The Pareto Analysis?

The Pareto Analysis, also known as the Pareto principle or 80/20 rule, assumes that
the large majority of problems (80%) are determined by a few important causes
20%).

The founder of this analysis, Italian economist Vilfredo Pareto, discovered this
when he was carrying out a study at the end of the 18th century in which he
ascertained that 20% of the Italian population owned 80% of the property. This
80/20 rule or Pareto Analysis was further developed by total quality management
guru Joseph Juran (after 1940) and can be applied to various matters (for instance
decision-making and other complex issues).

The principle of the Pareto Analysis is based on the Zipf distribution (pattern in
linguistics and a discrete probability distribution with parameters λ and N. the
Pareto Analysis is a creative and practical way of looking at the causes of
problems. It stimulates ideas about thinking and organizing. This method of
analysis helps identify the main causes (20%) that lead to 80% of the problems
that need are to be solved. As soon as the main causes have been identified, the
diagnostic techniques such as the Ishikawa diagram or fishbone analysis can be
used to identify and address the deeper causes of the problems.

Step 1: Measuring – identify the problems and document them in a table

Based on observations, interviews and reports, data can be collected from which problems can be
deduced. Subsequently, these problems are documented in a table and grouped if possible. It is
important to apply the ‘cause-effect’ theory to each item so that the source of each documented
problem can be found. There are several techniques that can help in this such as for example
the Root Cause Analysis (RCA).
Step 2: Determine their order of importance

Organize the inventoried problems in ranking order from the most important down to the least
important in descending order. Make sure that the most important cause is documented first.

Step 3: Mark or score each recorded problem

Step 4: Group the identified problem and add the marks or scores

Step 5: Time to act