The 80ᚼ Pareto principle is based on Pareto's theory that 80% of the results one gets in a particular endeavour will be mainly due to 20% of areas to which one has applied efforts. In business this principle has been found to be true. Your data, properly converted into appropriate performance indicators, will show you where your largest margins come from. You can then channel more time and effort in that direction.
For instance if a company had five drink brands in the market but notices that Brand A, which has a profit margin of at least twice the others is in greatest demand, they could (a) focus production efforts on that brand, so that more bottles go out to trade (b) Apply Best Practice/Continuous Improvement initiatives that would result in lower costs of producing each bottle of Brand A so that even though the market price remains fixed, the company is able to earn increasing profit margins per bottle.
To experience the type of automation I refer to, you can email FREE demos of sample automated Excel VB driven spreadsheet applications like Ƒ) a Training Tracking Database(TM), ƒ) a Fiveƕ) Year Income & Expense Monitor(TM) or Ɠ) an Export Packing List & Invoice Generator(TM) to yourself using the file mailer on my website.
Spreadsheet Tracking As A Crucial Element For Business Development. There are ways you can use spreadsheets to record and track materials usages/stocks, product sales, and other business data such that discrepancies will be easily detected when they do occur. The use of spreadsheets when properly done, can help to uncover the cause(s) of "losses" in virtually any aspect of a business operation.
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