Quality management experts throughout history have used the Pareto Principle (also called the 80/20 rule) in various ways. Vilfredo Pareto, an Italian economist, first came up with the idea based on his observation that 80 percent of Italy’s land belonged to just 20 percent of the country’s population.
Joseph Juran, one of the fathers of quality management, later adapted it into “The Rule of the Vital Few.” The ratio doesn’t have to be 80/20, and the numbers don’t have to add up to 100, but the idea is simple: a small number of inputs have an outsized impact on the outputs. For example, 20 percent of causes create 80 percent of your quality problems. In a more familiar example, most of us probably wear just 10 percent of what’s in our closets for 80 percent of the time.
With that in mind, this post looks at 7 ways you can apply the Pareto Principle to improve your quality management efforts.
Pareto charts are one of the most obvious ways that you can apply this principle to quality management. A Pareto chart plots causes or problems along the x-axis, charting the resulting frequency or cost on bars along the y-axis. Arranging the bars from largest to smallest allows you to easily see the biggest contributors to the problem
For instance, you might look at the root cause of equipment malfunctions, discovering that calibration issues are a key area of concern. Or you might plot the frequency of nonconforming materials attributed to individual suppliers to identify which of your partners need the most improvement.
When you look at the root causes identified in corrective action investigations, it’s likely the same things that show up over and over again. This is the Pareto Principle in action. What you want to do is analyze the frequency of those findings to show where your greatest areas of improvement lie.
You might uncover a need for more employee training in a particular area, for example. Or perhaps you find that many defects or safety problems arise as a result of people rushing, in which case you need to examine how focusing on increasing productivity sets up problems in quality or safety.
Assets and Equipment Maintenance
20 percent of your facility’s equipment likely contributes 80 percent of the equipment-related problems that occur. What are your biggest pieces of problem equipment, and what are the most common causes of issues? Is it back-ordered parts or support ticket backlogs?
Risk is an especially useful area where quality professionals can apply the Pareto principle. If 20 percent of sources contribute to 80 percent of your risk, then it just becomes a matter of identifying what contributes to the greatest frequency of high-risk items.
Applying Risk Management Software tools to areas such as open corrective action requests, supplier ratings and customer complaints, you can easily see where most of your risk originates in each of these areas.
20 percent of causes likely lead to 80 percent of your nonconformances. Which are the vital few you should focus on fixing first? Is it employee training, equipment malfunctions or maybe another problem altogether? Using Pareto charts in reporting nonconformances can be especially enlightening here.
Supplier Quality Management
There are several ways you can apply the Pareto principle to Supplier Quality Management. Questions you could ask include:
- Which suppliers provide most of our materials? You’ll want to focus risk management and quality management efforts with this subset of your suppliers.
- Where are our greatest supplier quality costs coming from? It’s likely concentrated among just a few suppliers.
- Which materials represent the greatest potential risk for the organization? These are elements where you must have reliability, and therefore are critical to manage closely.
Keeping projects moving can be a challenge, especially when there are multiple parties involved. You can use the Pareto Principle to analyze where your project management process can be improved, whether it’s identifying the 20 percent of team members that contribute to 80 percent of review delays, or maybe pinpointing the subset of project phases where tasks are likely to become bogged down.
No matter what the numbers are behind your calculations, the basic Pareto principle will likely hold true: it’s a small number of causes that cause the biggest effect on the outcome. That’s why it makes sense to try to pull out the vital few inputs driving your results, so you can leverage your time to make the greatest impact.