TEMPLO, SHEANA CAMILLE T.

IV-AN

Pareto Chart

Simply put, the Pareto Principle is an unscientific “law” that states: 80% of effects come from 20% of
causes. In other words, most of what we do has little effect. The principle comes from the Pareto
distribution and illustrates that many things don’t have an even distribution. It was originally written by
Italian economist Vilfredo Pareto in 1896, who stated that 20% of the population in Italy holds 80% of
the wealth. In the 1930s-1940s, Dr. Joseph Juran recognized the principle can be applied universally
to almost any situation where there is an uneven distribution. For example:

 80% of output is produced by 20% of workers.

 20% of customers produce 80% of the revenue.
 80% of a teacher’s time is taken up by 20% of the students.
 80% of retail sales are made by 20% of brands.
 80% of your website’s traffic comes from 20% of your posts.
 80% of STDs are transmitted by 20% of the population.
 80% of RNA-viruses are shed by 20% of birds (see this PLos One article).
 80% of movie rentals are 20% of the available titles (usually the new releases!).
 1% of the world population holds half of the global wealth.

The numbers don’t have to add up to 100%. And there doesn’t have to be an actual 80-20 split in
the distribution. In fact, you’ll rarely come across a distribution of anything that’s exactly 80-20,
although many things come close. The main idea behind the principle is just to recognize that a small
number of cases produce a large percentage of the effect.

Angela wants to find out what problems were involved in her company's customer service process.
To do so, first she collected data about the different customer needs and how well the customer felt
those needs were met using a survey. Once she had the data in hand, Angela began to arrange the
data. Once the data were arranged, Angela listed the categories in order from the highest rate of
dissatisfaction to the lowest rate of dissatisfaction and created a bar graph –with the highest rate of
dissatisfaction on the left and the lowest rate on the right. Now that the information was in front of
her, Angela knew where to start in the quality improvement process. It shows that Installation has the
highest dissatisfaction according to survey and the cumulative total shows only 47.2% effort is being
rendered by the agents , and most effort is provided by Journal entries which is 99.3%.