Over the last few months, I have been helping an international holding company assess the operations of their portfolio of companies. They want to know things like, “How Lean are the operations at each company?” “How far along is each company in its Six Sigma improvement journey?” And, “What are the common opportunties and strengths we can build upon?” I’ve visited company sites, reviewed operation activities, collected data, and interviewed executives and staff. I have found that, in many ways, the foundation for excellence in operations can be boiled down to a single, simple question: “How do you define quality?” (more…)

Vilfredo Pareto (1848-1923) was an Italian economist who proposed that 80 percent of an economy’s wealth is held by 20 percent of its population. Since Pareto proposed his famous principle, it has been confirmed that this 80-20 rule of thumb also applies to many other phenomena, including the distribution of product/process quality. For example, it has been found that 80 percent of the observed defects on a product or in a process can be attributed to 20 percent of the possible causes.

The Pareto Principle is a principle because, by definition, it holds true across a broad range of situations and applications. The Pareto Principle describes the behavior of much more than just the usual distribution of product or manufacturing defects. Here are some other areas—from both business and life—where I’ve found the Pareto Principle provides the key to understanding and improvement: (more…)