The Significance of Pareto charts in Six Sigma
A Pareto chart is a fantastic tool used in six Sigma to depict the frequency with which a certain event occurs. This chart is based upon the Pareto Principle also known as the 80:20 rule or the vital few. This principle finds a lot of importance in six Sigma as it helps the team to differentiate between the vital few from the useful many. Thus an organization can easily focus on the vital few to increase its revenues and productivity in the long run. Thus the defects in any process or the whole system can be classified into two categories one factor due to which 80% of the problems are cropping up and the other factors due to which 20% defects are coming up in the final product or service. Thus keeping a tab on the factors responsible for 80% defects will be easier to follow up and control in the path towards achieving six sigma.
While using a pareto chart in a six sigma process the practice generally followed is to use two pareto charts one that was generated before the process was brought under the preview of six sigma and the other once six sigma has been implemented in full swing. Thus the difference in the results of the two pareto charts is going to show the difference to the management. Moreover it will be more clear to the team as to which processes need more efforts so that the defects can be controlled and the goal of six sigma be reached in a short span of time.
Thus once you have analyzed the report generated from the pareto chart it becomes a lot easier to concentrate on the 20% population that is giving maximum advantage to the organization. To take an example in the marketing department 20% of the sales people are responsible for the 80 % sales of the organization is the inference drawn out of the analysis of a pareto chart. Thus the management can concentrate on giving this group the maximum advantage and retain them at all costs as they have a big part to play in the revenue generation of the organization. The other group may be trained and brought at par with the other 20%.
Pareto chart is an excellent tool in Six Sigma as it identifies the most efficient and the most productive resources in the organization. On the other hand it is also beneficial in identifying the factors that are responsible for the 80% defects in the end product of the product or the service being churned out by the organization.
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Article Source : http://blog.brainmeasures.com/2011/07/13/the-significance-of-pareto-charts-in-six-sigma.aspx
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