How to use a Pareto chart in lean manufacturing

This article summarizes the application of pareto charts in lean manufacturing. We explain the 80/20 principle and show an efficient way to collect data for pareto analysis.

What is a Pareto Chart?

A Pareto chart displays the frequency of cases, as well as the accumulated percentage of these cases. The frequency of cases is depicted by the bars, the accumulation by the line in figure 1.

Why Pareto 80/20?

Based on the Pareto principle (also known as 80/20 rule), which states that 80% of the effects are caused by 20% of the cases, the Pareto chart is used to determine the most important reasons for a certain effect. 

Pareto charts

 What is cumulative percentage in a pareto chart?

In the displayed Parto chart, the first two defect reasons (valve and button) account for 76% of all failures. By dividing the number of cases (valve 38) through the total number of cases (84) the contribution is calculated (38/84 = 48%). The cumulative percentage is the aggregation of all percentages, which is displayed by the line.

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Pareto charts in lean manufacturing

The Pareto chart is mostly used to analyze defects of a process or product. For this reason, the Pareto chart is sorted in descending order after the number of cases (see also ABC-Analysis). 


What ist the Pareto chart used for in lean manufacturing?

By following the accumulation line the biggest levers for an effect are identified and allows defect detection at a glance. Therefore it is mostly used to compare and detect defects within operations. By focusing on a certain defect and analysis of its occurrence, improvement measures can be developed to stabilize operations.

Pareto analysis to identify defects
Pareto analysis


How is the data generated?

To conduct a Pareto analysis reliable data is needed. It can either be generated by in-line measurements or be manually tracked. Using digital data acquisition tools, data can be collected in real-time. For example, with the WORKERBASE System defects can be collected in real-time using a data collection app on a smartphone. All data is automatically stored in the WORKERBASE system and can be visualized with Pareto diagrams. By analyzing the data, corresponding actions are arranged to guarantee a smooth flow of operations. For example, by marking a product or part as broken, a transport order is automatically issued and made available to the logistics department. This enables not only data visibility but also fast and smooth operations without losing line capacity. If you would like to learn more about using pareto apps for manufacturing, please do not hesitate and contact us!

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