Issues in Pareto analysis and their resolution

Abstract

Vilfredo Pareto established the ‘Pareto principle’, which is also known as ‘vital few, trivial many’, to help in identifying ‘vital few’ errors for problem-solving. However, in many industrial applications, issues such as (a) the incorrect selection of the ‘vital few’ errors, (b) the interrelationship among errors and (c) the merging-up errors of different processes together need to be addressed. Otherwise, the chances are pretty high that the application of Pareto analysis will fail to correctly identify the ‘vital few’ errors, leading to an incorrect problem-solving approach. In this paper, the authors demonstrate the issues with the help of a real-life case study in a service scenario and suggest the appropriate remedial measures, for effectively separating out the ‘vital few’ causes from the ‘trivial or useful many’ causes to enhance the discriminating power of the Pareto graph.

Keywords:

• Pareto
• correlation
• discrimination
• dendogram
• quality improvement

Acknowledgements

The demonstrative case studies used for highlighting the major points of the paper are carried out at a leading company engaged in medical transcription. The authors acknowledge the contribution of designated Black Belt, Mr K.P. Singh.