Question 33 - CPIM-Part-2 discussion

Pareto analysis is a technique that a group can use to prioritize problems.Pareto analysis is based on the Pareto principle, also known as the 80/20 rule, which states that 80% of the effects come from 20% of the causes1.Pareto analysis can help a group identify and focus on the most significant problems that account for the majority of the negative outcomes, and allocate their resources and efforts accordingly2.

The steps of Pareto analysis are3:

Step 1: Define the problem and its scope. Clarify what the problem is, why it is important, and what are the desired outcomes.

Step 2: Identify the causes of the problem. Brainstorm and list all the possible factors that contribute to the problem, such as people, processes, equipment, materials, environment, etc.

Step 3: Collect data on the causes. Gather quantitative or qualitative data on how often or how much each cause affects the problem, such as frequency, severity, cost, time, etc.

Step 4: Analyze the data using a Pareto chart. A Pareto chart is a type of bar chart that shows the frequency or impact of each cause in descending order, along with a cumulative line that shows the percentage of the total effect. A Pareto chart can help visualize which causes are more significant than others, and where the 80/20 split occurs.

Step 5: Prioritize the causes and take action. Based on the Pareto chart, select the most critical causes that need to be addressed first, and develop and implement solutions to eliminate or reduce them. Monitor and evaluate the results and repeat the process if necessary.

Therefore, Pareto analysis is a technique that a group can use to prioritize problems by identifying and focusing on the most significant causes that account for the majority of the negative outcomes.