SIPOC is a diagramming tool that uses logic to help a team create a process map of a how they (the team) accomplish a task. This also has a tendency to irritate some of the team members if done incorrectly.
SIPOC stands for Suppliers, Inputs, Process, Outputs and Customers. Here is a great link to how to perform a SIPOC diagram, meanwhile I want to talk about the benefits.
The power of a SIPOC is that it makes a team actually put on paper what they do. In most small organizations individual's think they know how things are accomplished by their team members, both upstream and downstream of them. Most often what they believe is happening is not entirely true.
Once a process is mapped, you can add the wait times between processes and actual processing time to the map. This helps to identify areas that need improvement.
I did a SIPOC with a finance department and we discovered areas ripe for improvement. They wanted to improve their collections in accounts receivables because their DSO (days sales outstanding) was very high. We had everyone that worked on accounts receivables (4 people) do the map and after 2 hours what emerged surprised all of them, including the controller.
We found that:
- Invoicing occurred every 7-10 days.
- Report of overdue invoices was run every 30 days
- Action on overdue invoices occurred 7-14 days after the report was run. (Low priority)
- Many Invoices had errors and error resolution took an additional 3-7 days (Low priority)
- Receipt of payment was tracked at the day deposited into the bank and not when actually received
- Monies were deposited only twice a week
The times and issues above were estimated from the workers..."gut instinct data" which after further checking was discovered to be fairly accurate.
After doing some additional Lean Six Sigma work the DSO dropped by 50% in a matter of 2 months.
"Live Long and Prosper"
S'chn T'gai Spock "the pointy eared-bastard"