A Pareto Chart provides a visual representation of frequency or cost (represented as time or money) expressed by the lengths of bars in a bar chart. The chart is then arranged with the longest bars to the left of the diagram and the shortest bars to the right, visually depicting which situations are more important or significant based on the cost in time or money. The Pareto Chart is one of the key instruments within the Six Sigma toolbelt, and it is considered one of the seven basic quality tools.
In order to develop a Pareto Chart, one must follow the following 7 steps:
- Identify which categories you want to use to group items together.
- Determine which metrics you will use to measure each of these categories. Most frequent measures and metrics are cost in time or money, frequency of a specific occurrence, or quantity of a product.
- Decide the length of time being measured against: Is this an annual, quarterly, or monthly measure? Is it hour by hour or week by week?
- Collect data and record the which category each data point falls into.
- Aggregate the data points and total up the measurements of each category.
- Analyze the data output to adapt the chart and create the right scale for the measurements created.
- Once the data is compiled, create a bar chart for each sum of the category. The largest sum will be in a bar chart to the left, while the smallest will be all the way to the right.