Pareto Chart: How to Make One and Calculate Cumulative Percentages
Open the Pareto Chart (opens in a new tab)
What is a Pareto chart?
A Pareto chart combines a bar chart of counts by item, arranged in descending order, with a line graph showing their cumulative percentage. It is used to tabulate defects, complaints, and the like by cause or type and to see at a glance which items account for most of the total.
In many cases, most of the total is accounted for by a few items. This is called the Pareto principle (80/20 rule), because the top 20% of items account for 80% of the total. A Pareto chart helps you find these “vital few” items.
What it is used for
A Pareto chart is used to start with the items where improvement has the greatest effect. For example, it can be used for the following kinds of data.
- Count by type of defect (scratch, dimension, stain, etc.)
- Count by content of complaints
- Number of times or hours by cause of equipment stoppage
- Breakdown of the amount of loss
Reducing the items with high counts also greatly reduces the total count. It is a tool for directing limited time and staff to where the effect is greatest.
Steps to make one
- Decide the categories: Decide what to divide by, such as type of defect, cause, or process
- Decide the period and tabulate: Decide a period such as one month, and count each category
- Arrange in descending order: Arrange the items in order of count. “Other,” which groups items with small counts, is always placed last regardless of its count
- Find the percentage and cumulative percentage: Find each item’s share of the total and the cumulative percentage added up from the top
- Draw the chart: Plot the counts on the left vertical axis as a bar chart, and plot the cumulative percentage (0 to 100%) on the right vertical axis as a line. If you set the maximum of the left axis to the total count, it lines up with 100% on the right axis
Worked example
This is an example of 200 defects of a product in one month, tabulated by type.
| Type of defect | Count | Percentage | Cumulative count | Cumulative percentage |
|---|---|---|---|---|
| Scratch | 80 | 40.0% | 80 | 40.0% |
| Dimension | 50 | 25.0% | 130 | 65.0% |
| Stain | 30 | 15.0% | 160 | 80.0% |
| Chip | 20 | 10.0% | 180 | 90.0% |
| Deformation | 10 | 5.0% | 190 | 95.0% |
| Other | 10 | 5.0% | 200 | 100.0% |
| Total | 200 | 100.0% |
The percentage is found as “count ÷ total,” and the cumulative percentage as “cumulative count ÷ total.” For example, the cumulative percentage for Dimension is 130 ÷ 200 = 65.0%.
Count (bars) Cumulative percentage (line)
The top 3 items (Scratch, Dimension, Stain) account for 80% of all defects. You can see that concentrating on reducing these 3 items would have a large effect.
How to read a Pareto chart
Finding the key items
A common guideline is to treat the items up to the point where the cumulative percentage reaches 70% to 80% as the key items. The method of dividing items into groups by cumulative percentage to decide the order of action is called ABC analysis.
| Group | Cumulative percentage guideline | Items in the worked example |
|---|---|---|
| A | Up to 80% | Scratch, Dimension, Stain |
| B | 80% to 95% | Chip, Deformation |
| C | 95% to 100% | Other |
The values that separate the groups vary by workplace and purpose. If your company has its own rules, follow them.
What the shape tells you
The next action changes depending on the shape of the Pareto chart.
Count (bars) Cumulative percentage (line)
- A: Clear priorities: A few top items account for most of the total. Start countermeasures from the top items
- B: Small differences between items: All items have about the same count, and no priority can be found. Tabulating again with a different way of classifying, such as by equipment, operator, or cause, may reveal the priorities
- C: “Other” is too large: Many counts are in “Other,” so you cannot tell what is most frequent. Review what is in “Other” and reclassify it into finer categories
Points to note when using it
- Do not judge by count alone: Even with a small count, some items cause a large loss per occurrence or are related to safety. If necessary, also make Pareto charts tabulated by amount or by size of impact
- Align the periods: When comparing, tabulate over periods of the same length
- Compare before and after improvement: Placing Pareto charts from before and after the countermeasures side by side lets you confirm the effect. When comparing, match the scales of the vertical axes. If the scales differ, you may misjudge whether the count decreased
- Review by stratification: Problems that are not conspicuous overall may become visible when the data are split by line or equipment
Making one in Excel
In Excel 2016 or later, select the two columns of items and counts, and choose Insert › Insert Statistic Chart › Pareto. With this method, however, “Other” is also sorted by count, so if you want to put “Other” last, make a table as follows and then make the chart.
This is an example where the items are in A2 to A7 (in descending order, with “Other” last) and the counts are in B2 to B7.
| What to calculate | Example formula |
|---|---|
| Percentage (enter in C2 and copy down to C7) | =B2/SUM($B$2:$B$7) |
| Cumulative percentage (enter in D2 and copy down to D7) | =SUM($B$2:B2)/SUM($B$2:$B$7) |
Make it a combo chart with the counts as clustered columns and the cumulative percentage as a line on the secondary axis, and you have a Pareto chart.
Making one with the tool on this site
With the Pareto Chart, just paste in your items and counts and it sorts them in descending order, calculates the percentages and cumulative percentages, and draws the Pareto chart. You can also group items with small counts into “Other” and draw reference lines such as 80%. No registration is required, and it is free to use.