A Pareto chart is also known as a Pareto distribution diagram. It’s a type of vertical bar graph which contains relevant values. These values are typically plotted in declining order.

The order shows the comparative frequency from the left side to the right. Pareto diagram templates are very useful for analysis. You can use them when you’re trying to analyze problems.

Then you’ll be able to determine which ones need immediate attention. The problems are the ones with taller bars on the chary. They show the frequency in which variables have the most cumulative effect on a system.

A Pareto analysis template will provide a graphic representation of the Pareto principle. This principle states that 80% of the output in a specific system or situation gets generated by 20% of the input. It’s one of the basic tools used in quality control.

When you see Pareto charts examples, you’ll find out that they are very informative. The chart shows independent variables on the horizontal axis. Then you’ll portray the dependent variables as the heights of the bars. In this article, we’ll learn more about Pareto charts.

## Benefits of a Pareto analysis

You need to make a Pareto chart template when you perform a Pareto analysis. This analysis is important as it can help you identify the causes of a problem. You can use it in an organization or a business.

As you’re performing the analysis, you’ll also make a Pareto analysis template. This will show the problem causes from the most to the least serious.

The basis of the Pareto analysis is the Pareto Principle, also known as the 80/20 rule. This states that 20% of your effort products 80% of the results. This analysis enables organizations and individuals to make relevant changes. Here are some of the benefits of performing a Pareto analysis:

• Efficiency of the organization
When you perform a Pareto analysis, you’d have to make a list of the problems in your organization. Then you arrange these problems (and the causes) according to the most severe to the least.
Once you see the visual representation of all the problems, you can start planning. Focus on whatever issues you rank as the highest first. Do this when thinking about problem resolution.
Aside from the problems, you should also focus on their causes. In doing this, you’ll be able to resolve them better. With this will come an improved efficiency of an organization. Organizations can function better when the employees establish the root causes of concerns. Then they’ll be able to resolve the most serious problems. This will then give the most benefits to the organization.
• Improved problem-solving skills
When you perform such an analysis, it can help improve your problem-solving skills. It will enable the employees to organize work-related concerns into facts.
Once you’ve done that, you can start planning the necessary steps to solve the concerns.
It’s also possible for a group of people to perform a Pareto analysis together. They would have to arrive at a consensus about the different issues and their severities.
Then they can identify the causes of the problems in order to find solutions to them.
• Enhanced decision-making
This analysis can also help enhance the decision-making process. Those who conduct the Pareto analysis can examine and compare the effect of changes.
With this information, they can focus on making decisions in order to solve the problems.
They decide which processes and procedures they need to implement changes. Then they document all this information while performing the analysis. Documenting everything allows for better preparation.
This also enhances the decision-making for changes in the future.

Performing a Pareto analysis can be really beneficial. It will give you information and insights about what changes you need to make. While performing the analysis, you can make your own Pareto diagram template to use. Either that or you can download one from here.

## When to use a Pareto chart template

You may have already seen Pareto chart examples online. These are basic but useful tools. They can help you establish complaints, defects, and issues in your organization. Basically, you can categorize and count everything.

The chart got its name from Vilfredo Pareto. He came up with the 80/20 rule or the Pareto Principle. Here are some instances wherein you can use a Pareto chart template:

• When you have data that are broken down into different categories, you can use a Pareto chart
With it, you can calculate how many times each of the categories occurs. Basically, a Pareto chart is a bar chart. You need to arrange the bars from the tallest to the smallest. The categories represented by the tallest bars are the more important ones.
When you order the bars from the tallest to the smallest, the chart helps you visualize the data better. You can determine which categories encompass the 20%. These are usually the most critical ones.
You can also determine which categories encompass the 80%, which are the more trivial ones.
As you’re making your chart, you can add a cumulative percentage line. This will help you judge the contributions of the categories. If there’s a presence of the Pareto effect, the cumulative line will rise sharply.
This applies to the first few categories. Then it will start to level-off. There are times when the bars in your chart are fairly the same height. In such cases, the line will make it easier for you to compare the different categories.
• While still in the early stages of your quality improvement process, you can use a Pareto chart
Use a Pareto analysis when you’re trying to plan processes for quality improvement. Through the analysis, you can determine the most prominent issues in your business. Then you can start planning how to improve these issues.
While performing the analysis, you first need to collect and examine data. Doing this usually leads to surprises. All these help to change the “traditional wisdom” of an organization.
For instance, you may believe that most customer complaints come from defective products. But after collecting the data, you may find out a different reason. In fact, more customers have made complaints about the delays in shipping.
In this case, you then need to focus more on fixing your shipping processes. Since it’s the more prominent and frequent problem, you need to focus on improving it first. Then you can move on to the other issues based on your data.
• You can also use the chart in the later stages of your quality-improvement process
Once you’ve identified a project, you need to do a lot of things in the execution process. You need to have a team who will focus on working with problems in your project.
This team can perform an analysis and use a Pareto analysis template to help choose the areas they can focus on. This is very important because most business issues are huge and multifaceted.
For example, delays in shipping may happen for different reasons. It can be because of accidents, mechanical breakdowns, data-entry errors, and more.
If there are a lot of possibilities for causes, it’s better to collect all the data you need. Then you can start categorizing the variables. Do this to see which one happens most frequently.
In doing this, it’s easier to choose a direction to go with when trying to solve problems.
• If you need to build a consensus, you can use a Pareto chart
A Pareto chart is also very useful when you’re trying to build a consensus. It’s helpful when you need to resolve conflicts. This is especially true if your project involves a lot of different functions.
With such projects, team members might have disagreements about how to move forward.
When you perform a Pareto analysis, you can collect all the relevant data. Then you can represent it in a Pareto diagram template. In doing this, you’ll be able to inform every one of the problems and how severe they are. Then it becomes easier to come to a consensus on how to proceed.
• You can also use a Pareto chart for other purposes aside from quality-improvement
Pareto charts are very simple. However, they are an important tool to help you make decisions. This doesn’t just apply to quality improvement. These charts provide you with a visual representation of the different categories.
You can use them to prioritize opportunities, customer needs, and others.

When you see a Pareto charts example, you may think it’s very basic and simple. Well, it is. But it’s that simplicity which makes the chart applicable to different situations. Aside from categorizing and solving problems, you can use it for other things.

## Types of Pareto chart templates

A Pareto chart or diagram is a visual illustration of both line and bar charts. It shows individual values in the form of bars. You usually arrange the bars in descending order from the left to the right. There are different types of charts you can use.

While you’re performing a Pareto analysis, include specific and general components. In doing this, you need to make sure you’re not avoiding anything. You have to focus on the details of your analysis. When you do this, there’s a higher likelihood that you’ll accomplish it successfully.

During the analysis, you basically take a look at where the line diagram crosses the 80% mark. The categories which fall on the left side of the line are the most noteworthy categories. It’s that simple.

## Tips for using a Pareto chart template

The best part is, it would already come with the required formulas. It’s easy to delete or insert rows and columns as needed. Doing so won’t modify the formulas in any way.

This chart is an extremely helpful and useful tool. It helps visually illustrate the root causes of a particular situation. Such charts are commonly used in major methodologies for project management.

These charts are easy to design in a basic program like Microsoft Excel. Here are some tips for using chart templates:

• You can use Pareto charts for the purpose of inventory control. You can analyze the increasing contribution to sales. You can do this among the sales personnel and the regions.
You can use a dual-axis template if you won’t get confused by it. Otherwise, you can also use a single scale with a Pareto.
• If you’re utilizing a dual-axis chart, you can format it accordingly. You can use color coding to make the chart more readable. You can change the colors of the axes if you think it will be easier to understand.
• One thing this chart doesn’t do is arrange the information in an ascending order. Remember, such charts arrange categories in descending order. This is so you can immediately identify which category is the most frequent or severe.
This is one of the key features of Pareto charts.
• If you want to modify the axes’ options in Excel, just right click on the axis of your choice. Then click on “Format Axis” and “Axis Options.”
• If you’re using an old version of Excel, you can also create or work with a template. Just try to experiment with the options and functions. Also, each time you make a modification, make sure to check if the formulas still work properly.

These are simple tips for using a chart template. They’re general tips which may help you work with a specific template. Of course, if you want to create your own template, you can do so using the same program. Before working with templates, it’s important to learn about Pareto analysis more thoroughly.