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80/20 rule technique for Financial Performance & Productivity Management:


Introduction:

Rule 80/20 techniques which is known and popular with the name of Italian economist Vilfredo Pareto. That is the rule which explain that how the 20% actions make the 80% effects on our action or  the rule stated that our 20% action can give us 80% productivity. That’s consider as a rule of thumb in many sciences.  Vilfredo Pareto essentially noted  that the 80% land and resources and land occupied by the 20% population.


Back Ground and Examples:
Management Consultant suggested that the 80/20 rule and give it the name of Pareto 80/20 effective rule. The rule come in paper first time in 1896, the paper name is Cours Decomomie  Politique and according to him
There are many example we have but according to the subject time for Financial Performance and Productivity Management we see that if a business company wants to use its inventories effectively so they need a complete and comprehensive Supply Chain Management department and team. Through which they completely manage their product or services demand and supplies. They need to keep the 20% of their inventory in stores and use the 80% in production and make the planning to how to use effectively the production units and maintain the Supply chain issues. The Finance department needs to keep the 20% of their early budgets in deposits in shape of liquidity which helps them in their hard times to use that deposits as investments in their business. That both the production and financing examples helps the business to improve the business productivity and performance and helps them to manage their business very effectively and efficiently.


Effective for Financial Growth:
There is another example for the Personal Finance Lovers. If a company or business use its 20% of skills with any business then they can get 80% through their 20% efforts. The Individuals also can use this rule to save their money for their future life time period. That savings and effective use of financial capital and equities helps us to give a very economical and financial growth to our business.
 
80/20 rule for other Sciences:
It is a common rule of thumb for many sciences topic in many topics. We can see the Pareto rule in Economics, Costing, Inventory Management, Supply Chain and Purchasing Management, Operations and Productivity Management, Total Quality Management, Six Sigma technique, ABC-Analysis, XYZ – Analysis and the Time Management Techniques. The Same rules can be use in IT, Software management development, Sports, Health and Safety related issues and Dunedin Study.

That’s show that how much the rule is positive, effective and efficient in terms of its results.  

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