Ishikawa and Pareto

Nur Amira Farihan Bt Abdul Razak G1328638

Nur Aliaa Che Abdullah G1311828
Nur Adibah Mohd Salleh G1218294
Nima Abdiaziz G1322784

Introduction
This study is done to analyze the two tools for strategic
management which are Ishikawas Fishbone Diagram and Pareto
Objectives:

To understand the concept or definition of Ishikawas Fishbone

Diagram and Pareto

To identify how to apply the strategy

To relate the strategy with the real case study or organization

Ishikawas Fishbone Diagram

Ishikawa diagrams was developed by Kaoru Ishikawa in 1960s as a way

measuring quality control processes in the shipbuilding industry.

Also referred as fish bone diagrams because they resemble a fish skeleton,
with the "ribs" representing the causes of an event and the final outcome
showing at the head of the skeleton.

The purpose of the Ishikawa diagram is to assist teams in categorizing the

many potential causes of problems or issues in an orderly way and in
identifying root causes.

How To Construct Ishikawas Fishbone Diagram

Define the
Problem

Brainstorm

To define the problem for which the root cause has to be identified

Gathers ideas from people who are potential contributors, to seek the various
causes of the problems

Mckinsey 7s Framework
Categorize 4Ps of Service Industry, 6 Ms Manufacturing Industry, Process Steps

Fishbone Suggested Categories

Ishikawas Fishbone Diagram

Fishbone Diagram
Man
Method
Machine
Another
Sample Text

Effect

Mother of Nature
(Environment)

Management
Materials

St James Hospital: Inefficient Supply Chain

Management
The case study reveals that the hospital is facing
immense problem to ensure sound supply chain
management.
As a result the hospital is increasingly failing to
maintain its well established and long lasted
reputation.
In this fishbone analysis the causes of the
inefficient supply chain management of the
hospital will be uncovered

Fishbone Diagram: St James Hospital (cont..d)

Faulty Process
Lack of Proper Equipment
No Storage

Too Many Options

No IT Facility
No Technical Support Haphazard
Under Utilization

High Cost

No Professionalism
Too Many Inventories
No Storage
High Cost
Unavailability

Misdirected People

Lack of Specification

High Cost

Overstocking

Many Suppliers

No Specification

No EOS
High Lead Time

Faulty Ordering

No Orientation

Underperforming

No Coordination

Power War

Inefficient
Supply Chain
Management

Lack of Trust

Disappointment

Hidden Cost
Short Budget
No Innovation

Resistant to Change
Protectionism

Duplicity
Supplies Cost

Stockout

Unsound Set-Up

Rivalry

No Relationship with Supplier

No Employee Orientation
No Material Manager

Materials Managed Poorly

Improper Environment

Inefficient Management

Fishbone Diagram: St James Hospital (cont..d)

Based on the diagram constructed, the problems
or root cause can be clearly identified.
It helps the management to see which area can
be improved, or which causes that contributes
most to the problems
From here, the management could find the
appropriate solutions for the problems

Advantages
Determine root causes
Encourage group
discussionbrainstorming
Easy to read format

Disadvantages
When problem is
simple or already
known
Team size is small
Communication
problems
Time constraint

PARETO

Pareto 80 20 Rule
BACKGROUND

OVERVIEW

- Named after Vilfredo Pareto an Italian

- The 80-20 rule asserts that a minority of
economist
causes, inputs or effort usually lead to a
- He observed in 1906 that 20% of the Italian
majority of the results, outputs or rewards.
population owned 80& of Italys wealth
- The 80-20 rule tells us that in any
- He the noticed that 20% of the pea pods in
population, somethings are likely to be
his garden accounted for 80% of his pea
much more important than others. A good
crop each year
benchmark or hypothesis is that 80% of
results or outputs flow from 20% of causes,
and sometimes from a much smaller
proportion of powerful forces.

Pareto Principle
00

20

0
25

80

80

20% of the input (time, resources, effort)

accounts for 80% of the output (results, rewards)

Steps to be analyze-Pareto
1. Identify and List the Problem
2. Identify Root causes- brainstorms,5 Whys, cause & effect analysis
3. Score the Problems
4. Group Problems together by root cause
5. Add up the scores for each group
6. Take action

Pareto 80 20 Rule
HOW
1. Record raw data
2. Prepare analysis sheet and categorize the data
3. Determine the percentage of each category

EXAMPLE
Delay in processing credit card application
Category

Frequency

Percentage

Cumulative Percentage

No signature

40

43%

43%

Non-legible writing

22

23%

66%

Current Customer

15

16%

82%

No Address

10%

92%

Other

8%

100%

Vital Few
80% Line
Trivial Many

Results
Line at 80% on the y-axis running parallel to the x-axis. This point on the xaxis separates the important causes on the left (vital few) from the less
important causes on the right (trivial many).

It enables you to see what 20% of cases are causing 80% of the problems
and where efforts should be focussed to achieve the greatest improvement.

In this case, we can see that no signature, illegible and current customer
should be the focus.

BENEFITS

A Pareto chart breaks a big problem down into smaller pieces, identifies the most
significant factors, shows where to focus efforts, and allows better use of limited
resources

Focus on activities that produce the best outcomes for you, professionally and
personally

Helps identify important problems

LIMITATIONS

Focus on the past

Mistaken application

Incorrect problem scores

Time constraint-short period

Conclusion
We have explained Ishikawa Diagram and Pareto concept and also how to
apply the strategy tools.

Case example given to relate to the both strategy.

Thank you!