sipoc-diagram

SIPOC Diagram In A Nutshell

In a SIPOC diagram, high-level process maps are used as simple yet effective illustration tools. Project leaders use them to quickly explain expectations and provide common reference points to all project team members. SIPOC diagrams are also helpful in identifying problem areas offering little value.

Understanding a SIPOC diagram

A SIPOC diagram is a tool for documenting and improving business processes. Ultimately, SIPOC diagrams help businesses develop operations that are more efficient and less wasteful. The diagrams are a form of process mapping, where project goals are first identified and then detailed steps devised regarding how they might be achieved. 

The five components of a SIPOC diagram

SIPOC is an acronym of five components that are included on a SIPOC diagram. Emphasis is given to high-level processes and how they transform inputs (resources) into outputs (products or services).

Here are the five components:

  • Supplier – the provider of inputs into a process. For a café business, the supplier may be a local roastery or grocery store. Customer requests or feedback can also be classified as suppliers.
  • Input – materials, resources, or other information required to complete a process. Coffee beans and cake are examples of inputs for a café. Electricity and water are also important inputs in the coffee-making process.
  • Process – what are the steps that must be taken to convert inputs into outputs? The café must take customer orders using a point-of-sale system and then convert coffee beans into a hot appetizing beverage.
  • Outputs – or products and services that result from the process. For example, a freshly brewed cup of coffee.
  • Customer – the recipient of the output, such as coffee lovers or morning commuters.

How to construct a SIPOC diagram

Constructing a SIPOC diagram is relatively straightforward. To start, create a table with five columns and then label each with one of the five components.

Then, follow these steps:

  1. Write the name of the process in the central column and describe key steps. In describing the steps, remember that SIPOC diagrams describe high-level processes. Keep each step brief by using a flowchart and ensure that the team understands the start and endpoints.
  2. Identify the outputs. Describe four or five important outputs using nouns and neutral language to avoid categorizing them as either positive or negative. Businesses can also note customer requirements in this column but again, keep the tone neutral where possible.
  3. Identify customers. Who are the stakeholders that will ultimately benefit from the process? If improvements to internal operations are the goal, then employees are the customers. 
  4. List the inputs required for the process to function at the desired level. The focus should again be on four to five of the most salient.
  5. Identify the suppliers for each input described in the previous step.
  6. At this point, a business may choose to identify preliminary customer requirements. This step is useful for those incorporating customer requirements into the measure phase of the Six Sigma DMAIC methodology.
  7. Lastly, discuss and verify all aspects of the process with sponsors, key stakeholders, and decisions makers.

Key takeaways

  • A SIPOC diagram helps businesses identify the key drivers of high-level process improvement.
  • A SIPOC diagram consists of five components: supplier, input, process, output, and customer. Focus is given to processes and how they transforms inputs into outputs.
  • Constructing a SIPOC diagram is a straightforward affair that favors simplicity. Team members should identify processes using flow charts and keep input and output lists to a maximum of five items. However, those wanting a more detailed analysis can incorporate the Six Sigma DMAIC process.

Connected strategic frameworks

PESTEL Analysis

pestel-analysis
The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

SWOT Analysis

swot-analysis
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

Porter’s Five Forces

porter-five-forces
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces

Growth-Share Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Root Cause Analysis

5-whys-method
The 5 Whys method is an interrogative problem-solving technique that seeks to understand cause-and-effect relationships. At its core, the technique is used to identify the root cause of a problem by asking the question of why five times. This might unlock new ways to think about a problem and therefore devise a creative solution to solve it.

NOISE Analysis

noise-analysis
A NOISE analysis is a strategic planning tool that is a useful alternative to the SWOT analysis. Conversely, the NOISE analysis allows decision-makers to analyze the current state of the business and create a strategic improvement plan. It incorporates solution-focused language that helps teams build upon their knowledge and goals and overcome identified obstacles.

SCOC Analysis

scoc-analysis
The SCOC analysis is an asset-based strategic planning tool focusing on the core strengths of a business, building upon what it claims to be the shortcomings of a traditional SWOT analysis. Indeed, the SCOC analysis claims that the SWOT analysis focuses on threats that might never materialize, thus underweighting potential opportunities.

STEEP Analysis

steep-analysis
The STEEP analysis is a tool used to map the external factors that impact an organization. STEEP stands for the five key areas on which the analysis focuses: socio-cultural, technological, economic, environmental/ecological, and political. Usually, the STEEP analysis is complementary or alternative to other methods such as SWOT or PESTEL analyses.

TOWS Matrix

tows-matrix
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"