1. Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training Six Sigma Simplicity

2. ParetoPareto  Understand what the Pareto law is  Understand what a Pareto diagram is  Understand how to make and interpret a Pareto diagram  Understand how a simple tool can be very powerful  Understand what the Pareto law is  Understand what a Pareto diagram is  Understand how to make and interpret a Pareto diagram  Understand how a simple tool can be very powerful Objectives

3. Pareto Law  The Pareto law states that a small number of the causes is responsible for a large percentage of the effects.  It is also called 80 – 20 rule  The Pareto law states that a small number of the causes is responsible for a large percentage of the effects.  It is also called 80 – 20 rule

4. Pareto Diagram Definition A data display tool that breaks down discrete observations into separate categories for the purpose of identifying the “vital few” and separating them from the trivial many Frequency Reason CABED

5. Pareto Chart: examples 15 % of the customers generate 80% of the sales!

6. Pareto & Process improvement Helps to focus improvement efforts on areas where the largest gains can be made  Gathers input from all team members  To logically group potential causes for defects (X’s)  Tests ideas  Helps scope a project  Gathers input from all team members  To logically group potential causes for defects (X’s)  Tests ideas  Helps scope a project

7. Constructing a Pareto diagram  Define categories  Choose them based on impact  Assure the “other” category is small  Sort data in descending order  Plot the data  May need several Pareto’s to hone in on problems  Define categories  Choose them based on impact  Assure the “other” category is small  Sort data in descending order  Plot the data  May need several Pareto’s to hone in on problems

8. Pareto diagram: first level Pareto on inspection rejections Simple and very powerful tool

9. Pareto diagram: second level Any relationship between the numbers of missing screws and the shift? Team tests ideas and/or kill ghosts: Pareto on missing screws by shift

10. Pareto - Exercise MistakeAdditional Costs $K Contract Engineer Caused Late Delivery Split shipment40KarenNo Casting reject20PierreNo Driver upgrade50MarkYes Pipe rework60KarenYes Certification40KarenYes Certification and Driver upgrade 70PierreYes Split shipment20MarkNo Split shipment40MarkNo Driver upgrade90MarkYes Casting reject20PierreNo Split shipment50MarkNo Driver upgrade90MarkYes Driver upgrade10MarkYes Driver upgrade10MarkYes In Groups, create Pareto(s) to describe the key problem?

11. Pareto Exercise – Examples

12. Pareto Analysis Six Sigma Foundations Continuous Improvement Training Six Sigma Foundations Continuous Improvement Training