Example of a Pareto Chart in a Service Company

Pareto chart or Pareto chart is a tool (tools) which is often used in the implementation of the Lean Six Sigma method. The Pareto chart, named after the Italian economist Vilfredo Pareto, serves to rank various categories or causes of a problem in the form of a bar chart in order of frequency or magnitude from left to right. This diagram will help determine priorities by separating causes into ‘vital few‘ (which is small but important) or ‘trivial many‘ (which is a lot but not important).

This chart has two vertical axes – one on the left and one on the right. The left axis shows the actual frequency, or the number of causes that caused it. The right axis shows the cumulative frequency in percent showing the cumulative contribution on a scale of 0 to 100%.

The following chart shows the causes of customer complaints at a hotel in one month:

This chart indicates the waiting time in the reservation process, the time delivery room cleaning and room service, which accounted for 75% as the cause of customer complaints that month.

With this data, management can concentrate on improving these areas and placing them in priority. However, be careful which areas you will target the highest priority – waiting times in the reservation process may occur due to outdated reservation systems and replacing them in the near future may not bring about a decent change in the near future. If so, it might be better to shift the focus of attention to other areas that are also the cause of the biggest customer complaints.

Other Uses of Pareto Charts

Another way to make this diagram is by sorting the complaints based on the cost to the company to resolve the complaint, the cost to eliminate the cause of the complaint, or the time required to address the cause of the complaint. Each approach can result in a different sequence; You must choose the method that best suits your business situation.

[highlight style=’smoke’]By specifying a ‘division’ of each category, a Pareto Chart can help provide insight into the main problem in each area and guide the improvement team for next steps. [/highlight]

Conclusion

Pareto charts or Pareto charts are very easy to use graphical tools to identify the main sources of problems in a process. Use of Pareto Diagrams in the early stages of the initiative problem solving will make it easier for the team to reduce the complexity of the project being executed.

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Source: moresteam.com