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- 1. Making Better � Joe Kilbride, Kilbride Consulting, Inc. Excerpt from Chapter 2: Making Sense SIPOC (Customer-Supplier Chain) What is it? A method used to clarify the value chain in which you operate. It is often used to: ♦ Develop team purpose or mission ♦ Identify possible “quick hit” opportunities to eliminate some non value-added outputs ♦ Select a core process to redesign ♦ Clarity key customer or supplier relationships needing improvement The name SIPOC derives from the content of the chain: Suppliers, Inputs, Processes, Outputs, Customers. How do I use It? � Identify the team or organizational unit for which the SIPOC chain is being developed. Inevitably this chain is a sub-unit of other, larger chains and has sub-chains within it. Use your judgment to decide the proper level of perspective, but it is
- 2. generally best to focus on the SIPOC of the group completing the chain. � Clarify roles and allow 30-60 minutes to complete the chain. � Brainstorm to fill the SIPOC one category at a time. HINT: Suppliers and Customers are WHOs, Inputs and Outputs are WHATs, and Processes are HOWs. Therefore the S, I, O, and C columns should be lists of nouns. The Process column should be written in the form Verb-Direct Object, e.g., Take orders, Write Code, Select vendors,etc. To complete the chain, it usually works best to… ♦ Start with Product/Service Outputs, ♦ Then work backwards from there by identifying the Processes that produce those outputs, ♦ The Inputs to those processes, and ♦ The Suppliers of those inputs (both internal and external). ♦ Finish by identifying all Customers (internal and external), i.e., anyone who receives and uses your Product/Service outputs. HINT: For some types of knowledge work, you might also include anyone whose behavior you wish to influence through your work processes.
- 3. Making Better � Joe Kilbride, Kilbride Consulting, Inc. Excerpt from Chapter 2: Making Sense Don’t be surprised to discover overlap between your lists of Suppliers and Customers. This indicates life is more non- linear than this method, and explains why managing these relationships can be so challenging. At one minute, you are a supplier; the next a customer, and often within the same conversation. � Refine your Processes into a final list of 5-15. You may divide your list of processes into three types based upon the process model illustrated at right and described below: CC Core processes directly add value to customers Examples are: • New Product Design • Production
- 4. • After-sales support SS Support processes enable the Core processes Examples are: • Finance • Facilities management • Information management GG Governing processes direct or monitor other processes Examples are: • Strategic Planning • Performance Reviews � Analyze the chain to identify areas for improvement. Use a red pen to “flag” any areas in your chain where:
- 5. ♦ Customer requirements are not clear, ♦ Outputs are non value-added and can be eliminated, ♦ Processes aren’t functioning effectively, ♦ Supplier performance is not satisfactory. POINTER: Methods in Chapter 6: Making Improvements can address identified opportunities. See Stop-Start-Streamline to identify “quick hit” improvements. See Customer Segmentation to clarify target customers for further study. See Supplier Assessment to address the performance of key suppliers. DeliverSell Produce Develop products Service Support Processes Core, Operating Processes Governing Processes Customer
- 6. Value �Information Services �Finance & Accounting �Purchasing & Supply �HR Management �Sales & Marketing �Facilities Management Making Better � Joe Kilbride, Kilbride Consulting, Inc. Excerpt from Chapter 2: Making Sense POINTER: A common use of SIPOC is to develop a list of processes, then select one or more to improve. Refer to Chapter 5: Making Decisions for methods such as the Impact-Ease Grid or Goals Evaluation Matrix in When selecting a process for improvement, consider the following criteria to ensure you focus your improvement efforts on the VITAL few processes: VVersus--How large is the gap versus competitors? Versus customers’ perception? IInfluence--To what extent will improvement in this area influence other areas? TTiming--How urgent is it we improve in
- 7. that area now? Other things we should do first? AAppetite--Is there enthusiasm for achieving this goal? Improving this process? LLikelihood of success--How feasible is it? Do we currently have the required capabilities in that area? Can we develop them? In addition to these criteria, experience has shown that for teams new to process improvement, it is usually best to map, analyze and improve a process that… ♦ Is existing (versus designing a new one). ♦ Involves multiple individuals, groups or functions. ♦ The right team can be assembled, including those with sufficient understanding of how it works and authority to change it. ♦ The team's sponsor agrees is a priority. ♦ Is likely to yield significant payoff as a result of improvement. ♦ You are enthusiastic about changing. ♦ You aren't certain how to improve it, i.e., the answer is "unknown".
- 8. On the next page is an example, followed by a blank SIPOC worksheet. Making Better � Joe Kilbride, Kilbride Consulting, Inc. Excerpt from Chapter 2: Making Sense SIPOC (Customer-Supplier Chain) � Chain for: JOE’S PERFECT PIZZA Scribe: Facilitator: Date: Participants: Timekeeper: SUPPLIERS INPUTS PROCESSES PRODUCT/SERVICE OUTPUTS CUSTOMERS S C ��������� ��� �� �������� ��� ��
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- 15. Making Better � Joe Kilbride, Kilbride Consulting, Inc. Excerpt from Chapter 2: Making Sense SIPOC (Customer-Supplier Chain) � Chain for: Scribe: Facilitator: Date: Participants: Timekeeper: SUPPLIERS INPUTS PROCESSES PRODUCT/SERVICE OUTPUTS CUSTOMERS S C � � � � � � �
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- 21. � � � � � � � �� � � �� � Roles Professor Roblyn Simeon [email protected] IdeaIdea OpportunityOpportunity Business Plan Business Plan
- 22. What? What? + How? Business Model Canvas Opportunity: What? • What is the real need/problem? • What market/customers are we after? • What value is added? Business Plan & Model Canvas: What & How? • How are the need addressed • How do we target/serve our market/customers? • How the value is added? BUSINESS MODEL CANVAS: ALTERNATIVE APPROACH • Visual language for business planning • Describe the main business block of a business model • Allows continuous testing of ideas/hypotheses (do not have to
- 23. continuously re-write a business plan) • Shows a BIG PICTURE – ROADMAP for business BUSINESS MODEL CANVAS: 9 COMPONENTS http://www.youtube.com/watch?v=QoAOzMTLP5s 1. VALUE PROPOSITION • What is (are) the customers’ problem(s)? • How do you solve the problem(s)? - Convenience (e.g., fast free delivery of shoes) - Performance (e.g., faster and smaller processor) - Brand/Status (e.g., become a part of an exclusive club) - Cost reduction (e.g., free online telephone calls) - Etc. • Describes the value your product and service (e.g., features, product life, customer support, etc.). • How can you or how did they solve the problem better than your competitors? - Understand your competitors - Substitutes they are offering 2. CUSTOMER SEGMENTS
- 24. • Describe your customer segments or segment • Who needs your product the most and will pay for it? • location (e.g., U.S., Nigeria) • Industry or demographics • characteristics and trends • Market/industry Description • market size • market growth rate • market structure (e.g., fragmented, consolidated, etc.) • Market share attainable 3. CHANNELS How a company communicates and reaches its customers? • Raising awareness among customers • Helping a customer make a purchase decision • Purchase • Delivery • After sales support 4. CUSTOMER RELATIONSHIPS Type of relationships a company wants to establish with the customers: • Personal • Self-service
- 25. • Communities (e.g., AVON) • Co-creation (e.g., YouTube) 5. KEY RESOURCES Most important assets to make value - Physical - Intellectual - Human - Financial 6. KEY ACTIVITIES Most important actions an organization must make to operate successfully (think distinctive competencies, value chain) - Production - Outsourcing, Import/Export - Recruiting, Training, Retaining - Market analysis & Marketing - Supply Chain Management - Software design
- 26. - R&D 7. KEY PARTNERSHIPS Describe the key network of suppliers, distributors, strategic alliances, joint ventures, etc. - Optimization and economies of scale - Acquisition of particular resources - Strengthening brand - Reducing risk and uncertainty 8. REVENUE STREAMS Cash that the company generates from each Customer Segment Revenue Streams • Asset sale • Usage fee • Subscription fee • Licensing / Franchising • Leasing/Renting/Lending • Advertising • Brokerage fee Pricing Mechanisms • Fixed Pricing
- 27. segment dependent • Dynamic Pricing -time Market 9. COST STRUCTURE • Cost associated with creating value for customers • Can be calculated easily after defining Key Resources, Key Activities, and Key Partnerships • Fixed costs (physical manufacturing facilities, rent, etc.) • Variable costs (marketing, insurance, etc.) Different for Value-Driven vs. Cost-Driven companies Source: Starbucks 2013 Annual Report BUSINESS MODEL CANVAS
- 28. BUSINESS MODEL CANVAS Offer CustomersInfrastructure Financial Viability BUSINESS MODEL CANVAS & YOUR BUSINESS PLAN 2. Problem 3. Solution 4. Business Model 5. Underlying Magic 2. Problem 3.