At first, creating a new business process seems simple. But even if you’ve identified a complete, linear path from your suppliers to your customers, you may start to notice complications.
Wrangling a list of departments that need to get involved. Figuring out how to transfer a product from one department to another. Finding a way to simply codify it all so you don’t end up with 40 versions of the same basic business process document.
To solve the problem of complexity, many companies turn to the SIPOC diagram. Working from a SIPOC template helps create a “blueprint” for any new business process you want to create. Done right, you’ll gain a clear understanding of what needs to happen to launch a new product or service, down to the smallest details.
But it won’t work until you know how to mold that SIPOC diagram into a rock-solid plan.
What does SIPOC stand for?
SIPOC stands for Supplies, Inputs, Processes, Outputs, and Customers. It refers to an A-to-Z approach to the entire business process. This is useful for high-level management because it helps you document any new business process from a bird’s-eye view.
You might have also heard COPIS, which is the entire process in reverse. Why start with “Customer” at the beginning? Some companies want to emphasize the customer’s experience and reverse-engineer their business process around that.
For others, SIPOC’s chronological order makes more sense. Without supplies and inputs, there are no outputs and customer-facing products or services. Think of SIPOC as an essential way to distill the business process down to its core steps, from A to Z.
What is a SIPOC diagram?
A SIPOC diagram is a workflow chart that illustrates every stage of your SIPOC. This brings the SIPOC meaning in your business from an abstract acronym into a visualization of workflow. According to some statistics, visualization like this can boost performance by as much as 89%.
In other words, SIPOC diagrams help you see a new business process before you implement it.
A SIPOC process can be as comprehensive or as simple as you like. But at the very least, it will need to include a component part of each of the following:
- Supplies: What are the tools, products, services, or raw materials that need to be a part of the business process to create an end result for your customer? List them all here.
- Inputs: Are there data inputs that need to go into the process at this stage? What do you need to add or modify to the existing supplies?
- Processes: Here’s where you’ll list the essential functions of your business as you carry out the new directive. What processes can be automated? Which ones will be manual? Will you have to hire new workers to handle the processes and inputs? Answer those questions here.
- Outputs: This is where you should think about maintaining standards, as well as installing processes for quality control. Any testing you do with your products/services before they go to market will take place here.
- Customers: This stage doesn’t simply refer to the point of purchase. Think about the entire customer experience. In fact, you might even want to consider doing a few COPIS exercises just to get a sense of what you want the end result to look like before you build the process around it.
SIPOC diagram example
We’ve put together a step-by-step illustration of a SIPOC diagram below:
If that’s too abstract, let’s take a simple but specific example. Let’s say your business process is going to the grocery store. Here’s what that could look like:
- Supplies: Fully stocked grocery store, address of the grocery store, car to drive you there, money to purchase groceries.
- Inputs: List of ingredients. Scheduling a time to visit the store.
- Process: Purchase groceries, return home, put groceries away.
- Outputs: List of recipes. Food preparation.
- Customers: Happy, well-fed family.
It might not translate to something as complex as a 500-employee business. But a trip to the grocery store helps solidify exactly what a SIPOC diagram is: a blueprint for getting things done.
What are the benefits of SIPOC diagrams?
Dwight D. Eisenhower once said that plans are worthless, but planning is essential. The idea? You may need to adapt your plans when the rubber meets the road, but the act of preparing plans is what prepares you to handle any obstacles.
The SIPOC diagram forces your business to do the essential work of planning. By creating a SIPOC diagram, you see the entire workflow from beginning to end. Along the way, you can fish out blind spots, brainstorm new ideas, and reduce red tape that isn’t necessary to create the end results you want.
But the act of sitting down and planning isn’t the only benefit of SIPOC diagrams. Here are a few more to consider:
- Cost savings: There’s a reason you don’t build a house until you have blueprints in place. When you make a mistake in the blueprints, you can erase them and not lose thousands of dollars in labor and costs. Think of SIPOC as your blueprint for business processes and you’ll understand why you want such a clear picture of a business process before you begin. You’ll identify many of the potential bugs before they have the potential to cost you serious money.
- Beginning the process: With SIPOC diagrams, you’re already beginning the planning stages of developing your business. You’re already brainstorming suppliers, considering which departments need input, and thinking about the key people who will be part of the process. When you’ve effectively built out a SIPOC diagram, your end result will be a blueprint that’s ready for feedback and adjustment.
- Making strategic decisions: Along the way, a SIPOC forces you to see business processes as a result of cause and effect. Some data suggests it helps you identify patterns as well. This puts you in the position of making strategic decisions at the outset. How will the supplies you acquire affect which customer segments you target? Will you need to hire people to provide key inputs that you don’t already have at your company?
What challenges should I be aware of with SIPOC analysis?
A SIPOC analysis is low-cost and high-benefit — it only takes advanced planning. But it doesn’t mean there won’t be challenges along the way.
One key challenge: untangling knots. With a SIPOC diagram, you have to answer cause-and-effect questions. And sometimes, it can be difficult to handle these without the ability to experiment in action and see which solutions work best. The temptation is to skip the SIPOC analysis and get straight to taking action, but this can lead to its own problems. The best way is to complete the SIPOC as much as possible. You might also refer to a Gantt chart to help supplement this issue.
Another key challenge is communication. You have to keep key decision-makers in the loop with SIPOC diagrams, and if you make business process decisions without their input, it can not only introduce complications but friction. Visualizing data has a way of making communication effective — after all, a picture is worth a thousand words. Harvard Business Review refers to data visualizing as “visualizations that really work.”
How is SIPOC used in project management?
You’re probably already getting a grasp of how a SIPOC diagram can help make project management more streamlined, efficient, and stress-free. But, there are a few more things to keep in mind to reap the benefits for your projects.
- Use specifics: Don’t say, “we will need enough graphite to put in our pencils.” Get specific about how much graphite you need if you’re building pencils. A good template for handling the Supplies and Inputs variables is to use formulaic statements. For example: “We will build X-quantity of Y-material into Z-units before moving to the next stage of the process.” Don’t leave the work of estimating quantities to the future. That’s what SIPOC is here for: to create your blueprint.
- Document the types of customers you have and what they need: Project management without an emphasis on the customers’ experience is ultimately an internal-facing process. But it’s not completely SIPOC unless you include customer considerations. Make sure you know who your target customer is. What are their concerns? What problems are you solving? Knowing these questions and feeding them into the rest of the process will help you innovate in ways that wouldn’t be apparent if you were solely focused on the first four stages.
- Record your progress: Even if you don’t nail a SIPOC analysis on the first try, record your progress every time you and your team sit down to discuss the details. Remember to think of your SIPOC diagram as a blueprint. You wouldn’t get halfway through sketching the plans for a house and then say “we’ll remember this when we sit down again.” Document every step you’ve specified, including any key numbers and people you’ve identified as part of the new process.
- Gather feedback: Once you have a SIPOC ready to go, it’s time to involve any key decision-makers who might have a say, even if they’re not going to make key decisions in the process itself. Take a scientific approach. Your goal is to poke holes in the process and come up with solutions before implementation.
Once you have a thoroughly vetted SIPOC diagram in hand, you’ve defined your new business process in full. This isn’t to say it will go perfectly smoothly when you launch. But when something does go wrong, you’ll have a much clearer picture of what needs to be done to get back on track.
Rather than making your processes rigid, the end result of a SIPOC diagram is that you make yourself more flexible and adaptable. You’ll build a business that can adjust on the fly. You might throw out old plans once in a while. But if you approach it the right way, the simple process of planning can take you anywhere.
