Pareto Analysis



Pareto analysis is a statistical technique in decision making that is used for selection of a limited number of tasks that produce significant overall effect. It uses the Pareto principle – the idea that a large majority of problems (80%) are produced by a few key causes (20%).

Pareto analysis is a formal technique useful where many possible courses of action are competing for attention. In essence, the problem-solver estimates the benefit delivered by each action, then selects a number of the most effective actions that deliver a total benefit reasonably close to the maximal possible one.

Pareto analysis is a creative way of looking at causes of problems because it helps stimulate thinking and organize thoughts. This technique helps to identify the top 20% of causes that need to be addressed to resolve the 80% of the problems.

At SDG, Pareto analysis is used in a continuous cycle. Once the high-driver issue has been resolved and cleared away, the analysis is repeated and work begins on the next high-driver. This way, SDG continuously improves its systems and processes.

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