What are the common mistakes to avoid when using the Pareto Chart?

1 Not defining the problem

Before creating a Pareto chart, you need to have a clear and specific definition of the problem or the goal you want to address. Otherwise, you may end up collecting irrelevant or incomplete data, or overlooking important factors. For example, if you want to reduce customer complaints, you need to define what constitutes a complaint, how to measure it, and what are the relevant categories or sources of complaints.

2 Not collecting enough data

A Pareto chart requires a sufficient amount of data to show the relative frequency or impact of each cause. If you collect too little data, you may miss some significant causes, or overestimate or underestimate their importance. For example, if you only collect data for one week, you may not capture seasonal or cyclical variations, or random fluctuations. You should collect data for a representative period, and use a sample size calculator to determine the optimal number of observations.

3 Not verifying the data quality

Another mistake is to use data that is inaccurate, outdated, or inconsistent. This can skew the Pareto chart and lead to wrong conclusions or actions. You should verify the data quality by checking the sources, methods, and standards of data collection, and by performing data cleaning and validation. You should also use descriptive statistics and visualizations to explore the data and identify any outliers, errors, or anomalies.

4 Not applying the 80/20 rule correctly

The 80/20 rule is a guideline, not a fixed rule, that helps you focus on the most influential causes. However, it does not mean that you should ignore the other causes, or that the ratio will always be exactly 80/20. Depending on the context and the data, the ratio may vary, and there may be more than one Pareto point. You should use the 80/20 rule as a starting point, but also consider other factors, such as the feasibility, cost, and impact of addressing each cause.

5 Not updating the Pareto chart

A Pareto chart is not a static document, but a dynamic tool that reflects the current situation and the progress of your improvement efforts. You should update the Pareto chart regularly, as you collect more data, implement solutions, and monitor the results. Updating the Pareto chart will help you track the changes in the frequency or impact of each cause, and evaluate the effectiveness of your actions. It will also help you identify new or emerging causes, and adjust your priorities accordingly.

6 Not communicating the Pareto chart

Finally, a common mistake is to create a Pareto chart, but not share it with the relevant stakeholders, such as your team, your manager, or your customers. A Pareto chart can be a powerful communication tool, as it can summarize complex data in a simple and visual way, and highlight the key issues and opportunities. You should communicate the Pareto chart to your stakeholders, along with the problem definition, the data sources and methods, the analysis and interpretation, and the recommendations and action plans.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?