Pareto diagram interpretation

Look at the chart to identify the categories that are significant compared to those that are trivial. Expect the significant few categories to represent approximately 80% of the data in the Pareto diagram. This can be tested by looking at the cumulative percentage line for the first few categories. In the example, “Clean & paint wheels” and “Parts out of stock” are the two largest bars. Reading from the cumulative line to the right axis, they represent approximately 68% of the data. This means that out of all the time lost in preventive maintenance, these two categories have taken up the most time.

No matter how data is categorized, it can be ranked and made into a Pareto diagram. Be careful, however, because the “significant few-trivial many” principle does not always hold. Sometimes no single bar is dramatically different from the others, and the Pareto diagram looks either flat or gently sloping. In this situation, no significant advantage is gained by working on the tallest bar. If possible, try to re-categorize the data to see if a clear difference in the bars can be found. A flat Pareto diagram simply means there are no significant differences among the categories.

In the example, there is a substantial difference between the first two categories and the remaining bars. So, tackling the first two bars has substantial advantage.