SIPOC
How to Improve Your Output_

Introduction

Run a business?

Then you need to use SIPOC.

“Woah woah woah-

How do you know?”

Because every business needs SIPOC.

Every process.

Every product.

And every department.

Each element of your operation can do with a visual overview from supplier to customer.

Not convinced?

Well, we’ve trained nearly two-thirds of our clients in SIPOC diagrams.

Yep - that’s a lot of successful businesses.

In fact, it was only last month we introduced a new customer to SIPOC.

They were an accounting firm based in Northern Ireland.

They did pretty well last year by advising lots of worried business owners for small fees.

(They’ve got a thing about giving back to the community.)

After COVID-19, they were planning to make these low-cost advising services one of their main services.

Demand went through the roof.

And hey, that’s a good thing!

But what wasn’t so good was their efficiency.

They wanted to find ways to streamline the delivery of this service.

Any time they could slash would translate to cash savings.

Normally this would call for a process mapping session.

You know, a clear way to see any inefficiencies and delays in processes.

But we started them off with a SIPOC map.

Why?

Because it provides a clear overview of where a process starts and ends, what goes into it, and the stakeholders involved.

It familiarised their financial advisory department with their new offering and the process behind it.

This was an essential foothold to boost them into the next stage:

Process mapping and optimisation.

It’s only been a few weeks, and they’ve cut the average process time per client down by two hours.

Might not sound like a lot, but that adds up.

A simple visual tool gave the entire team a chance to sync up.

It was the starting point for their post-pandemic journey.

After all, you can’t improve something if you don’t know what needs improving!

Sounds like you could do with some SIPOC?

Well, you’re in the right place.

I’m even going to take you through a step-by-step example of a SIPOC diagram.

You really can’t go wrong!

Contents

Chapter 1

What Is Continuous Improvement?

It’s pretty intimidating, isn’t it?

Staring a scary acronym in the face.

(And it’s in all-caps, too.)

But it’s really quite simple.

A SIPOC is a tool that summarises the inputs and the outputs of a process in a table form.

It tends to look something like this.

We will come back to this SIPOC diagram later.

As you can see, it covers suppliers, inputs, process, outputs and customers.

Each column of the table focuses on a different category.

You can see where the acronym comes from.

So, what’s the purpose of SIPOC?

It’s used by businesses to identify the different elements of a process improvement project.

Essentially, it helps define the scope and the stakeholders of a process.

It’s best known for its use in Six Sigma methodology.

This is an approach that encourages businesses to improve their processes with strategies such as ‘DMAIC’.

SIPOC is used during the ‘define’ or ‘measure’ phase of DMAIC.

This new acronym means ‘define, measure, analyse, improve and control’.

SIPOC has even been used during Kaizen events.

Sounds pretty straightforward, right?

Next, we have to define SIPOC’s relationship with process mapping.

It’s a complex one.

Some people think SIPOC is a high level process map.

It just shows a few steps of the process, customer needs and outputs.

Some people think it’s a pre-process map stage.

It is used before an in-depth process map, like a value stream map.

Here’s an example:

Two years ago, we started working with a vegan catering company in Surrey.

They were trying to streamline processes by focusing on their company culture.

“We’ve got the technology.

We just need the mindset to match.”

We introduced them to Six Sigma and explained how to use DMAIC to improve their business.

We recommended process maps to kickstart this shift.

But before that, we showed them how to complete SIPOC maps.

Why?

Because it applies boundaries to a process and establishes the level of detail required to map the process.

So, you know what SIPOC is.

(And what it isn’t.)

But where does it come from?

Lean thinking and Six Sigma have their own diverse histories.

SIPOC comes from Total Quality Management programmes:

These were business-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on-demand products and services that customers will find of particular value."
- Dan Ciampa, 1992

TQM was kickstarted in the US and Europe as a result of Japan’s surge in competitive advantage in the 1970s and 80s.

This was due to the emergence of Kaizen in Japanese industry.

It made costs lower, efficiency higher and eliminated waste continuously.

So, European and American companies looked into the quality control measures taken by the Japanese and took direct inspiration from it.

The most famous example of this was with the US Navy in 1984.

They followed William Deming’s (a leader in Kaizen) approach to improve their operational effectiveness.

These ideas would later penetrate the US government and branches of the armed forces through the decade.

And it was in the 1980s that SIPOC, one of its core tools, gained fame.

Today, it’s a staple of Six Sigma and lean manufacturing.

But why was it quite so famous?

And why is it so important for a business to use?

There are a few reasons I’ll explain in more depth later.

For now, I’ll whet your appetite…

They’re a useful precursor to process mapping.

They help identify or isolate problems in processes.

Chapter 2

What Is Six Sigma?

I’ve already explained that SIPOC comes from Six Sigma.

But if you don’t know what Six Sigma really is, that’s not helpful, is it?

So, I’m here to give you a whistle-stop tour of the go-to business methodology.

What is Six Sigma?

It is a set of methods and tools used to improve business processes and product quality by finding and correcting defects.

It looks for problems, identifies their cause and emphasises repeatability and accuracy.

The idea is when efficiency rises and defects fall, the quality and timeliness of products improves - along with employee satisfaction.

One of the most popular methods or roadmaps is DMAIC.

(Remember?)

Six Sigma focuses on measuring a process in order to improve it.

What are the principles of Six Sigma?

There are quite a few.

But let’s just cut to the chase and go through the most important ones.

Efforts to improve business processes should be continuous.

Getting rid of variation can save money and prevent defects.

What are the benefits of Six Sigma?

There’s a reason Six Sigma is so popular among businesses…

It reduces waste.

It improves time management.

It increases customer satisfaction and loyalty.

It boosts employee morale.

It increases revenue and lowers costs.

Sounds awesome, right?

Well, SIPOC naturally imports some of these benefits over to the businesses that utilise it.

In fact, we always advise our clients adopt its principles when they first consider SIPOC.

But you don’t need to fully submit to Six Sigma to successfully implement this tool.

Chapter 3

Does Your Business Need SIPOC?

It’s all well and good for me to gush about SIPOC.

I’ve seen it in action.

I know what it can do!

But if you’re looking for a new business tool, you wanna be sure you aren’t wasting your time.

I get that.

I’m here to quash your concerns.

I’m here to answer your queries.

I’m here to prove SIPOC is essential to streamlining your business processes.

We’re going to go through when you should consider SIPOC, and if your processes are eligible.

That way you can be sure how it will work for you.

This is always the biggest concern of our new clients.

In the first few months of 2021, we engaged in talks with a marketing agency based in the States.

They were in the middle of a crisis:

They had just lost two big clients because of a simple, avoidable error:

A confusing email chain.

We’ve all been there.

They managed client projects via eclectic communications.

You know, emails, Slack messages and phone calls.

An important message was just waiting to be missed!

Deadlines weren’t picked up on.

Updated ideas were ignored.

It was bound to go wrong.

We introduced them to Six Sigma to help them identify the issue and correct it.

But they’d just lost a major source of their income.

If it didn’t work, they’d lose even more money!

So, we took the time to walk them through the processes up ahead.

Once we’d matched specific processes to SIPOC, they could be sure it was the best course of action.

Now it’s time to do the same for you!

Firstly, let’s go through why you should do SIPOC.

If you want to work out any of these things, you know where to turn.

Next, you need to calculate if your processes suit it.

Six Sigma started with manufacturing firms.

But these days, any business can use it.

In fact, a vast range of executives implement DMAIC into their operations everyday.

Amazon, Boeing, and Motorola are just a handful of Six Sigma’s biggest fans.

Okay, okay.

I’ve regurgitated everything I know about SIPOC.

And it’s a lot.

But now it’s time to uncover how to actually do a SIPOC map.

Don’t worry, it’s really straightforward.

But to make things even easier, I’ll take you through each step.

You can’t go wrong!

First, let’s look at the template of a SIPOC diagram.

It’s pretty simple to understand, isn’t it?

For example, in the ‘suppliers’ column you list all the stakeholders who provide inputs…

You get the picture.

Let’s go through the different elements in more detail.

Suppliers

Suppliers are the stakeholders who supply the inputs.

They can be internal or external to an organisation.

Here’s an example:

Let’s say you run a software company.

Not bad.

The software developers are the suppliers.

The managers that oversee development are the suppliers.

But do you know who else fits into this category?

The customer!

That’s because they give a request and requirements for the software which is an input into the process.

If the example was a shop on the high street, the customer wouldn’t be a supplier.

Why?

Because they don’t influence the inputs as much as a client asking for a custom-made product.

Inputs

Inputs are things provided by suppliers that are required for a process.

This includes services, products, information and skills.

Let’s say you own an accounting firm.

Busy, aren’t you?

Your inputs could be:

Customer requirements for individual businesses.

Specific accounting knowledge.

And accounting software and tools.

Process

This is the easiest step.

All you have to do here is provide the steps that turn the inputs into the outputs.

Just break down the process into 5-7 chunks.

We recommend each chunk/step is titled with a ‘verb + noun’.

For example, ‘wireframe software’ or ‘design form’.

Outputs

These are the results of the process.

Each output must be based on the requirements already laid out.

Even the products or services used in the later steps of the process qualifies as an output.

Imagine you owned a graphic design company.

The outputs could extend to:

A completed website project.

The design documents and diagrams.

Documentation for the website programming.

And a happy customer.

Customers

(I don’t need to tell you who they are.)

But you do need to know that they can be internal or external.

Let’s go back to the graphic design example.

The customers would include:

The company you produced the shiny new website for.

And the people that would go on to use the website - aka the end-users.

But it could also include your own employees!

“Wait - how does that work?”

The outputs aren’t intended solely for your customers.

One of the outputs could be for use in the process.

Therefore a customer of one of the outputs would be your team.

Chapter 5

The Pros And Cons Of SIPOC

No decision would be complete without weighing up the good and the bad.

SIPOC might sound good on paper…

(Or computer screen, I guess?)

...But can it really benefit your business?

Take it from the expert.

And by that I mean me.

Let’s go through the advantages and disadvantages of high level mapping!

The Pros

It provides an overview of a process before you deep-dive for process mapping.

SIPOC ensures no stone goes unturned or input goes missed.

It gives your team a chance to gather your thoughts and put them into practice.

If you’re just starting process mapping, your documentation might be limited.

SIPOC can correct this.

It updates team members on operational changes.

Lean thinking and Six Sigma always emphasise team work.

And not just amongst the executives.

Improvement starts at an employee level.

SIPOC provides effective documentation that everyone can contribute to and understand.

This is turn encourages the principles of continuous improvement.

And who doesn’t want that?

It simplifies the definition of a process.

Process mapping ain’t easy.

It kickstarts not just mapping but process optimisation, too.

It can identify liabilities in your business.

Hefty fines.

Angry letters.

The occasional hurried phone call.

When you get caught out for breaching one of those pesky regulations, it can have damning effects on your business.

To prevent this from happening, you need to know what your business is doing at all times.

You need clear documentation that is frequently updated to catch out problems or liabilities.

SIPOC provides the broad scope you need to keep an eye on your operations.

It maximises your business process efficiency.

SIPOC exposes your operations.

Unnecessary input?

Spotted.

Outdated process?

Noted.

Customers not satisfied?

Got it.

Six Sigma emphasises cutting waste out of a business.

And using fewer resources for higher output is the epitome of efficiency.

The Cons

It only provides limited detail.

SIPOC is known for providing a broad scope.

It sets the boundaries of a process.

It doesn’t map it.

Therefore, it should never be completed without a follow-up process map.

It is just a starting point for process mapping.

SIPOC gets a lot of flack for not going far enough.

It’s considered merely a stepping stone for process mapping and process optimisation.

But it’s an important stepping stone.

Without it, you’d be a bit lost.

And your process mapping might skip over a few details.

Chapter 6

An Example Of A SIPOC Map

Let me guess:

I’ve done a pretty good job of convincing you to try SIPOC.

You’re welcome.

But I’m not done just yet!

Yes, I’ve shown you a few templates…

And yep, I’ve walked you through the elements…

I want to make things even easier.

Time for some inspiration!

Remember that process map I told showed you early on in this article?

Now you understand how they work, it should make a lot more sense.

Here’s an example of a completed SIPOC map for a complaint procedure in a manufacturing company:

Conclusion

Are you ready to get your SIPOC on?

Well, you should know enough to kickstart the process.

So, what are you waiting for?