This is a slide presentation explaining the use of a Pareto Chart. This is a great tool to use when resolving claims or defects. Sometimes data can be overwhelming. This process will give you a starting point and allow you to focus on the most important areas of concern.

2. PARETO CHARTS
I enjoy working with numbers and charts. Recently, I had the opportunity
to help my daughter with algebra homework. It was actually a learning
experience to revisit a lot that I have long since forgotten.
Another useful exercise I have learned is the use of a Pareto Chart. The
Pareto Principle was named after an Italian economist Vilfredo Pareto. A
Pareto Chart is basically built on the principle that 80% of problems can
be traced back to 20% of the root causes. This tool is great for QA
Managers or Project Managers if you are not sure where to start to resolve
your problems or even to find your biggest problems.
The following chart is an example of 20 customers that filed the most
complaints in one month, comprising of 155 defects or claims. The
customers were sorted from the highest claims submitted to the least. The
following slide reveals the results.

3. PARETO CHART
CUSTOMERS MONTHLY CLAIMS CUMULATIVE AMOUNT CUMULATIVE %
CUSTOMER A
22 22 14.19%
CUSTOMER B
18 40 25.81%
CUSTOMER C
14 54 34.84%
CUSTOMER D
13 67 43.23%
CUSTOMER E
12 79 50.97%
CUSTOMER F
8 87 56.13%
CUSTOMER G
8 95 61.29%
CUSTOMER H
7 102 65.81%
CUSTOMER I
6 108 69.68%
CUSTOMER J
5 113 72.90%
CUSTOMER K
5 118 76.13%
CUSTOMER L
5 123 79.35%
CUSTOMER M
4 127 81.94%
CUSTOMER N
4 131 84.52%
CUSTOMER O
4 135 87.10%
CUSTOMER P
4 139 89.68%
CUSTOMER Q
4 143 92.26%
CUSTOMER R
4 147 94.84%
CUSTOMER S
4 151 97.42%
CUSTOMER T
4 155 100.00%
155 2136

4. Asyoucanseefromthepreviousslide,thetop2customers(A&B)accountedfor
25.81%oftheclaims.BelowaretheresultsintheformofaParetoChart.
14.19%
25.81%
34.84%
43.23%
50.97%
56.13%
61.29%
65.81%
69.68%
72.90%
76.13%
79.35%
81.94%
84.52%
87.10%
89.68%
92.26%
94.84%
97.42%
100.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
5
10
15
20
25
CLAIMS PER CUSTOMER CUMULATIVE %
CUSTOMER MONTHLY CLAIMS DUE
TO DEFECTS

5. Since you now know that customersA& B make
up 20% + (in this case 25.81%) of the defects, you
can now gather more detailed information from
these two customers and break it down into the
specific defect types and quantities (or department
where the defect occurred). The following two
charts are the findings for CustomersA& B.

6. CUSTOMERADEFECT TYPES FOUND FOR THE MONTH.
CUSTOMER A CLAIMS
DEPT. (DEFECT TYPE)
DEPARTMENT DEFECT COUNT
DEPT 2 6
DEPT 3 5
DEPT 4 4
DEPT 6 3
DEPT 1 2
DEPT 5 2
22

7. 0
1
2
3
4
5
6
7
DEPT 2 DEPT 3 DEPT 4 DEPT 6 DEPT 1 DEPT 5
CUSTOMER A DEFECT TYPE
DEFECTS PER DEPARTMENT

8. CUSTOMER B DEFECT TYPES FOUND FOR THE MONTH.
CUSTOMER B CLAIMS
DEPT. (DEFECT TYPE)
DEPARTMENT DEFECT COUNT
DEPT 2 5
DEPT 5 4
DEPT 4 4
DEPT 1 2
DEPT 6 2
DEPT 3 1
18

9. 0
1
2
3
4
5
6
DEPT 2 DEPT 5 DEPT 4 DEPT 1 DEPT 6 DEPT 3
CUSTOMER B DEFECT TYPE
DEFECTS PER DEPARTMENT

10. If you compare the bar charts for CustomersA
and B, you can now determine the two areas that
you need to focused on. In both charts, Dept. 2
had the most defects. But also, Dept. 4 was
consistent in both charts in that it was ranked third
in defects for both customers. In comparison of
the total defects, it ranked #2.

11. DEPARTMENT DEFECT COMPARISON
OF CUSTOMERSA& B
DEPARTMENT CUSTOMER A CUSTOMER B
DEFECT COUNT DEFECT COUNT
DEPT 1 2 2
DEPT 2 6 5
DEPT 3 5 1
DEPT 4 4 4
DEPT 5 2 4
DEPT 6 3 2
22 18

12. COMPARISON OF DEFECTS PER
DEPARTMENT FOR CUSTOMERSA&
B
0
1
2
3
4
5
6
7
DEPT 1 DEPT 2 DEPT 3 DEPT 4 DEPT 5 DEPT 6
CUSTOMER A CUSTOMER B

13. Focusing on Departments 2 & 4 is crucial to resolving the
defects. Granted, it may be very time consuming to compile
this much information. But once you do, you are on the road
to resolving problems using a great tool.The more you use it,
the more history you create. This will allow you to look back
at where you started and give you an overall picture of your
results to date.
For more information on how to create a Pareto Chart, try
the following link:
http://www.pryor.com/blog/creating-a-pareto-chart-in-excel/
Ricky Bailey