What is a Pareto Chart, and what are best practices, tools and online templates for teams and organizations?
Definition of Pareto Chart
A Pareto Chart is a tool used by business leaders to analyze data about the likelihood of certain problems occurring through the analysis of problem frequency and root causes. A Pareto Chart is often referred to as a Pareto Diagram or Pareto Analysis, and it generally takes the form of a bar graph.
Description of Pareto Chart
A Pareto Chart provides a visual representation of frequency or cost (represented as time or money) expressed by the lengths of bars in a bar chart. The chart is then arranged with the longest bars to the left of the diagram and the shortest bars to the right, visually depicting which situations are more important or significant based on the cost in time or money. The Pareto Chart is one of the key instruments within the Six Sigma toolbelt, and it is considered one of the seven basic quality tools.
In order to develop a Pareto Chart, one must follow the following 7 steps:
- Identify which categories you want to use to group items together.
- Determine which metrics you will use to measure each of these categories. Most frequent measures and metrics are cost in time or money, frequency of a specific occurrence, or quantity of a product.
- Decide the length of time being measured against: Is this an annual, quarterly, or monthly measure? Is it hour by hour or week by week?
- Collect data and record the which category each data point falls into.
- Aggregate the data points and total up the measurements of each category.
- Analyze the data output to adapt the chart and create the right scale for the measurements created.
- Once the data is compiled, create a bar chart for each sum of the category. The largest sum will be in a bar chart to the left, while the smallest will be all the way to the right.
Tools & Templates
The tools that managers use to make the most of the Pareto Chart template are customer service requests, sales figures, marketing reports, business performance reviews and process audits.
upBOARD's Online Pareto Chart Tools & Templates
Unlike most traditional process checklists and problem solving models, upBOARD’s online Pareto Chart model tool allows any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.
Learn more about upBOARD’s portfolio of other business strategy best practice tools and templates, including:
2 X 2 Matrix, ADL Matrix, Affinity Diagrams, Baker’s 4 Strategies of Influence, Balanced Scorecard, Benchmarking, Blue Ocean Strategy, Bowman Strategy Clock, Build-Measure-Learn Feedback Loop, Business Model Canvas, CAGE Distance Framework, Competitive Analysis, Competitive Landscape Analysis, Contingency Planning, Core Competence Analysis, Critical Success Factors, Discovery Driven Planning, Economic Value Added, First Mover Advantage, Five Forces Model, Force Field Analysis, Gap Analysis, GE McKinsey 9-Box Matrix, Go To Market Strategy, Hambrick & Frederickson’s Strategy Diamond, Hedgehog Model, Hook Model of Behavioral Design, Hoshin Planning System, Kay’s Distinctive Capabilities Framework, Key Outcome Indicators, Kotler’s Five Product Levels Model, Kotler’s Pricing Strategies, Lafley & Martin’s Five Step Strategy Model, McKinsey 7S Model, McKinsey’s Seven Degrees of Freedom for Growth, Mergers & Acquisitions, Mission Statements, Mullin’s Seven Domains Model, OGSM Framework, Ohmae’s 3-C’s Model, Partner Relationship Management, PEST Analysis, PESTLE Analysis, Porter’s Diamond, Portfolio Management, Purpose Statements, Pyramid of Purpose, Scenario Planning, Simonson & Rosen’s Influence Mix, SMART Performance Metrics, SMARTER Goals, SOAR, Strategic Goals, Strategy Map, Strategy Roadmap, Strategy Uncertainty Map, SWOT Analysis, TOWS Matrix, Triple Bottom Line, USP Analysis, Value Chain Analysis, Value Disciplines Model, Value Net Model, Values Statement, Vision Statements, VRIO Analysis, and Weisbord’s Six-Box Model.