Manufacturers often have a tough time deciding which problem to tackle first – delays, customer complaints, product defects, or downtime. After all, neither time nor resources are unlimited. This is where a Pareto diagram steps in to help as a visual decision-making tool.
It facilitates swift problem solving by offering clarity amidst confusion, so you know which issues need prompt attention and which ones aren’t that urgent. You get to channel your efforts strategically for the greatest impact or improvement.
Let’s explore why a Pareto diagram matters in manufacturing, how to create one, and the benefits.
What Is a Pareto Diagram (or Pareto Chart)?
In 1896, economist Vilfredo Pareto noticed that 20% of Italy’s people owned 80% of its land. He suggested that this 80/20 pattern appears in many areas of life: 20% of causes often lead to 80% of the results.
Widely known as the 80/20 rule, the Pareto principle is the idea behind the Pareto diagram or chart. This diagram uses bars and a line to show which problems matter most, so you can focus on the ones with the biggest impact.
Here’s what to note about a Pareto diagram:
- Bar Graph
Each vertical bar indicates an issue. Arrange the bars in a descending order (tallest to shortest). Each bar’s height stands for problem impact or frequency.
- Line Graph
It’s a cumulative curve running from left to right. Indicating the cumulative percentage, this line helps in visualizing the proportion of issues that are more serious than others. The part just before the point where the curve starts flattening highlights significant problems.
Hence, Pareto analysis/charts help you understand the true impact of problems and make informed decisions. For example, if you make ceramic vases, damaged deliveries may not be caused by poor product quality. You may find that improper packaging causes 80% damaged deliveries.
Why Pareto Diagrams Matter for Manufacturing Teams
A dynamic, competitive manufacturing landscape requires you to navigate multiple complexities. There’s no room for wasting time or resources. Fortunately, a Pareto diagram is one of those lean manufacturing tools that can help with:
Easy Comprehension and Communication
It is easy for everyone to read Pareto charts, be it a manager or an operator. No one requires a special degree or skill to understand what’s going on. This eases information exchange, communication, and presentations.
Root Cause Analysis
Pareto diagrams make it easy to detect significant problems or the ones creating the most effect on the business. And since you can visualize it all, it’s possible to save precious time.
Swift Decision-Making
Just a single glance at a Pareto chart can tell you which problem needs your attention without delay. This means you can prioritize efficiently, take action, and allocate resources cost-effectively. Hence, driving continuous improvement becomes simpler.
How to Build a Pareto Diagram in Practice
These steps will help you put together and use a Pareto chart effectively:
Collect Data
Identify problems (supplier delays or downtime, for example) as well as the events or factors causing them. Also note the magnitude of every issue, in terms of – occurrence frequency, cost, or time lost.
Categorize Issues and Quantify Them
Treat every manufacturing problem as a separate category. Add up the magnitudes noted for every problem, based on the data collected in step 1. You will arrive at a total figure.
Then find what each problem’s percentage is in the total. For that, take the problem’s tally (frequency, for instance), divide by the total figure, and multiply with 100. Next, estimate the cumulative percentage of each problem.
List the problems in descending order of magnitude (say frequency). For each problem, add its percentage to the percentages of all the problems that come before it. This means, the cumulative percentage of the last (or least frequent) problem will be 100%.
Plot Bars in Descending Order
On a graph’s horizontal right axis, list the problems as per their descending order of magnitude. Mark vertical left axis with numbers that indicate each problem’s magnitude (be it frequency, cost, or time).
Label the vertical axis on the right with cumulative percentages. Next, for each problem, draw a vertical bar in a way that its top coincides with the problem’s magnitude on the left axis.
Add Cumulative Percentage Line
Put in a line graph that connects the cumulative percentages. Its starting point should align with the first vertical bar’s top. As it’s cumulative, the line will curve upwards.
Interpret Results and Set Priorities
Finally, spot events that lead to the most issues or hiccups. Especially note the point where the cumulative line graph hits the 80% mark. Problems that lie to this specific point’s left need immediate attention. Hence, craft action plans accordingly.
Benefits of Pareto Diagrams for Modern Manufacturers
Pareto diagrams are a popular six sigma tool because they offer benefits to manufacturers, such as:
Improve Quality
Pareto charts are among the top quality improvement tools favored by progressive manufacturers. They help quickly detect conformity lapses or defects in various manufacturing stages.
From flaws associated with materials and contamination of sensitive products to assembly line errors and size inaccuracies, Pareto diagrams reveal the most frequent quality issues easily. Hence, you can channel corrective efforts intelligently, comply with standards, and boost customer delight.
Enhance Efficiency
Since detecting critical problems doesn’t take much time with Pareto diagrams, you can undertake improvement actions that have the maximum possible impact.
There’s no need to waste too many hours on fixing minor issues and barely making a difference or allocating resources unprofitably. Your production pace will witness an uptick and downtime will decline.
Reduce Cost
Pareto charts that use cost as the measure of a problem’s magnitude enable you to take actions that improve overall profitability. And they are handier than charts that only bank on the issues’ frequencies.
For instance, a hiccup that crops up every now and then might not require expensive resolution. However, addressing certain rare issues might cost way more. In such scenarios, focusing more on rare problems can reduce expenses significantly.
Maintain Equipment Smartly
With Pareto diagrams, you can identify equipment that needs more maintenance than others or detect machines or components most likely to malfunction. Hence, you can plan the resources and budget for predictive maintenance more strategically instead of adopting a traditional approach where every equipment piece receives the same treatment.
Manage Safety
Pareto analysis/charts also reveal work zones or processes that lead to the most safety-related incidents. This helps you make targeted improvements in terms of safety training, gears, signage, equipment maintenance, and so on. Consequently, there are fewer accidents, injuries, and fatalities.
Why Manufacturers Should Take Pareto Diagrams Digital
Pareto diagrams help you detect and douse the manufacturing fires (problems) that are most severe. A powerful combination of bar and line graphs, Pareto charts ease communication, root-cause analysis, and decision-making.
These diagrams are also instrumental in improving operational efficiency, cost-effectiveness, product quality, safety, and equipment maintenance. Most importantly, going digital with Pareto will only amplify these benefits for you.
fabriq facilitates automatic generation of Pareto charts in real time. You can even customize these diagrams based on multiple key parameters to derive actionable insights. Analyze the root cause of an issue and create, track, and share problem-solving initiatives effortlessly.
Discover how fabriq’s digital Pareto diagram empowers your teams with clarity, speed, and traceability.
