Setting priorities is one of the main management functions of an organization. If the managers do not prioritize their tasks and organizational objectives, the organization will head towards the wrong direction and eventually collapse.
A Pareto Chart can be used when it comes to identifying the facts needed for setting priorities. Pareto charts clearly illustrate the information in an organized and relative manner.
This way, management can find out the relative importance of problems or causes of the problems. When it comes to prioritizing the causes of the problem, a Pareto chart can be used together with a cause-and-effect diagram.
Pareto charts are created based on the Pareto principle. The principle suggests that when a number of factors affect a situation, fewer factors will be accountable for the majority of the affectation.
This is almost the same as the 80/20 theory, which says that 80% of the impact is made by 20% of causes.
This shows that almost 80% of the tickets in production are purchased because of general inquiry and product issue, which is almost 20% of the total tickets in the categories. Now to reduce the flow of new tickets to production, we need to create a strategy to target these two vulnerable areas.