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6. 4Ms OF
PRODUCTION AND
BUSINESS MODEL

7. OBJECTIVES
• Describe the 4M’s (Manpower, Method, Machine,
Materials) of operations in relation to the business
opportunity;
• Appreciate the importance of production process,
business model and business plan.
• Apply the concept of 4M’s of production in a small
manufacturing business.

8. TROT OR CHAROT
1. Output represents the final products from the
production process and distributed to the customers.
2. The 4M’s in the production operation are the
materials, manpower, machine and money.
3. Manpower in production operation refers to the
workers involved in the production of goods.

9. TROT OR CHAROT
4. Product description is the marketing copy that
explains what a product is and its benefits.
5. Prototype is a replica of a product.
6. Product to produce is one of the factors to be
considered in the production method.

10. TROT OR CHAROT
7. Educational qualifications and experience is one of
the criteria in considering manpower.
8. Skills and expertise is not important in considering
manpower.
9. Benefits are the reasons why customers will decide
to buy the products.

11. TROT OR CHAROT
10. Machine refers to the manufacturing equipment.
11. Supplier is an entity that supplies goods and
services to another organization.
12. Supply chain is a system of organizations, people,
activities, data and properties involved in moving a
product or service from supplier to customer.

12. TROT OR CHAROT
13. Business model describes the rationale of how an
organization makes, transports, and captures value in
economic, social, cultural or other contexts.
14. In selecting the type of equipment to purchase, the
entrepreneur may consider cost and capacity of the equipment.
15. Value chain is the process or activities by which a company
adds cost to an article, that includes production, promotion,
and providing of after-sales service.

13. 4 M’s of Operations
in Relation to the
Business
Opportunity and
Developing a
Business Model

14. The three important elements in the
production system
The Input includes the
following:
1. Manpower
2. Materials
3. Machine
4. Design
5. Instructions

15. The three important elements in the
production system
The Production process, also referred
to as the transformation or conversion
process, is the stage of production
where the materials are transformed
into the final product with the aid of
manpower and machine.

16. The three important elements in the
production system
The output represents
the final product from
the production
process and
distributed to the
customers.

17. 4 M’s of Production
The most serious issues in the
whole production system are the
inputs and the transformation
process. Their quality determines
the quality of the output. The
factors involved in the input and the
production process are usually
referred to as the Four M’s of
production, namely Manpower,
Method, Machine, and Materials.

18. Manpower
Manpower talks about human labor force involved in
the manufacture of products.
It is measured as the most serious and main factor of
production. The entrepreneur must determine, attain and
match the most competent and skilled employees with
the jobs at the most appropriate time period.

19. Manpower
Educational qualifications and experience, status of
employment, number of workers required, skills and
expertise required for the job are some of the manpower
criteria that must be highly considered by the
entrepreneur.

20. Materials
It simply refers to the raw materials necessary in the
production of a product.
It forms part of the finished product. Just in case the
resources are below standard, the finished product will
unsatisfactory as well.

21. Two Types of Materials
DIRECT INDIRECT

22. Direct Materials
Are those directly related to
the production of your product
or to the performance of the
service you are offering.

23. Indirect
Materials
Are those not directly related to
the production of your product.

24. The entrepreneur may
consider;
Cost,
Quality,
Availability,
Credibility of suppliers

25. Machine
Discusses about manufacturing equipment used in
the production of goods or delivery of services.

26. 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

27. Method
Method or production method is the process or way of
transforming raw materials to 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 product to produce, mode of production,
manufacturing equipment to use and required skills to do
the work.

28. PRODUCT
The product is the physical output of the whole
production process.
It should be valuable and beneficial to the consumers
and should satisfy their basic needs and wants.

29. PRODUCT
A product can be heterogeneous or homogeneous.
A heterogeneous product has dissimilar
characteristics, parts, and physical appearance. It can be
easily identified from other products. Entrepreneurial
ventures that produce heterogeneous products include
makers of furniture, bags, and home decors.

30. PRODUCT
A homogeneous product has a physical appearance,
taste, or chemical content that can hardly be
distinguished from that of the other products.
Businesses that produce homogeneous products
include makers of soft drinks, and medicines.

31. PRODUCT DESCRIPTION
Promotes and explains what a product is and why it’s
worth buying.
The purpose of a product description is to provide
customers with details around the features and benefits
of the product so they’re obliged to buy.

32. PRODUCT DESCRIPTION
Know who your target market is, focus on the product
benefits, tell the full story, use natural language and tone,
use power 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.

33. PRODUCT DESCRIPTION
Know who your target market is, focus on the product
benefits, tell the full story, use natural language and tone,
use power 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.

34. PRODUCT PROTOTYPE
Prototype is created before the massive
production of such product; an entrepreneur
must consider prototyping.
One of the important early steps in the
inventing process is making a prototype.

35. PRODUCT PROTOTYPE
A prototype is a duplication of a product as
it will be produced, which may contain such
details as color, graphics, packaging and
directions.

36. PRODUCT PROTOTYPE
It is better to test your product prototype to meet
customers’ needs and expectations; and to know if
product is saleable.
Pretesting of the product or service is similar to 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. Ex: Free taste at malls

37. SUPPLIERS AND SUPPLY CHAIN
In a manufacturing venture, the supplier
plays a vital role. They are your business
partners, without them your business will not
live. You need them as much as you need
your customers to be satisfied.

38. SUPPLIERS AND SUPPLY CHAIN
Choose a potential supplier who has
1. loyalty and values your partnership:
2. a supplier who would lead you to the
fulfillment of your business objectives,
mission and vision.

39. SUPPLIERS AND SUPPLY CHAIN
Supply chain management systems automate
the flow of information among members of the
supply chain so that they can use it to make better
decisions about when and how much to purchase,
produce, or ship.
It is a structure of organizations, people,
activities, data, and resources involved in moving a
product or service from supplier to customer.

40. SUPPLIERS AND SUPPLY CHAIN
Objectives of supply chain is management
of components and procedures such as
1. storing of raw materials
2. handling the inventory
3. warehousing
4. movement of finished product/ logistic

41. SUPPLIERS AND SUPPLY CHAIN
Supply chain management decreases
purchasing cost. Retailers depend on supply
chains to quickly distribute costly products to
avoid sitting on expensive inventories. Any delay
in production can cost a company tens of
thousands of pesos. This factor makes supply
chain management ever more important.

42. VALUE CHAIN
Value chain is a method or activities by which
a company adds value to an item, with
production, marketing, and the provision of after-
sales service.

43. VALUE CHAIN
The Value Chain concept was developed and
popularized in 1985 by Michael Porter, in “Competitive
Advantage.” Porter defined value as the amount
buyers are willing to pay for what a firm provides, and
he conceived the “value chain” as the combination of
generic value added activities operating within a firm –
activities that work together to provide value to
customers.

44. VALUE CHAIN
When value chain management is
implemented effectively, the flow of products and
materials is improved through the accurate
forecasting of sales and demand as well as
improved inventory management. Delays are
also minimized and products are visible and
traceable throughout the supply chain.

45. VALUE CHAIN
Value chains help increase a business's
efficiency so the business can deliver the most
value for the least possible cost.
The end goal of a value chain is to create a
competitive advantage for a company by
increasing productivity while keeping costs
reasonable.

47. Business model describes the
factors of how an organization
creates, delivers, and captures
value in economic, social,
cultural or other contexts.
The development of business
model construction and variation
is also called business model
innovation and forms part of a
business plan.

48. It is a company's plan on how it
will make revenues and make a
profit.
It describes what products or
services the business plans to
manufacture and market, and
how it plans to do so, as well as
what expenses it will incur.

49. Phases in developing your business model
1. identifying the specific audience;
2. establishing business process;
3. recording business resources;
4. developing strong value proposition;
5. determining key business partners;
6. creating demand for today’s generation
strategy and being open for innovations.