Are you looking for a more efficient way to identify and solve your company's problems? Pareto Analyses exist to simplify the challenge of dealing with crises and finding effective solutions, thus being strong allies in a manager's daily routine.
If you don't know it yet, what it's for, or how to use this tool, don't worry. We made this post precisely to tell you about the Pareto Analysis and its application. Thus, by the end of the reading, you will be even more prepared to contribute to the achievement of best results in your company! Let's go?
Pareto Analysis
Vilfrido Pareto was an Italian economist who observed that 80% of his country's wealth was concentrated in the hands of 20% of the population, which caused economic problems.
This analysis led to the idea that 80% of problems originate from 20% of the causes. A theory that can be used beyond economics and that, therefore, led to the development of 80/20 Rule, ABC Analysis, Pareto Chart or Pareto Analysis.
What is the purpose of these analyses?
In a business environment, analyses serve to indicate that a large part of the problems that managers deal with daily originate from more specific causes than may sometimes appear.
This is because, without conducting an analysis, it's difficult to clearly identify the real origin of the challenges the company faces. This way, managers and employees end up directing their efforts towards solutions that are merely palliative without, in fact, getting to the heart of the matter.
Therefore, Pareto Analyses provide valuable insights for the development of more assertive strategies, effective and lasting solutions, and to prevent the occurrence of new crises.
All this in an easier and safer way, saving effort, time, and resources. And therefore, leading to better and more promising results.
How to Apply Pareto Analysis in Your Business
Pareto analyses are based on the development of tables, spreadsheets, and graphs. Although all of this can be done manually or with the support of Excel, it is most advisable to look for software that brings together all these functionalities.
It's worth considering that this type of technology, in addition to simplifying the process, facilitates the cross-referencing of information for richer and more complete analysis.
Whatever your choice for the development of the Analyses, it is important to know that the 80/20 ratio it is not exact and can vary according to each company's reality. However, the idea remains, as does the method's effectiveness.
Diagram development
The Pareto Diagram is created based on the collection and organization of data related to the problems and causes identified within the company. Initially, the process may seem laborious, but it leads to clear results that tend to offer a new perspective for resolving crises.
- O first step is precisely to list the identified problems and their causes;
- O second step it's sort this list, from the most recurring problem to the least recurring;
- O third step is to calculate the percentage of occurrence for each problem, based on the number of causes.;
— O Fourth and final step is to organize this data into a bar graph relating issues and frequency.Data analysis
Once the diagram or graph is developed, it becomes visually easy to identify the true Relationship between problems and causes and its consequences for the company's routine and results.
Access to more accurate data favors the development of solutions, contributes to the quality analysis of processes and strategies applied, and also to the overall decision-making process.
After analyzing the collected data, it's time to put an action plan into effect!
