Certified Production & Operations Manager Exam Practice 2025 – Complete Study Guide

The degree of improvement in key areas of operations is best explained by the Pareto principle, also known as the 80/20 rule. This principle suggests that a small number of causes or factors are often responsible for a large percentage of the effect. In the context of operations management, applying the Pareto principle can help organizations identify which key areas are most critical for improvement. By focusing efforts on these vital few issues rather than trying to address all potential problems, organizations can achieve significant enhancements in efficiency and effectiveness.

For example, if a company finds that 80% of its operational inefficiencies stem from just 20% of its processes, prioritizing improvements in those specific processes can lead to substantial overall gains in productivity. The Pareto principle allows managers to allocate resources effectively and make informed decisions about where to concentrate their improvement efforts for maximum impact.