The Pareto principle, also known as the 80/20 rule, tells us that 20 percent of inputs are responsible for 80 percent of results. Even when it’s not an exact 80/20 split, the idea that a few factors drive a large proportion of outcomes applies to many business processes and everyday situations.

Take, for example, how a majority of complaints often result from a few key defects. Or how 20 percent of our time accounts for 80 percent of our productivity, with the remaining 80 percent spent on meaningless tasks.

In the automotive and aerospace industries, organizations can use a range of tools to leverage the 80/20 rule for bigger, faster, quality improvements. Pareto management is the most obvious of these, but manufacturers should also apply the rule to performance metrics, risk management, and audits.

Getting more from Pareto charts

Pareto charts are a core tool for identifying issues that have the greatest impact on performance. The chart combines a bar graph and a line graph to show the relative frequency or cost of different types of problems, and is useful for prioritizing action. In the example below, addressing process errors will do more to reduce failures than fixing any other issue.

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