Pareto analysis was developed by an Italian economist (amongst other fields) who analysed the wealth of Italy. Wilfried Pareto discovered that 80% of the wealth (Land) of Italy was owned by only 20% of the population. This coined the phrase of the 80/20 rule - 80% of your effects come from 20% of your causes. How can this be applied to reliability engineering and the mining industry?
80% of downtime are caused by 20% of component failures.
80% of maintenance spending are caused by 20% of the equipment.
80% of stock costs are caused by 20% of the stock.
80% of failures are caused by 20% of the defects or issues.
The Pareto analysis is a fantastic tool for analysing data, particularly for defect elimination. As one of the keys to successful reliability engineering, defect elimination is focused on finding the key issues affecting the equipment and solving them. This is where Pareto analysis helps to identify those issues that have the largest impact on the equipment. The chart below demonstrates an example that could have been found on a dozer fleet. The bars display the effect of the issues from highest to lowest. These could represent downtime hours, costs, failure events or any measurable unit. The red line displays the cumulative percentage of each issue. This graph shows a hand full of issues and after only 9 issue types, 80% of the downtime is identified.
The important note for this analysis is that it is dependent on the data it is analysing. Quality data is a critical part of a reliability engineers role and the team must work to ensure the data compliments their analysis. For more info read "Understanding your data"
The ability to identify the key issues for the fleet, allows for the reliability team to prioritise their projects. This creates projects that can deliver maximum value to the business. The key benefit of Pareto analysis is this ability to demonstrate why the RE teams projects are important and what they are trying to solve.
FYI - How do you pronounce it?
http://www.merriam-webster.com/cgi-bin/audio.pl?bixpar02.wav=Pareto
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