Before we can comprehend the information being displayed on the Pareto tab, we must first understand the term “Pareto”.
The Pareto principle, also known as the 80/20 rule, is a theory maintaining that 80 percent of the output from a given situation or system is determined by 20 percent of the input. Here are a few examples of this principle:
• 20 percent of employees produce 80 percent of a company’s results.
• 20 percent of software bugs cause 80 percent of the software’s failures.
• 20 percent of a company’s investments produce 80 percent of its investment profits.
The 20% are often described as the “Vital Few”, and the 80% as the “Useful Many”. As you may suspect, it isn’t an exact science but can be very useful.