To solve the problems permanently, the causes rather than the symptoms of the problems should be eliminated. In this step, the measurements will be evaluated with respect to the employees, organization, procedures, facilities, technologies, and materials. An enormous variety of measurement and analysis techniques is available:

• Analytical quality tools

• Pareto diagram

• Fish bone diagram—cause and effect

• Control tables

• Histograms

• Distribution diagrams

• Control sheets

• Work sampling

• Work study

• Activity analysis chart

• Sequence diagram

• Customer surveys

• Financial analysis

• Process analysis

• Capacity analysis

• 5W

Analytical Quality Tools

Pareto Diagram (for Root Cause Analysis)

A Pareto diagram is based on the Pareto principle, named after an Italian economist who recognized that 80% of the world’s wealth was held by 20% of the countries. Applied to defect reduction efforts, this “80—20” rule becomes, 80% of the defects/problems are related to only 20% of all causes.

A Pareto diagram organizes data so that the vital few causes are separated from the trivial many. It is a very good visual tool for communicating information (see more in George and Maxey 2004). Figure 5.1 shows an example Pareto diagram.

Benefits

• Pareto analysis shows the results in graphical form and in this way major issues are revealed from the background.

• It provides a guide on the most important issues to address.

Figure 5.1 Pareto diagram—example.

To construct a Pareto diagram

• Define which data need to be analyzed.

• Choose the categories by which the data will be sorted.

• Sort the data and determine

• Total number of data points

• Number of data points in each category

• Percentage of total data points in each category

• Draw the horizontal and vertical axes of the diagram.

• The left vertical axis represents the number of data points.

Its scale must equal the total number of data points.

• The right vertical axis represents the percentage of the total data points.

• The vertical bars representing the number of data points in a category are drawn starting with the category having the most data points against the left vertical axis. Then the next highest category, continuing until all categories, is shown.

• If it has been decided to use a category called Other to collect all the categories with very few data points, it is always shown against the right vertical axis.

• Plot the cumulative percentage from zero to 100% in line with each category bar.

To achieve continuous improvement, once the first cause is eliminated work on the next major cause, and then the next, and so on. In a Pareto diagram the purpose is to work on identifying the most leveraged problems in order to find the phenomenon constituting the bad situation. For instance, let us assume that typologies of the losses in TL currency are calculated within the business. The path to follow is to create breakdowns until the largest loss typology isolates the problem, which is shown as an example in Figure 5.2.