During development of creating a new product, improving systems, or starting up a project you will encounter a lot of issues. Time and resources can prevent you from tackling all the issues at the same time therefore you should tackle the one’s that would have the biggest impact. This is where the Pareto analysis comes in handy as it can assist you in identifying the important issues you should focus on.

The Pareto analysis is based on the Pareto Principle (1) which was created by economist Vilfredo Pareto who believes that 80% of the issues you face comes from 20% of the causes.

To carry out a Pareto analysis you begin but listing out the issues that need to be resolved and identify the causes of that issue. Then score each cause based on % and arrange the causes with the most important one being at the top. Group similar problems together as you may have the same causes for separate issues. You then add up the scoring together and then mark the chart when the cumulative scoring reaches 80%. This is the group of causes and issues you should tackle first and you should now develop an action plan focusing on these problems. Tackle the biggest issue first and then the subsequent issues in descending order. You can carry out a new Pareto analysis for the remaining issues.

 Figure 1 Pareto Analysis for faulty radio

In our example (Figure 1) we have satellites with radio faults. We identify potential root causes for these radio failures and we can see that radio short circuiting, interference within the satellite, faulty radio components and mistakes in wiring are 80% of the potential causes. This would allow us to focus our investigation on these potential causes instead of trying to investigate every one of them.

A drawback (and basically contradicting this article) blindly leading by the Pareto analysis can lead to just solving the most common issues while ignoring problems that could lead to catastrophic consequences. This tool can work well in problem solving when in conjunction with Ishikawa analysis and FMEA tools which can help you avoid major incidents and give you a better view of what is going on.

References

1. Pareto Analysis. Mind Tools. [Online] Emerald Works Limited. [Cited: February 27, 2023.] https://www.mindtools.com/afzbk2y/pareto-analysis.