The SIPOC Diagram urges the team to understand and focus on the 5 essential elements in a process improvement project; The suppliers, the inputs, the process at hand, the outputs, and the customers. It is generally used during the Measure phase of a DMAIC process to provide added details to a scope that is not very well defined.
In a process improvement project, the SIPOC Diagram clarifies who the true customers are, and what they require. It also helps explain who the suppliers are and what are the specifications for the inputs.
To create the SIPOC Diagram the team must begin with the actual process, and divide it into 4 or 5 major steps. Then, the team needs to identify the inputs, the outputs, the suppliers, and the true customers or receivers of the output. Once the identification is complete, the team must get it verified from the sponsor, the Champion, and the stakeholder.