.


This is a “Rule of Thumb”. It is not an exact numerical relationship, but a general guide. If we relate this principle of a place of work, approximately 80% of our rejects might be due to 20% of causes. If is probable that a small number of faults cause most of our problems. This allows you to focus on “vital few” for action rather than the “trivial many”. It directs attention to which problems to tackle first – the “opportunities for improvement”.



It is quite straightforward. You simply collect data and then arrange it in a ranked order from highest to lowest. The height of the column represents the scale of the problem.