SIPOC stands for suppliers, inputs, processes, outputs, customers. SIPOC is a management tool frequently used for process analysis in production and operations management as well as in business process improvement.
The approach is general so it can be applied to any analysis in business, although it was originally used by quality management and production management professionals.
How to use the SIPOC tool?
You can analyze your business process with this tool by using a table with 5 columns with the SIPOC titles as follows:
Supplier – Input – Process – Output – Customer
In each column make a list of key stakeholders for your processes. Keep in mind that you should use both internal and external stakeholders. For example, in some circumstances all your customers or suppliers might be internal.
Since SIPOC analysis is used for analyzing processes it is important to define your process with its start and end before you start the analysis.
In addition, defining inputs and outputs is both art and science because in some cases like in production processes materials and physical units are used for input and output, however in other cases inputs and outputs can be different things like information, document, result from another process, etc.
After you create your list of suppliers (both internal and external suppliers), for each supplier you can create a new row in your table and list all the critical for your business inputs, processes, outputs and customers.
The most frequently asked question is: “should we analyze everything based on and starting with the suppliers or should we start with the customers?”
Based on your situation analysis you can try both ways and see which one approach makes more sense for your requirements. Many business analysts start with the customers first and even use the name COPIS instead of SIPOC.
Based on your business analysis requirements you should in addition define the purpose of your analysis and consequently the KPIs for each stage in your process which will be used during your analysis.
For example, you might be in a situation where you need to evaluate different vendors and you will use your KPIs and metrics to compare their performance. In addition to the KPIs you might also assign the importance or weight of each KPI for your business process and calculate overall weighted averages for each supplier or customer.
As you can see the SIPOC analysis is a very general framework which means that it allows you to perform different analysis in different ways. The benefits of SIPOC come from the simple and powerful foundation used which is always helpful to keep your analysis well structured at anytime.
You can follow these simple steps when using SIPOC:
- Define the business requirements – the purpose of your analysis
- Define the process or processes which will be used for SIPOC
- List all stakeholders
- Use KPIs to evaluate and compare different elements in your process
- Summarize your business analysis and Identify simple and obvious ways to improve your process(es)