Lean Six Sigma and the 80/20 Rule

Most businesses recognize the importance of efficiency. Getting the job done at the lowest cost, with the smallest margin of error, and best results are goals of every company, no matter how they phrase it. How they measure their success at achieving these goals can be measured in a variety of ways. Profits, waste reduction, customer satisfaction, and increased sales are just a few of those measurements.  Utilizing the Lean Six Sigma methods has been proven to help companies from a large variety of industries to reach their goals, and achieve high efficiency.

One of the most important factors in the Lean Six Sigma method is to identify the areas or issues that are causing delays, errors, or loss. By analyzing the issues that are a problem, a company can focus on those areas. However, there may be a large number of factors causing the problems. When faced with so many issues, how does a company know where to focus their energies? This is where the Pareto Principle, or the 80/20 rule, comes into play. The Pareto Principle was originally discovered by Vilfredo Pareto in 1906, in Italy. It was his discovery that 80% of land in Italy was held by 20% of the population.

By utilizing Pareto’s idea, quality pioneer Dr. Joseph M. Juran introduced what he called “Pareto analysis” to the quality field. In his later years Dr. Juran confessed that he wished he’d named the approach “Juran analysis”. Working with this principle proved that the 80/20 idea applied to many areas. Working on this factor, it was discovered that this 80/20 idea applied to many areas.  In most circumstances 80% of the outcome was produced by 20% of the input. The same holds true for issues in a company’s production. To simplify the idea, if a study of issues in a company identifies 10 problems, the majority of the problems are usually caused by 2 of those issues. By focusing the majority of resources on those 2 issues, a company can solve 80% of the problem.

By utilizing the Lean Six Sigma techniques of identifying issues, and discovering the areas to focus on, a company can achieve results that will improve efficiency. Increasing efficiency can improve a company performance in multiple areas, such as profits, output, employee morale, reduction in costs, and margin of error.  The Lean Six Sigma program can help any business concerned about productivity, cost, and results.