Alfredo Pareto (1848-1923) conducted extensive studies of distributions of wealth in Europe. He found that there were a few people with a lot of money and many people with little money. This unequal distribution of wealth became an integral part of economic theory. Dr. Joseph Juran recognised this concept as a universal truth that could be applied to many fields. He coined the phrases “vital few” and “useful many.”
In restaurant quality problems, the activity could be customer complaints and the factor could be “discourteous customer.” For a manufacturer, the activity could be a product defect and a factor could be “missing product.” Pareto concept, called the 80/20 rule, is that 80 percent of the activity is caused by 20 percent of factors. By concentrating on the 20 percent of the factors (the vital few), a manager can attack 80 percent of the quality problems.
Examples of the vital few are as follows:
A few customers account for the majority of sales.
A few processes account for the bulk of the scrap or rework cost.
A few nonconformities account for the majority of customer complaints.
A few suppliers account for the majority of rejected parts.
A few problems account for the bulk of the process downtime.
A few products account for the majority of the profit.
A few items account for the bulk of the inventory cost.