Which few causes drive most of the problem?
Upload your data and see the Pareto chart
Put your raw records in one file, with a category and a value on each row. The tool adds them up by category, ranks them, and shows the few that account for about 80 percent of the total.
How a Pareto analysis works
Add up the value for each category, sort from largest to smallest, and track the running share. The smallest set of categories that brings the running total to 80 percent is the vital few.
For example, five complaint types totalling 500 come to 200, 150, 70, 50 and 30. The running shares are 40, 70 and 84 percent, so the top three are the vital few.
Three questions this answers
- Which few categories account for most of the total?
- Is the total concentrated in one category, or spread over a long list?
- Which categories are the useful many, and which are the tail?
What your file needs
- One row per record: a complaint, a defect, a return or an order line.
- A category column.
- A numeric value column, such as cost, quantity or minutes. To count occurrences, put 1 on every row.
- At least 5 usable rows. Negative values are left out and counted in the report.
What you get back
- The categories ranked, each with its share and the running share.
- The vital few named, with how many categories they are and the share they cover.
- ABC classes: A up to 80 percent of the total, B from 80 to 95 percent, C the tail.
- The Pareto chart: bars for the top 20 categories with the rest rolled into Other, and the running share on top. The counts above use every category.
- How concentrated the total is: the top category, the top three, and a concentration measure.
- The method named and the R code.
Questions people ask
What is a Pareto chart?
Bars for each category from largest to smallest, with a line showing the running share of the total. It shows at a glance where the bulk of the total sits.
What is the 80/20 rule?
A rule of thumb that about 80 percent of the effect comes from about 20 percent of the causes. Real data is rarely that tidy, so the tool reports the actual split instead of assuming it.
How do I make one in Excel?
Sum the value by category in a pivot table, sort it from largest to smallest, add a running percentage and chart the bars with the line. This tool does that from the raw rows and states the vital few in a sentence.
What if no small group reaches 80 percent?
Then the total is spread out. The tool reports how many categories it takes to reach 80 percent, and a high number means there is no short list to fix first.
How does this differ from ABC analysis?
ABC analysis sorts items into classes by their share of value. This tool gives you both views: the vital few and the A, B and C classes.