Late 19th century, economist and philosopher Velfred Pareto from Italy observed that 80% of wealth was owned by 20% its people. He conducted similar surveys in other countries and found similar statistics. Later many observed this “vital few” factor in many other fields. Later this 20-80 principle was generalized applied in quality assurance and management fields and many other fields. For example

80% of customer complaints arise from 20% of your products or services.
20% of your sales-force produces 80% of your company revenues.
80% of system problems are caused by 20% of defective system.
80% of CPU time is consumed by executing 20% of codes.
20% of defective code is responsible for 80% of software bugs.

That means fixing 20% of defective code is like resolving 80% of bugs. According to Pareto principle, analyzing existing data and finding the 20% factor is key to resolving the most of the problem. To find the 20% factor there are 7 steps, from analyze the data to ranking the cause from most to least and lastly drawing a Pareto Chart, it is that simple. But most important step is to rank the cause of the problem. To find out ranking, analysts often use Fishbone diagram. With Pareto’s century old finding, people can save time solving the problems.

Rate this Post:

(5 votes, average: 2.4 out of 5)  Loading ...

Posted by Mahesh Kansakar in Capture on December 30th, 2007  |      560 Views     Share This     Print This Post