Have you ever heard of the Pareto Chart?
This tool can help you solve problems and increase the quality of your processes. The dream of everything, right?
Managing a company, regardless of its size or area, is a considerable challenge. In many cases, the manager knows that there are problems, but fails to identify their causes or decide which one to prioritize.
If you are going through a similar situation or want to learn how to solve problems that may arise in your daily life, this is the time!
Keep reading our post to learn more about the Pareto Chart and discover how to put it into practice in your business!
What is the Pareto Chart?
The Pareto Chart is a quality tool that we can apply in the routine of the business world or in our personal lives. The whole system is based on the idea that little things can have big consequences.
The methodology consists of identifying the situations that generate the most problems and prioritizing them during the intervention strategies.
A self-employed professional, for example, who is struggling to manage his finances and increase his sales, can focus on correcting what generates the most negative impacts in his professional life.
That is, instead of trying to be, which can further complicate the situation, you can begin to act on the root of your problems in a strategic and focused way.
How did this methodology come about?
One of the most interesting ways to understand the function of a task management methodology is to know its origin. So let’s go back in time a bit and understand how Vilfredo Pareto created his method.
It all started in 1897, when the Italian political scientist, sociologist and economist concluded that 80% of the world’s wealth was concentrated in the hands of 20% of the people.
The finding was so important that it was quickly applied to other areas of science. Thus it was discovered, for example, that the highest population concentration in the world was found in some countries.
In 1941, Joseph Juran introduced this concept to the business world. He said that 80% of the problems within an organization are related to only 20% of their possible causes.
Therefore, if the manager of a business prioritizes these elements, he could solve a large part of the limitations that prevent his company from growing.
What are the benefits of the Pareto Chart for your business?
There is no doubt that task management requires a lot of time and dedication from managers and entrepreneurs. In the end, every day there are an infinite number of processes to execute and decisions to make.
The Pareto Chart is a tool that can make your daily life more efficient and . Take a look at the main benefits it provides in the business environment!
Helps identify business critical points
Every company faces difficulties and this is part of the growth process. What defines whether it will be successful (or not) are the measures the manager takes to overcome these problems.
The Pareto Chart will help you identify the critical points of your business and the situations that have the most negative impact on your results. With this you can find, for example:
- 20% of the products and services that generate the most customer complaints;
- 20% of the products and services that generate the most profit for the business;
- The 20% of partners who contribute the most to your income.
Improve data organization
The Pareto Chart needs concrete data so that you can put it into practice. This helps keep your business more organized, since there will be greater control of the processes.
In practice, the manager begins to see the data as an important asset. No sale, complaint or problem goes unrecorded and that is valuable for the management of the business.
Facilitates decision making
Think hard: if the manager can see the whole context of your problem and identify your main obstacles, you get the issues that will really help you solve your demands.
For this reason, we can say that the Pareto Chart facilitates decision making, making the task of developing the appropriate strategies much simpler.
When you know the attitudes that lead to a goal, your actions can be focused on what is relevant to get the result you want, right?
Increases the quality of internal processes
A basic consequence of the application of the Pareto Chart in daily corporate life is the improvement of the quality of internal processes.
With a more strategic analysis focused on operational failures, it is much easier to correct them and ensure continuous improvement of the activity, which contributes to increased sales and profits.
Help the company grow in a healthy way
Finally, it is important to note that Pareto Analysis helps your business grow in a healthier and more lasting way.
Working in competitive markets requires strategic action focused on quality. The more efficient your performance, the easier it will be and conquer your customers. Think well on that!
How to build a Pareto Chart?
With all the information that we have presented to you, now is the time to learn how to build the Pareto Chart and start perfecting your performance in the market.
For that, we have selected infallible tips that will help you identify the problems, their causes and work intelligently to overcome them. In the end, believe me, your business will never be the same again! Look!
Start by defining your goal
The first step to apply the Pareto Chart in your business is to define what you are going to analyze and, of course, the type of problem you are going to combat.
Keep in mind that multitasking is not a smart strategy. You must focus on what really matters. Even if you have several problems to solve, it is important that you focus on one at a time.
Look at the data at your disposal
Collecting the data is the next step in the process. In the end, you must have safe and up-to-date information about what you are studying.
In this phase, it is also essential to define the period in which this data will be collected: days, weeks or months, for example. This done, it is time to gather the information and carefully observe what it reveals.
Do you want an example?
Imagine that you are looking for the products that bring more income to the business. In this case, you can analyze sales records for 30 days.
Separate the problems found by categories
After fulfilling the previous stages, you must separate your problems by categories. We remind you that the problem analyzed is not necessarily something negative, but the situation you are studying.
This will help you to carry out a deeper analysis of the situation and to visualize what is most important for the results of your business.
Make mental maps and tables with the collected data
The next strategy is to use and tables to facilitate your analysis. In short, this representation can help you link a cause to a problem more quickly and safely.
Let’s say you want to find out which outreach strategies give your box the most results. Using a table or a mind map, you can record all the channels used and map where your sales are coming from.
Find the 20% of the causes that generate the results
Now it’s time to find the 20% of the causes that generate 80% of the results. For this, it is necessary to organize the facts in descending order.
What is repeated more intensely is more relevant to the situation studied. For example, if you find that promoting the product in generated the most sales, that’s a sign that you’ve found an important cause.
Use the information to improve your processes
As we said, the purpose of the Pareto Chart is to improve business performance. For this reason, you must correctly take advantage of the information collected and the conclusions you have reached.
Ideally, use these ideas to inform your decisions. In the end, by discovering the best or the product that generates the most income for the business, you can, for example, invest in specific and effective actions.
Did you understand why the Pareto Chart is important for your results?
With this post we have shown you that Pareto Analysis is an excellent strategy for businessmen and professionals who are concerned with the continuous improvement of their work, product or service.
High competition is a reality in the market. Do you want to know how you can overcome it?
Finding your differential is the key to winning clients and becoming a reference in your area of activity.
To achieve this, of course, you need to know your limitations, correct the processes that create problems and invest in the ones that favor you.
The Pareto Chart will help you do this, since it shows the causes that most . With that, making decisions and acting assertively becomes much simpler and faster.
Do you have difficulties managing your day to day and organizing your priorities?
Do not forget to see what are the
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