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You may be familiar with Pareto's Law or the 80/20 principle. Put simply, Pareto's Law states a universal truth that nothing is evenly distributed.

80 percent of the wealth is held by 20 percent of the population.

80 percent of your firm's sales likely come from 20 percent of its customers.

And 80 percent of your breakdowns are caused by 20 percent of the possible problems.

The comparative split between any two sets of variables may not be 80/20. It could be 95/5, 60/40 or any other variation.

But it's unlikely to be 50/50 which represents an even distribution.

80/20 thinking can help us identify points of leverage. And the more skewed the distribution, the more powerful the leverage.

For example, if 95 percent of your breakdowns were caused by five percent of the possible problems, it follows that if you can identify and eliminate this small percentage of problems, you will eliminate 95 percent of your breakdowns.

During a meeting with a new client, I was briefed on their hydraulic hose 'maintenance program' for their fleet of hydraulic mining shovels.

This involved changing out every hose on the machine, every 18 months.

So whenever the machine was down for planned maintenance a portion of the hoses on the machine were changed-out, beginning with the oldest first.

The hydraulic hose supplier who devised the program was somewhat of a hero because prior to its implementation, ad-hoc hose replacement in response to in-service failures had caused machine availability to fall as low as 65 percent.

When a multi-million dollar shovel stops, so does a multi-million dollar fleet of haul trucks.

Downtime is a significant cost. But large-diameter, multi-spiral, hydraulic hoses aren't cheap either.

So while I couldn't argue with the success of the hose replacement program, I did point out its fundamental flaw.

I explained to my client if he were to look at the historical data, he would likely find

20 percent of the hoses were causing 80 percent of the in-service failures and downtime.

In fact, the data revealed less than 20 percent of the hoses were responsible for nearly 90 percent of the failures.

My client was delighted with this discovery.

Not so his hose supplier.


By Brendan Casey