How do you think Pareto Analysis is misused? Please remember your answer should not exceed three sentences. 

To choose to plot only against certain certain problems and showing that it fits in to the 80 rule so that focus is only on what the person is aiming at.

By not being Mutual Exclusive

By not being Collectively Exhaustive

By not implementing the findings

 

While plotting defects on pareto, severity of defect is ignored and only occurence of it is considered. So if a severe defect does not contribute to 80% band and falls in 20%, there might be chances of it getting unconsidered

1. Always use 80 - 20 rule but not other combinations

2. Treating the defects as root cause

3. Failing to focus on counter balance metrics

1. They can't be used to calculate variation over any period of time
2. More than one Pareto chart would be required in majority of cases were we need to trace the cause for the errors to its source.

3. Factors outside the scope are not taken into consideration while doing Pareto Analysis
 

1. Only assumed probable root cause is identified not the actual.

2. Depth investigation is skipped,leading to foucus only on probably identified root cause.

3. Probability of reoccurring the failure may happen,due to skipping of actual root cause and its potential to create the problem again is missed.

Data points being mutually exclusive

Adding weightage to attributes

Choosing which attributes should participate in pareto

1. Ignoring the bottom contributors blindly which might result in missing quick win.

2. Applying mathematical implication that is 80+20=100.

3. Accepting the factors blindingly vs. validating  if 20% of the identified factors are really contributing to 80% of problem.

• Applying Pareto Analysis for all kind of issues even for those issues where the complete set of data isn't available (E.g. For the scenario documented here).
• Not knowing the fundamental idea or principles of Pareto Analysis and usage of cause and effect (80/20) in reversed order (20/80) to substantiate the hypothesis.
• Wrong classification of data leads to wrongful identification of the cause.  Collection and classification of data are the foundation of Pareto Analysis.

 

Thank you. Your feedback is welcome.

1st pass at a Pareto chart may identify a significant problem that is still too big to work on and 

2nd Pareto analysis lead to break this most significant problem into more workable pieces.

12 hours ago, harinisp said:

Data points being mutually exclusive

Adding weightage to attributes

Choosing which attributes should participate in pareto

Hi Harini,

 

Your answer deserved to be among top three. However, system has picked others. I am sure you will be up there multiple times.  

Misuse of Pareto Analysis.docx

 

Misuse of Pareto Analysis

The 80/20 Rule points out the imbalance of effects.  The goal when using the 80/20 Rule is to maximize the small and powerful twenty percent and reduce the wasteful eighty percent.

REF - http://thenewageparents.com/80-20-rule-to-relationships/

Example. If you analyze the breakdowns of equipment’s of a production line, if one equipment “B is causing 80% breakdowns. I will focus and work on that equipment “B” to reduce breakdowns and ensure availability of machine to produce as and when required.

Despite the popularity of the rule, few people seem to understand it. I’ve seen many of misapplications and confusions.  Some of these errors are due to not understanding what the rule means. Others are just my opinion of unfair attacks on an otherwise useful principle. - 

REF - http://www.profitbooks.net/how-to-use-paretos-80-20-rule-to-grow-your-business/

Here are the worst attempts at using the 80/20 Rule: - 

80/20 to Perfection

I’ve seen the rule misapplied is when building skills. It might take 2 year to become 80% proficient. But in order to get that last 20% of skill you need to invest another 8 years. While this is a fair use of the rule, the advice with skills often goes against the 80/20 Rule. Instead of eliminating the need for that last 20%, you invest most your time to master the last 20%.

The point of the 80/20 Rule is that you should downplay or minimize the inefficient 80% of inputs. There are times, of course, when this rule doesn’t apply. Mastering a skill can be one of those areas where the 80/20 advice is faulty.

REF - http://www.lifehack.org/articles/featured/the-top-4-misapplications-of-the-8020-rule.html

80 + 20 = 100

I’ve seen a few times where people try to create a diagram explaining the 80/20 rule with a pie chart. One fifth of the pie chart is labeled 20% and the rest is labeled 80%. While those of us with basic math skills can see how this adds up to 100%, the calculation undermines what the rule is about.

Don’t get caught up on the numbers. Both 80 and 20 are just examples of one type of uneven balances. The fact that they add up to 100 is a coincidence.

REF - https://www.hrzone.com/community/blogs/mark-mccormack/applying-the-8020-rule

 

How to relay on 80/20 rule:

Find ways to eliminate the rest. Get rid of activities that don’t have a high payoff. Stop spending time in relationships that don’t create enough value. Stop wasting money on investments that aren’t giving you a greater quality of life.

One argument I’ve heard against the 80/20 rule goes like this, “If you keep applying the 80/20 rule, eliminating the wasteful 80%, eventually you’ll end up with nothing"

With skills often goes against the 80/20 Rule, Instead of eliminating the need for that last 20%, you invest most your time to master the last 20%.

In few times, people try to create a diagram explaining the 80/20 rule with a pie chart; One fifth of the pie chart is labeled 20% and the rest is labeled 80%.

I have come across Pareto being done on, Effects of the error, than the actual error, and used for C&E 

Not using the Mutual Exclusive or Collectively Exhaustive principles covers all misuses of Pareto. 

 

They can't be used  in place of a  frequency table