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Vital few or highest pareto? Which issue should be the priority?

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J

Jim Howe

#22
The Taz! said:
If my aging and fleeting memory serves me correctly, Villfredo Pareto WAS an economist. . . enough said
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?
 
B

Bill Pflanz

#23
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
 
J

Jim Howe

#24
Bill Pflanz said:
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
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! :magic:
Jim
 
J

Jim Howe

#26
ralphsulser said:
I concurr-look at the dollars...always gets management attention. I have always said go for the biggest "bang for the buck". May not even be the most expensive solution and correctable without spending any money.
One place I worked--the biggest dollar amount was for sample scrap. Technicial wrote a spec to take 5 samples per shift. Nobody questioned it. We discussed the need and reasons and decided to reduce it to 3 times per shift. Saved a lot of money and downtime because the equipment had to be shutdown to take a sample. Then you had start up scrap again. Also implemented crews to relieve normal crews to keep from shutting down for breaks and lunches. Saved a lot of money that started with a Pareto for dollars.
Good input Ralph, I must admit that I first submitted my pareto on scrap based on % of incident, "what did I know about dollars?" :confused: 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

#27
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.
 

Steve Prevette

Deming Disciple
Staff member
Super Moderator
#28
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.
 
J

J Oliphant

#29
Paretto

johnnybegood said:
the highest in the Pareto (normally take longer time to resolve) or the vital few (which can be resolve much shorter time). Let say the highest in the Pareto cause 20 dpku and this takes time to resolve versus 5 vital few which add-up 15 dpku and take much shorter time to resolve. Question is which issue should be the priority? In generall people will for for the highest Pareto but if we go for the vital few will ISO auditor question why we choose the vital few and not the highest in the Pareto?
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.
 
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