Lean Manufacturing and Six Sigma Definitions

Glossary terms, history, people and definitions about Lean and Six Sigma

Pareto chart

The Pareto chart is a special type of bar chart or histogram, and is one of the seven quality tools, named after Vilfredo Pareto. It is an analytical tool that graphically demonstrates the Pareto principle or the 80–20 rule. It is used to view causes of a problem in order of severity or impact from largest to smallest.

The categories are placed along the bottom x-axis in order from largest to smallest, and the quantity or cost are placed on the y-axis. Often times, a line is drawn against the opposite y-axis to represent the cumulative impact %. 

Figure 1: Pareto Chart – Audit of types of medication errors

Ideally, the best Pareto charts are when no more than 20% of the categories exceed at least 80% of the total impact. In the example above, the first 4 categories exceed the 80% cut off, but that is 33% of the 12 total categories. In this situation, it is recommended to create a new Pareto chart by looking at Frequency compared with another type of data instead of defect code, such as Department, Manager, Medication Type, Day of the Week, etc.