![]() ![]() Once the problems are solved in those areas, you also solved more than 50% of the root causes and surely will improve your business performance and profitability. Knowing that information, you can focus in those problem areas you can act and fix on those situations. The two reasons when combine together have more than 50% and simply means they are major root causes of your loses. That's why the phrase "the vital few and the trivial many" was coined after this rule.Ģ.) How this chart can help the business?Īnswer: Considering the example above, you can easily see that most of the reasons in losing a business are Price and Customers' Lack of Fund. It simply states the principle that a few of the reasons causes the majority of why you are losing, not exactly 20%. The 80-20 rule doesn't mean that exactly 20% of the reasons are 80% of the root causes of losing businesses. ) I can't see the 80% and 20% in the chart so why is it called 80-20 rule based?Īnswer: I intentionally made the sample Pareto chart an imperfect one to make it looks like a realistic one. I will try to answer these questions the best that I can.ġ.
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January 2023
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