Pareto Chart is basically a statistical chart that represents major of defect or problem in descending order of their frequency (number of times of occurrence) and their cumulative impact. Cumulative impact simply means changes in system or project that are caused due to combined impact of past, present, and future activities or natural processes of human beings. Pareto analysis is considered to be a powerful quality and decision-making tool. We can use Pareto Chart in various cases as given below :
- If one wants to organize and manage a lot of information and data that is needed to be organized.
- When someone wants to explain and tell about defects with higher priority to stakeholders.
- When someone wants to prioritize defect or task according to their severity i.e. according to their impact on system or organization.
- When it is essential and important to analyze data or defect.
- One of the essential and most important advantages of Pareto analysis is that it simply helps to identify and determine main cause i.e. root causes of defects or problems.
- Defects are firstly ranked in order of their severity i.e. in descending order. Defects are organized from highest to lowest priority with help of Pareto Chart. Defects that are on top with highest priority are eliminated first or resolved first.
- With help of Pareto chart, one can also determine cumulative impact of defect. In simple words, cumulative impact is an effect that is being caused due to defect happening over a long period of time.
- Pareto Chart also helps and provides a better explanation regarding defects that are needed to resolved first. One can also decide and plan about correct and important measures or actions that are needed to be taken regarding defect.
- With help of Pareto chart, skills of individuals are also increased in better ways like problem-solving skills, decision-making skills, etc. It simply helps to improve important skills that are required because when someone prepares a Pareto chart, it enables to organize problems related to defect or anything into cohesive facts.
- It also helps in solving issues regarding problem-solving and decision making, time management i.e. be at work on time or personal, change management, etc.
- One can plan, analyze, and resolve problems or defects with help of Pareto Chart.
- One of main disadvantages is that root cause analysis cannot be done by itself in Pareto analysis. There is a requirement of tool i.e. root cause analysis tool for determining or identify root causes or major causes of defect.
- It does not represent severity of defect or any problem. It only shows qualitative data.
- Pareto analysis only focuses on past data where damaged has already happened. Yes, past data is essential too, but it’s not necessary that it will be relevant in future scenarios also. Therefore, it should focus on past data as well as present and future data also.
- Pareto analysis cannot be applied to all cases. It is limited to some cases only.
- There are other disadvantages also like mistake in scoring problems, mistake in applications, etc.