behaviour of the characteristics, it is easy to determine the conformance of a
process with respect to designed specification limits. It is a flexible universal tool
that can be used in operations, administration, service, and practically in any field.
PARETO DIAGRAM
A Pareto diagram or analysis is not merely a problem-solving tool; rather, it is a
tool that allows us to analyse a situation, prioritise action, and monitor the results
after improvements or changes. It is a simple and cost-effective technique to find
out what to tackle first by identifying where the severest problems lie, or what
action will yield optimum results with least effort.
The core of the Pareto principle is that the ‘vital few’ among the problems hold
the key, while the ‘trivial many’ only dissipate resources, focus and energy. The
Pareto principle is based on the 80/20 rule, which emphasizes that 80 per cent of
the problems stem from 20 per cent of the causes. Logical application of this judg-
mental technique helps to identify and prioritise those important issues or prob-
lems which, when solved, will automatically lead to substantial cost-effective
improvements. Important issues may include those pertaining to financial impact
or the relative number of occurrences.
J. M. Juran discovered this famous ‘vital few and trivial many’ principle which
is analogous to an observation by Vilfredo Pareto, the noted nineteenth century
Italian economist, that 80 per cent of the wealth of a country is concentrated in the
hands of 20 per cent rich representing the phenomenon or principle of unequal
distribution of wealth. However, Pareto never extended this observation to other
areas nor did he attempt to universalise this phenomenon. Recognizing the value
and relevance of Pareto’s discovery, Juran was the first to introduce this principle
to the field of quality management. He magnanimously christened this universal
principle the ‘Pareto principle’ instead of ‘Juran principle’. Since then the Pareto
principle has been one of the most important tools in problem solving or decision-
making, applicable to any field of work. It can be also innovatively applied in walk
of life including home front or self-development. The few examples about the suc-
cessful application principle of Pareto principle given below are only illustrative—
the list is endless:
z The onerous task of competitive analysis is tackled by concentrating on key
product features or key competitors, or on both.
z In case of value-analysis or cost-value combinations, the application of the
Pareto principle brings out the combinations that collectively account for the
bulk of the value or costs, as the case may be. Identifying and controlling these
vital few factors will either add value or reduce cost.
z Human resource managers or planners find the Pareto principle useful in con-
taining and reducing human error. Though human beings are by nature error-
prone, their performances vary due to factors like skill-level, deliberate viola-
tion, lack of training, motivational problems, poor working environments,
SEVEN QC TOOLS 343

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