Using a SIPOC to Improve Your Business

Today I am covering another systems thinking tool called the SIPOC. This is a tool that I was introduced to during my Six Sigma days when I went through the process of getting Six Sigma certified.

It’s one of the main tools that’s used in the world of Six Sigma. It’s used as a process mapping tool although it’s different than some of the tools that I recently covered like the swimlane diagram.

I’ll cover the basic SIPOC and what that looks like and then I’m going to talk through some of the things that I do differently nowadays when I use SIPOCs.

What is a SIPOC?

A SIPOC is a tool that’s used to map processes. SIPOC is an acronym that stands for –

Supplier
Input
Process Step
Output
Customer

It’s a reminder of what you need to do to complete the actual tool and what you’re looking to analyze in your business.

Remember some of the systems thinking fundamentals that I’ve covered in the past. Remember that a system is comprised of a few different things. The main piece of it is process steps. That’s each of the steps that you do to move through your system, and each of those steps has inputs and outputs.

The SIPOC is focused on defining the inputs, process steps, and outputs. The S stands for supplier and that identifies who or what is providing each of the inputs in the process. For each input, you’re going to have a supplier. The supplier is either a person or piece of technology that’s providing that input to the process step.

It’s important to identify people by a role and not a person’s name. If you use a person’s name and they leave your business, then all your documentation is out of date and you have to go in and edit it.

On the other end, the Customer is the person or technology that is receiving the outputs.

Value of a SIPOC

The value that the SIPOC brings is similar to the swimlane diagram, but it’s a little bit different because it’s got different information in it.

The SIPOC goes down to a greater level of detail and it helps you deconstruct what’s happening in your business process. You’ve got better information to do some of your process improvement efforts that you want to do within your business.

Having an understanding of the outputs means you’re going to have a better understanding of the correlation between the process and the system and the outcomes that you’re creating because outcomes are derived from the outputs of your processes.

Let me say that again. The outcomes that you getting in your business are because of the outputs that you’re creating and the experiences that people within your business are having with those outputs.

Having the SIPOC and that greater level of detail on the inputs and the outputs is going to give you better information to go in and start to fine-tune and tweak the systems that you have to make them more efficient.

Also, keep in mind that the outputs that you get from the process are a function of the process steps and the inputs so if you want different outputs, you must change the process steps and change the inputs.

Changing the inputs and process steps will change the outputs which will lead to different outcomes.

Mechanics of Creating a SIPOC

So let me talk through the mechanics of creating a SIPOC and how you want to approach this. First, define your system and if you haven’t already done it, define the desired outcomes you want from that system.

The desired outcomes serve as a guidepost. As we look at the things we’re doing, we’re always driving towards desired outcomes. We make sure that we’re not doing things that don’t help us achieve those outcomes. Everything that we are doing is is pointing us in the right direction towards the desired outcomes.

Once you have that, look at the process that exists within that system and define the bookends. The bookends identify where the process starts and where the process ends.

Once the bookends are established, the next step is to identify each of the process steps that take you from the start to the finish of your process.

Next, you’re going to identify what inputs are coming into each step and who or what is providing each input (the supplier). You’re also going to identify each of the outputs that come out of each step and who or what receives the outputs (Customer).

A lot of times, you will see the outputs of one step become the inputs to the next step. Most of the outputs within a process become the inputs to the next step. If you see a lot of that, don’t get worried that you’re doing it wrong or you’re not thinking about it the right way. That’s exactly what you should see.

The outputs from step A become the inputs into step B. The outputs from step B become the inputs into step C, and so on.

For a basic SIPOC that’s it. That’s how you’d put it together. It’s not super fancy. It’s not crazy difficult. It’s just a matter of sitting down, defining those bookends where you start and where you finish, walking the path from start to finish, and identifying the inputs, outputs, suppliers, and Customers for each of the steps along the way.

The SIPOC 2.0

There are a few things that I do differently nowadays that add additional value to the SIPOC.

First, when I’m looking at the inputs, I’m going to identify if the input is controllable or not controllable by me.

The reason you want to do that is that if an input is not controllable, then it doesn’t matter very much. You don’t want to spend a lot of time trying to look at that input and figure out what can you do differently.

You still want to identify non-controllable inputs because they are important to the process, but you don’t want to waste any energy trying to think about how you make it better.

Here’s an example. Think about an accounting process where you’re paying your taxes. You have forms from the IRS or your local government agency and those forms are going to be an input somewhere into your process of paying taxes.

Those forms are not controllable by you, by me, or by anybody other than the government and so we mark that as non-controllable.

That way we can set it to the side. We acknowledge that it’s an input and it’s part of our process, but we don’t want to spend any time trying to figure out how we might want the form to change because we’re most likely not going to get the government to change those tax forms.

Another thing that I do is for each of the process steps, I identify if they’re value-add or not. Non-value-add is a description that gets applied in many different ways. I want you to be strict on how you define value add when you’re talking about your business processes.

Use this definition. When we say a process step is value-add, it’s because the Customers of your business are willing to pay for the benefit of that process step. This is the only definition I want you to use of value-add when you’re doing process work.

What you’re going to find is that a lot of the steps in your processes are non-value-add. The Customer is not paying you more money just because you’re doing most of your process steps.

There are many things you do as part of running a business related to administrative work and overhead that need to be done, but the Customer doesn’t see value in those tasks.

This is important to identify because when we start to dive into looking at how we make a process more efficient, one of the things we’re looking at is what are we doing that’s not adding value that the Customer is willing to pay for.

What you’ll find is that in a process, you might have 80% or more of your process steps identified as non-value-add and that’s okay. If you see most of your steps are labeled as non-value-add, you don’t want to think you were too harsh or did it wrong. Most processes in most businesses large and small have few steps that are value-add.

So go ahead and be ruthless and how you label value-add and non-value-add.

Labeling steps and value-add or non-value-add will make your SIPOC more valuable as you continue to go through your processes. You’ll be able to see the steps that are not adding value. These make good candidates for improvements that will make your processes more efficient.

Another thing I do is label each of the outputs that have an impact on the outcomes that are coming from the system.

Not all outputs have an impact on the outcomes that are being produced by a system. This is another informational thing we can use later on in our process improvement. Similar to inputs that aren’t controllable, outputs that don’t have a bearing on the system outcomes should get little to no attention.

If we want to drive different outcomes then we need to go and change the outputs that have an impact on those outcomes.

Another thing that I do is for each of those process steps is to identify two measurements of time. The first is the time it takes to do the work associated with an individual step.

The other piece of time is the calendar time or clock time it takes to complete the step.

Some of your processes take more calendar or clock time than work time because there’s waiting involved. You might have a process step that happens over a day or even multiple days even though it only takes an hour to do the actual work.

Think about mailing a product out for an order that comes in. You are putting the product in a box, adding a shipping label, then dropping it off at a delivery service, but the package won’t be delivered for a day or two at the earliest.

If you had a process step to “mail the package” it might be 15 minutes of work time and 2 days of calendar time to complete that task.

The last thing that I do differently with SIPOCs is that I pair them with a swimlane diagram. The SIPOC and swimlane diagram complement each other very well. The SIPOC is more informational and it’s more words about what’s going on in your process. It covers all your inputs and your suppliers and outputs, etc. whereas the swimlane diagram is more about the flow. It shows you what’s happening in the flow of your process and how things move from start to finish.

I reference the boxes that are on the swimlane diagram with a number for each that will be referenced in the SIPOC so you know which step in the diagram goes to which row or rows in that SIPOC.

Technology for SIPOCs

The technology here is really simple. When I first learned how to do SIPOCs, I was taught to do them in Excel. I still do them in Excel today, although I’ve added my extra columns.

Any spreadsheet programs are great for these. Either Microsoft Excel or Google Sheets or even Airtable would be good.

The document itself is really simple. You’re going to create one or more rows for each process step and you’ll have columns for each letter of the SIPOC.

There is an example of a SIPOC on the resources site so can go there and download the example to get a feel for what it should look like and how to fill it out.

Scaling Your Business Using SIPOCs

The SIPOC is a tool that’s going to help you scale your business similar to the swimlane diagram. A SIPOC is designed to help you get more efficient with things that you’re doing. Improving your efficiency is going to make it easier for you to scale your business because you will eliminate waste and inefficiencies that would otherwise scale with your business.

You can use the SIPOC to identify and remove waste that you have, the non-value-added steps, inputs that don’t matter, and outputs that are causing you problems.

You can use this document to really fine-tune your processes and then when you go to scale your business, you’re going to have sleek processes that are giving you what you need.

The SIPOC will help you get more efficient, and that’s going to make it easier for you to scale your business.

Creating a Great People Experience with the SIPOC

The SIPOC is also a tool that can help you from a people management perspective.

The SIPOC creates an opportunity for you to leverage your staff to help you do this work, and in doing so, you’re going to create a lot of goodwill with your employees. They’re going to see you taking an interest in their thoughts and ideas on improving the work they do.

When you document a process, you want the people that are doing the work to document what’s happening anyway. You shouldn’t document what you think is happening or what you told someone to do.

Just because you told your employee to do ‘x’ doesn’t mean they’re doing it the way you told them to do it. Let your employee tell you what they’re doing.

Completing that SIPOC gives you a leadership opportunity to work with your staff help them help you and show them that you’re interested in their thoughts and their ideas for improving the business.

That’s going to make them feel heard. That’s going to make them feel better about their spot in your company and the value that you put on their opinion will go a long way towards making them feel better about their job and the work that they’re doing.

That covers our review of the SIPOC.

If you’re looking for extra guidance on how to apply this or other tools in your business, you can book a 15 minute call with me for $95 here.