INPUT-PROCESS-OUTPUT ANALYSIS MODEL

In business, one way to understand your environment is to use the input-process-output (IPO) analysis model. The model rests on the assumption that business entities (such as firms, offices, and plants) use inputs, perform processes, and produce outputs to sustain themselves and to expand.

Inputs might include nonlabor resources, manpower, data, and money. Processes, which transform inputs into output, include functions, actions, and operations. Outputs, which are the results of processes, include products, information, and reports.

The IPO analysis model offers many advantages. Viewing a business in terms of the IPO analysis model enables seeing the interrelationships of all the activities in a business from various perspectives, such as managerial or labor. You can also see the relationships among all the different people or organizations in a business.

Using the IPO analysis model also reduces the complexity in understanding how an organization operates. It simplifies reality by breaking your business environment into three components—inputs, processes, and outputs—and identifying the interrelationships among them.

for Developing an Input-Process-Output Analysis Model

• On a sheet or paper or using computer software, list all the processes that can occur for the entities being analyzed.
• On the left of each process, list the inputs that feed it.
• On the right of each process, list the outputs that feed it.
• For a process that either receives or feeds other processes, draw a line between them to reflect that relationship.
  • Note: Label the line to describe what is being transferred between the processes.