4M’s of Operation

Week 1 - Entrepreneurship
Recall your previous activity.
• What will be your products made of? What are the things you need for
your business?
• Will you need machines, tools, or equipment to make your product or
operate your business?
• Can you make your product on your own? Will you need other people
to help you in your business?
• How much money do you need to make your product or operate your
business?
Given the following pictures, fill in the following
blanks below to form a meaningful word.
• M __ __ P __W __R
Given the following pictures, fill in the following
blanks below to form a meaningful word.
• M __ __ H __ __ N __
Given the following pictures, fill in the following
blanks below to form a meaningful word.
• M __ T __ __ I __ __ S
Given the following pictures, fill in the following
blanks below to form a meaningful word.
• M __ __ H __ __
4M’s of Operation
 The 4Ms of operation in relation to business opportunity
means that the four critical domains, usually attributed to
manufacturing, are: manpower, machine, material, and method
work together.
 They are the four resources needed to make a product or
operate a business.
4M’s of Operations mainly represent factors that
influence on results of any concern process. This was
used to make product design and quality defect
prevention to identify potential factors on cause and
overall effect.
In manufacturing industries, this method was used to
apply production control,
improvement, overall efficiency measurement,
processes, and design.

Let us now describe the 4 major domains of the 4M’s

of Operations in relation to the business opportunity.
 Input
Output
(4M’s)
What Comprises the 4M’s?
1. Manpower
 You cannot run a shop without the people who will help
you move things in order. Thus, the first component in
the production or operation of your business are the
people who work for you.

 Some entrepreneurs or business owners run their own

shop alone, but others hire workers who will assist them
in the delivery of product or services in their business.
 The entrepreneur must determine, attain and match the
most competent and skilled employees with the jobs at
the most appropriate time period.

 Educational qualifications and experience, status of

employment, numbers of workers required, skills and
expertise required for the job are some of the manpower
criteria that must be highly considered by the
entrepreneur.
TYPES OF WORKERS
 Workers may be classified into direct and indirect workers.
 Direct workers are those whose primary jobs and functions
are directly related to the production and operation of the
business. Examples of these are production workers,
assemblers, carpenters, mechanics, hairdressers, barbers, and
service crew.
 Indirect workers, on the other hand, are those whose primary
jobs and functions are not directly related to the production
and operation of the business. Examples of these are janitors,
security guards, secretaries, managers, and sales agents.
To look for the right employee for the business operation,
the following are the kind of staff one should have:
1. Skilled
2. Well-qualified and well-versed in business
3. Responsible
4. Dedicated and committed to work
5. Honest and with integrity
6. Able to attain targets and set goals
7. Not indulge in wasteful expenditure
8. Loyal
9. Team player
How to maximize the staff contribution to work?
• Motivate the staff. It helps to improve their morale.
• Make sure they are comfortable in their workplace. They
must be provided with the required amenities so that their
work does not appear burdensome.
• Staff should be provided with the necessary benefits. They
must feel that their work is worth performing. Not only
the entrepreneur should gain, but also the employee
should benefit.
How to maximize the staff contribution to work?
• Self-respect is very essential. The employee should be
treated well. He must not be treated as a slave.
• The staff should also share in the profits if possible.
Yearly bonus apart from his or her salary is added income
for him or her.
• Appreciation. Hard work and dedicated effort should be
appreciated.
How to maximize the staff contribution to work?
• Leisure time should be provided for extra-curricular
activities. He or she should also be given time to take off
from work so that he or she can go on a holiday. A change
of scene refreshes the mind.
• One must listen to the woes of the employees.
Understanding their difficulties n performing the task is
essential.
2. Material
 Talks about raw materials necessary in the
production of a product. (basket making – abaca,
water lily or plastic straws)
 They may also be the ingredients you needed in
baking a cake.
 This also includes other supplies that you need in
order to run the business (notes and pens for
recording your sales)
 For service type of business, materials may
include the supplies needed in providing the
services (hair salon-shampoo).
 Materials mainly form part of the finished
product. Just in case the resources are below
standard, the finished product will be of
unsatisfactory as well.
 The entrepreneur may consider cost, quality,
availability, credibility of suppliers and waste that
the raw material may produce.
TYPES OF MATERIALS
 Two types of materials used in business: direct and indirect
materials.
 Direct materials are those directly related to the production
of your product or to the performance of the services you are
offering. These are the raw materials you use in making your
product or the supplies you use for servicing your clients.
 Indirect materials are those that are not directly related to the
product or the performance of the services you are offering.
(example: paper and pen for recording sales)
3. Machine
 A machine is a mechanical structure that uses power to apply forces and
control movement to perform an intended action. It is controlled by
people or a machine itself to produce the necessary or required number of
productions needed. You may be able to use manpower to do a particular
job, but it is usually more efficient if machines are able to automate the
work.
 The right machine equipment can improve your processes, productivity,
and capacity to innovate. Not only will you save time and resources, but
you’ll also avoid costly quick fixes.
 Talks about manufacturing equipment, tools,
instruments, appliances or device used in the
production of goods or delivery of services.
 Machines are used to convert your raw materials or
ingredients into a finished products.
 In the process of selecting the type of equipment to
purchase, the entrepreneur may consider types of
products to be produced, production system to be
adopted, cost of the equipment, capacity of the
equipment, availability of spare parts in the local
market, efficiency of the equipment and the skills
required in running the equipment.
 Meanwhile examples of tools that you may use in
making your product or providing service to your
customers are the mixing bowls, baking trays and
utensils that you may use in baking cakes and
pastries.
 They may also be the scissors, blowers, combs and
hairbrushes that you will use in servicing your
customers in a hair salon business.
The following are the right equipment to purchase in
starting a business:
1. Assess your business reality. It is important to understand
your objectives and why you need to purchase machinery. Are
you looking for increasing your productivity? Will this
equipment make you more successful in the marketplace? Will it
help you stay ahead of your competitors? Can you upgrade
instead of buying new equipment and still get better
performance?
These are questions you need to ask to assess your business if
you really need machinery instead of manpower.
2. Get an external point of view. Depending on the scale of
your investment, it may be worth working with an external
consultant who can ensure you make the most of your purchase
by helping you assess your needs. To do this, you need to make
a cost-benefit analysis, which helps you justify your purchase
and determine its advantages and disadvantages.
3. Invest in digital technologies. According to a survey
conducted in 2017 by 960 Canadian manufacturers, they found
out that companies who adopted digital technologies reaped
impressive rewards, including improved productivity, lower
operational costs, and better product quality. This technological
advantage may monitor real-time production and quality control
to reduce waste and rework. It predicted maintenance to prevent
costly repairs, and higher automation to save labor costs and
improve throughput.
4. Create a technology roadmap. Rather than making an
isolated purchase, look at the overall needs of your business and
plan for the long term. A technology roadmap is a planning tool
that aligns your business objectives with long- and short-term
technology solutions. It helps you understand your current
technological systems set technology development priorities and
provide a timeline for the implementation of a new system. The
first part of
building your roadmap is to get a clear picture of what you are
already doing and mapping out your processes.
5. Shop around for suppliers. You may browse the internet to
access a different website that offers specialized machinery
equipment. Check out newsletters and attend trade shows where
you can get some hands-on time equipment.
Don’t let price alone guide you in your supplier decision,
consider aspects such as post- sales service and supplier’s
reputation and getting references.
6. Keep training in mind. All too often, entrepreneurs don’t
consider the time, money, and resources required to train
employees on new equipment. You want to avoid the
productivity drop that occurs when employees take too much
time to adapt to new technology or processes. If the equipment
is new or has new features, ensure that
employees who use the machine will have time to be trained
7. Think safety first. A healthy and safe work environment
means your employees and your company can be more
productive, and this rule applies to your equipment and
technology purchases as well. Suppliers are responsible for
selling equipment that can be used safely, but you are
responsible for ensuring that your employees follow safety rules.
8. Keep it green. When purchasing equipment, be sure that it’s
energy efficient. Not only to save money, but also by
contributing to the health of the planet. Research the
environmental impact of your new equipment and find out how
to dispose of your existing equipment in a way that minimizes
its impact on the environment.
4. Method
 Production method discusses the process or way of
transforming raw materials into finished products.
The resources undergo some stages before it is
finalized and become set for delivery to the target
buyers.

 The selection of the method of production is

dependent on the product to produce, mode of
production, manufacturing equipment to use, and
required skills to do the work.
 For a bakeshop or bakery business, for example,
the methods or processes involved are kneading,
baking, cutting, and decorating.

 For the laundry shop business, the methods or

processes involved are sorting (black and white)
prewashing (soaking treatment depending on the
dirt), washing, drying, and packing.
THE METHOD OR PROCESS INVOLVED IN A BUSINESS IS BEST REPRESENTED BY A
PROCESS FLOW CHART (FRIES)
 THE METHOD OR PROCESS INVOLVED IN A BUSINESS IS BEST REPRESENTED BY A
PROCESS FLOW CHART (POTATO CHIPS)

Soaking Boiling
Potato
Potato Peeling Washing Slicing (Whiting Washing (Added Drying Frying
chips
Solution) Spices)
In analyzing this method, an entrepreneur must do these steps:
1. Identify the operation to analyze.
2. Gather all relevant information about the operation, including
tools, materials, and procedures.
3. Talk to employees who use the operation or have used similar
operations. They may have a suggestion for improving it.
4. Chart the operation, whether you are analyzing an existing
operation or a new operation.
6. Evaluate each step in the existing operation or proposed new
operation. Does the step add value? Does it only add cost?
7. Revise the existing or new operation as needed.
 ANSWER THE FOLLOWING QUESTIONS.

In your home, when you want to eat egg sandwich before going to
school, your mother would surely prepare it for you. Your egg sandwich
would not be produced without a process.

1. Who would be your manpower?

2. What would be your materials?
3. What machines or tools would you use?
4. What methods are needed to produce the egg sandwich?
(Cooking procedures- enumerate them).
Once the production process is in place, an entrepreneur shifts to the
daily activities of materials management, which encompass the
following activities:
1. Purchasing
2. Inventory control
3. Work scheduling
1. Purchasing
1. Purchasing and Supplier Selection
The process of acquiring the materials and services to be used in
production is called purchasing (or procurement). For many products,
the costs of materials make up about 50 percent of total manufacturing
costs. Not surprisingly, then, materials acquisition gets a good deal of
the entrepreneur’s time and attention.
As a rule, there’s no shortage of vendors willing to supply
parts and other materials, but the trick is finding the best
suppliers.

In selecting a supplier, an entrepreneur must consider

such questions as the following:
 Can the vendor supply the needed quantity of
materials at a reasonable price?
 Is the quality good?
 Is the vendor reliable (will materials be delivered on
time)?
 Does the vendor have a favorable reputation?
 Is the company easy to work with?
Getting the answers to these questions and making the
right choices—a process known as supplier selection—is
a key responsibility of operations management.
E-Purchasing
Technology is changing the way businesses buy things. Through e-
purchasing (or e-procurement), companies use the Internet to interact
with suppliers. The process is like the one you’d use to find a
consumer good—say, a forty-two-inch LCD high-definition TV—
over the Internet. You might start by browsing the Web sites of TV
manufacturers, such as Sony, Samsung, TCL, or Skyworth. To gather
comparative prices, you might go to a
comparison-shopping Web site, such as Lazada or Shopee. Once
you’ve decided where to buy your TV, you’d complete your
transaction online, even paying for it electronically.
2. Inventory Control
Inventory Control
If a manufacturer runs out of the materials it needs for
production, then production stops. In the past, many
companies guarded against this possibility by keeping
large inventories of materials on hand. It seemed like
the thing to do at the time, but it often introduced a new problem—
wasting money. Companies were paying for parts and other materials
that they wouldn’t use for
weeks or even months, and in the meantime, they were
running up substantial storage and insurance costs.
Most manufacturers have since learned that to remain competitive,
they need to manage inventories more
efficiently. This task requires that they strike a balance
between two threats to productivity: losing production
time because they’ve run out of materials and wasting money
because they’re carrying too much inventory.
The process of striking this balance is called inventory
control, and companies now regularly rely on a variety
of inventory-control methods.
1. Just-in-Time Production
One method is called just-in-time (JIT) production: the manufacturer
arranges for materials to arrive at production facilities just in time to
enter the manufacturing process. Parts and materials don’t sit unused
for long periods, and the costs of “holding” inventory are
significantly cut. JIT, however, requires
considerable communication and cooperation between the
manufacturer and the supplier. The manufacturer must know what it
needs, and when. The supplier must commit to supplying the right
materials, of the right quality, at exactly the right time.
2. Material Requirements Planning
Another method, called material requirements planning (MRP), relies
on a computerized program both to calculate the number of materials
needed for production and to determine when they should be ordered
or made. Let’s say, for example, that you and several classmates are
planning a fund-raising dinner for the local animal shelter. First, you
estimate how
many people will attend—say, fifty.
3. Work Scheduling
Work Scheduling
As we’ve seen, manufacturers make profits by transforming inputs
(materials and other resources) into outputs (finished goods). We
know, too, that production activities, like all business activities, have
to be controlled: they have to be monitored to ensure that actual
performance satisfies planned performance. In production, the
control process starts when operations managers decide not only
which goods and how many will be produced, but when.
This detailed information goes into a master production schedule
(MPS). To draw up an MPS, managers need to know where materials
are located and headed at every step in the production process. For
this purpose, they determine the routing of all materials—that is, the
workflow of each item based on the sequence of operations in which
it will be used.
OPERATIONS
 What is Product Description?
 Is the promotion that explains what a product is and
why it’s worth buying? The purpose of a product
description is to provide customers with details about
the features and benefits of the product, so they’re
obliged to buy.

 Know who your target market is, focus on the

product benefits, tell the full story, use natural
language and tone, use powerful words that sell, and
use good images. These are guidelines for you to
have a good product description; since some
customers are very particular with it since they
consider the welfare of their family, if it is safe to
use.
 What is Prototyping?
 A duplication of a product as it will be produced, which
may contain such details as color, graphics, packaging
and directions. One of the important early steps in the
inventing process is making a prototype. Benefits are
the reasons why customers will decide to buy the
products such as affordability, efficiency or ease of use.
The features of the product or service merely provide a
descriptive fact about the product or service.

 It is better to test your product prototype to meet

customers’ needs and expectations; and for your
product to be known and saleable. Pretesting of the
product or service is like a sample of the product or
service given to the consumer free of cost in order that
he/she may try the product before committing to a
purchase.
Supplier
An entity that offers goods and services to another business.
This entity is among of supply chain of a business, which may
offer the main part of the value contained within its products.
Certain suppliers may even involve in drop shipping, where they
ship goods directly to the customers of the buyer.
Value Chain and Supply Chain
Remember this…
 Suppliers are your business partners; without them your
business will not live.
 You need them as much as you need your customers to be
satisfied.
 But as an entrepreneur you have to choose a potential
supplier that has loyalty and value your partnership; a
supplier that would lead you to the fulfillment of your
business objectives, mission and vision.
 Value Chain and Supply
Chain
 The term value chain refers to the process in which businesses receive raw
materials, add value to them through production, manufacturing, and other
processes to create a finished product, and then sell the finished product to
consumers.

 A supply chain represents the steps it takes to get the product or service to the
customer, often dealing with Original Equipment Manufacturing and aftermarket
parts.

 Supply chain involves all parties in fulfilling a customer request and leading to
customer satisfaction, a value chain is a set of interrelated activities a company
uses to create a competitive advantage.
Value Chain and Supply
Chain
Supply Chain is described as a tool of business
transformation, which minimizes costs and maximizes
customer satisfaction by providing the right product at the
right time at the right place and the right price.
Conversely, Value Chain is a way of getting a competitive
advantage, through which a company can beat its
competitors along with fulfilling customer requirements.
 https://whereinpampanga.com/wp-content/uploads/
2022/10/300988447_1773775259669086_7177505989665374295_n-2-750x375.jpg
 Answer the following questions.
1. Are you familiar with the picture? Give one example of a food
business establishment that you think is famous among teenagers
today.
2. What do you think is the reason why this particular food business
establishment becomes famous among people nowadays?
3. Do you know some other ways to enjoy their product other than
coming in personally, into their store, and buying their product for
yourself?
4. Do you think such strategies are effective to make the business more
productive? Why or why not?

https://pin.it/6x5oZRD
 Answer the following questions.

1.What is the importance of identifying the 4M’s

of operation? What role does each M play in
producing an output?
2. Why is it important to take a closer look at the
proper management of purchasing, inventory
control, and work scheduling?
3.What is value chain and supply chain?