Manufacturing, Supply Chain and Maintenance Management Newsletter

In this Issue: ABC Classification and the Pareto Diagram

ABC-Classification and the Pareto Diagram are very important management tools.

ABC-classification groups a range of items (finished products, customers, ...) into 3 categories (A, B, C), where each category should be handled in a different way.

 It is based on Pareto's 80-20 rule: a rule of thumb that 80 percent of the effects come from 20 percent of the causes. During the 1950's, Pareto's rule was applied to management theory.

Purpose

Steps

Applications

Pareto Diagram

In order to make the ABC-classification visual, the Pareto Diagram is used. 

The Pareto Diagram consists of two graphs:

 

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