Vital few or highest pareto? Which issue should be the priority?
J
Jim Howe
I believe you are correct, he was an economist. Did I read somewhere that it was Juran who first applied the Pareto principles to Quality?The Taz! said:
B
Bill Pflanz
The concept of the 80/20 Rule was developed by the Italian economist Vilfredo Pareto (1848-1923) and was later popularized by Joseph Juran. Pareto developed the rule based on his observation that 80% of the wealth in Italy was controlled by 20% of the population. He then went on to develop logarithmic mathematical models to describe the non-distribution of wealth. A mathematician by the name of M.O. Lorenz developed the graphs to illustrate it.
Others began to notice how universal the principle was and how it applied to many areas outside the field of economics. Juran started applying the principle to problems of quality in the 1950's. Juran used the terms "vital few" and "useful many" when describing the 80/20 split.
The source for this information is from Pareto Analysis, Juran Institute, 1989.
This trivia may be vital to a few and not useful to many but I thought I would pass it on.
Bill Pflanz
The Finance Guy
Others began to notice how universal the principle was and how it applied to many areas outside the field of economics. Juran started applying the principle to problems of quality in the 1950's. Juran used the terms "vital few" and "useful many" when describing the 80/20 split.
The source for this information is from Pareto Analysis, Juran Institute, 1989.
This trivia may be vital to a few and not useful to many but I thought I would pass it on.
Bill Pflanz
The Finance Guy
J
Jim Howe
Thanks Bill, I am not much on trivia but I love history! I also love Maps!I recall a seminar to improve memory where the instructor divided the class into two groups. He excused group #2 from the class room and told the story of Custers last stand to the first group. then he dismissed the first group and told the same story to the second group. finally both groupd were reunited and given a test on Custer's last stand. Surprisingly the second group scored considerably higher than the first group. WHY? When the instructor told the story to the second group he used a MAP!Bill Pflanz said:
Jim
A
Atul Khandekar
Juran's article on Non-Pareto Principle:
Dr. Juran´s Non-Pareto Principle Article published in 1975
Dr. Juran´s Non-Pareto Principle Article published in 1975
J
Jim Howe
ralphsulser said:
Good input Ralph, I must admit that I first submitted my pareto on scrap based on % of incident, "what did I know about dollars?"
It was the VP of Operations who approached me with the report and said:"Jim, somehow you have got to put this in terms of dollars." I must admit it was a struggle, after all, as long as I knew what the charts were saying, what else mattered. But I contacted accounting and we went at it. Several weeks later (you should all know that accounting data seldom aligns with QA data) we produced the COST pareto's for scrap dollars covering the last three years. These Pareto's caught the attention of the Executive V.P. Enough said!Jim
R
ralphsulser
Jim, Thank you.
One other suggestion regarding costs. Initially we used dollars based on selling price. This can be skewed due to the differences in margin. Changed to standard costs of goods manufactured to level the field. This is the actual cost for you company to manufacture the product. Usually costed at various process stages. But finished cost is used mostly. Accounting has this data as I'm sure you found out during your assigning costs to your Pareto's.
Glad you got the attention of the right people to do something to improve the scrap. Reduction of scrap usually drops directly to the bottom line profit.
One other suggestion regarding costs. Initially we used dollars based on selling price. This can be skewed due to the differences in margin. Changed to standard costs of goods manufactured to level the field. This is the actual cost for you company to manufacture the product. Usually costed at various process stages. But finished cost is used mostly. Accounting has this data as I'm sure you found out during your assigning costs to your Pareto's.
Glad you got the attention of the right people to do something to improve the scrap. Reduction of scrap usually drops directly to the bottom line profit.
But first the process must be stable
One thing I don't see discussed too often is that a Pareto Analsyis over a time interval of data can be dangerous if the process is unstable or otherwise is in the middle of a process change. I try to suggest to folks to first make a control chart of the data to see if it is stable and in control. You see, you are using the Pareto data as a prediction of what will happen in the future if you don't do anything. If the leading cost in a 12 month Pareto chart relates to something you fixed 6 months ago and hasn't happened since, then you will not get any useful further improvement.
Now, I am not saying you cannot do a Pareto chart if the data are unstable, but I am saying that you ought to do the Pareto chart over a time interval that contains stable data. Pareto chart the months with special cause variation separate from those with common cause variation.
One thing I don't see discussed too often is that a Pareto Analsyis over a time interval of data can be dangerous if the process is unstable or otherwise is in the middle of a process change. I try to suggest to folks to first make a control chart of the data to see if it is stable and in control. You see, you are using the Pareto data as a prediction of what will happen in the future if you don't do anything. If the leading cost in a 12 month Pareto chart relates to something you fixed 6 months ago and hasn't happened since, then you will not get any useful further improvement.
Now, I am not saying you cannot do a Pareto chart if the data are unstable, but I am saying that you ought to do the Pareto chart over a time interval that contains stable data. Pareto chart the months with special cause variation separate from those with common cause variation.
J
J Oliphant
Paretto
What is dpku??
Nevertheless a fascinating subject. Even personally. Do I want to stop smoking (major effort /major reward) or just send suits to the dry cleaners (minor effort / minor reward)?
Seems like such a question will be answered by a review of management support... Will the boss support a 10 member team, 10,000$ project to solve some truly significant quality problem or are the little issues challenging enough. Also what is his goals?
whichever way to go; Personally, I'd be certain that its doable. If you faill to truly fix the problem, perhaps your job will be on the line.
Just my thoughts.
johnnybegood said:
What is dpku??
Nevertheless a fascinating subject. Even personally. Do I want to stop smoking (major effort /major reward) or just send suits to the dry cleaners (minor effort / minor reward)?
Seems like such a question will be answered by a review of management support... Will the boss support a 10 member team, 10,000$ project to solve some truly significant quality problem or are the little issues challenging enough. Also what is his goals?
whichever way to go; Personally, I'd be certain that its doable. If you faill to truly fix the problem, perhaps your job will be on the line.
Just my thoughts.
J Oliphant said:
Defects per 1,000 units, I believe.
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