Sankey charts are a powerful visualization tool that can be used to understand and analyze the flow of materials, information, or money in a system. They are particularly useful for identifying opportunities for improvement, waste reduction, or optimization of processes. In this article, we will discuss how to create Sankey charts and some of the applications that they can be used for in the business world.

What is a Sankey Chart?

A Sankey chart, also known as a directional flow diagram, is a type of flowchart that displays the flow of materials or information from one process to another. It is named after its inventor, Charles Sankey, who first introduced the concept in the 1920s. A Sankey chart consists of a set of arrows that represent the flow of materials or information between different processes, and the chart is named based on the direction of the flow arrows.

Here’s an example of a simple Sankey chart:
lua
^
+--------+
| Process A|
+--------+
|
| Process B|
+--------+

Each process is represented by a rectangle, and the direction of the flow arrows are used to show the direction of the flow.

Creating a Sankey Chart

There are several software programs that can be used to create Sankey charts, including Microsoft Visio, Lucidchart, and SmartDraw. Most of these programs have templates specifically designed for Sankey charts. Here are the general steps to create a Sankey chart using Microsoft Visio:

1. Open Microsoft Visio and select the “Shape” tool.
2. Click on the “Rectangle” shape to create a new rectangle.
3. Add the name of the process to the rectangle.
4. From the Home tab, click on the “Arrows” icon.
5. Select the arrows that you want to use for the flow of materials or information.
6. Click and drag the arrows to connect the processes.
7. Format the chart as desired, including adding additional shapes, text, or images.

Applications of Sankey Charts in Business

Sankey charts can be used in a variety of ways to help businesses improve their operations and identify areas for optimization. Here are some examples of how Sankey charts can be used in business:

1. Process Improvement: Sankey charts are particularly useful for identifying opportunities for improvement in business processes. By visualizing the flow of materials or information, it is possible to identify bottlenecks, inefficiencies, and areas for optimization.
2. Cost Reduction: Sankey charts can also be used to identify opportunities for reducing costs in business processes. By visualizing the flow of materials or information, it is possible to identify areas where costs can be reduced, such as eliminating unnecessary steps or reducing the amount of waste generated.
3. Resource Allocation: Sankey charts can be used to visualize the flow of resources in a business, such as labor, materials, or money. This can help identify areas where resources are underused or overused, and can inform decisions about resource allocation.
4. Risk Management: Sankey charts can also be used to identify potential risks in business processes. By visualizing the flow of materials or information, it is possible to identify areas where risks are likely to occur, such as bottlenecks or points where materials may become damaged.

In conclusion, Sankey charts are a powerful visualization tool that can be used to understand and analyze the flow of materials, information, or money in a system. They are particularly useful for identifying opportunities for improvement, waste reduction, or optimization of processes. By creating Sankey charts, businesses can gain valuable insights into their operations and make improvements that can drive efficiency and reduce costs.

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