This is an excerpt from the book "Five Minute Lean", by David McLachlan - a wonderful book that blends teaching of the tools, culture and philosophy of traditional Lean with a modern-day Lean parable. You can get the whole book on Amazon here and enjoy your own copy.
Use Pareto to Find Where to Start
In some cases we might have a few different problems to choose from when improving our job or business. When there is more than one option it can be a good idea to discover the area that will give us the most value for our effort and start there.
Pareto Analysis or the “80/20 Rule” is a tool that can help us discover this, and quickly. The theory is that 80% of our results often come from 20% of our effort. This is the kind of thing Steve might point out at the boardwalk, where a restaurant might make 80% of its profits from just 20% of its menu. For Lisa it might be that the Call Centre loses 80% of customers waiting in queue because one of the five voice menu options sends them to the wrong place.
The amounts don’t have to be exactly 80/20, but you will usually find one or two stand out processes or problems that can give you a larger return on your effort if you focus on it first.
A Pareto Chart is a bar chart of whatever we are measuring – whether they are queue times, number of requests, sales figures, defects or mistakes. This bar chart is sorted from largest to smallest, and a line chart is then placed over the top of it showing the cumulative percentage as it grows from 0% of the results to 100%. In this way we can see where our larger opportunities are (such as in the first two queues in Figure 14) as they make up the majority of around 70% of the total time, and we can focus on these first.
Figure 14: An example of Pareto Analysis. Queue 1 and Queue 2 have the longest times and combined they make up around 70% of the total – the ‘significant many’. We can see that it might be valuable to start working on Queue 1 and 2 processes first.
By using a Pareto Chart, we can focus on where our biggest impacts might be. It is a tool that can be used for almost any input or when making a decision on where to start.
This is an excerpt from the book "Five Minute Lean", by David McLachlan - a wonderful book that blends teaching of the tools, culture and philosophy of traditional Lean with a modern-day Lean parable. You can get the whole book on Amazon here and enjoy your own copy.
Selected chapters from the story within Five minute Lean:
- Lean Parable – Where Lisa Makes a Change
- Lean Parable – Where Lisa Discovers a New Way
- Lean Parable – Where Lisa Performs a Balancing Act
- Lean Parable – Where Lisa Pulls the Trigger
- Lean Parable – Where Lisa Sets a New Standard
- Lean Parable – Where Lisa Becomes a Leader
Check out these selected chapters from the teachings within Five Minute Lean:
- Five Minute Lean – Use Feedback to Fix and Guarantee
- Five Minute Lean – The Power of Incentives – What is Measured and Rewarded Improves
- Five Minute Lean – Help Your Process Flow with Line Balancing
- Five Minute Lean – Heijunka: Level the Workload when Demand Fluctuates
- Five Minute Lean – Solve the Real Cause of the Problem
- Five Minute Lean – Use Pareto to Find Where to Start
- Five Minute Lean – Put it Together With Design for Ease of Use
- The Five Minute Catch-up
- Five Minute Lean Summary
- Five Minute Lean – Build in Quality with Error-Proofing and Autonomation
- Five Minute Lean – Map the Value Stream to Reveal Opportunities
- Five Minute Lean – Present and Manage Your Change Using an A3 and LCA
- Five Minute Lean – Introduction
- Five Minute Lean – Create a Pull System with FIFO, Kanban Triggers and Visual Management
- Five Minute Lean – Use Kaizen and Kaizen Events to Help Stakeholder Buy-In
- Five Minute Lean – Eliminate the Eight Wastes to Improve Flow
- Five Minute Lean – Collect and Measure Feedback With the Net Promoter Score
- Five Minute Lean – Make Feedback Meaningful with Kano Analysis
- Five Minute Lean – Work Towards One-Piece-Flow (and Reducing Silos or Batching)
- Five Minute Lean: Glossary