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One tool that you will find yourself using several times during your Six Sigma project is Pareto analysis. Pareto analysis is named after the eminent 19th century Italian economist Vilfredo Pareto. His study of the distribution of income showed that income wasn’t uniformly distributed. A few high-income earners garnered a disproportionately large share of the total income. Dr. Joseph Juran, the famous quality pioneer, noticed similar patterns when studying quality problems. Namely, most of the problems were caused by a disproportionately small number of causes. Pareto analysis is simply the process of looking at opportunities, which are often disguised as problems, to find the few big opportunities that should be pursued first. Pareto analysis is a tool that is used over and over again in Six Sigma to progressively break a big project into easier to manage subprojects. At this stage in your project you will use Pareto analysis to answer questions like: what project should I pursue? After choosing a project, Pareto analysis can help you answer the question: “which problem in this project should I address first?
Pareto Diagram with MS-Excel
In the video tutorial below you will learn how to create a properly formatted Pareto Diagram step-by-step using Microsoft Excel.