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Entrepreneurship
Learning Activity Sheet
Quarter 4
LESSON 1: DEVELOPING A BUSINESS PLAN (DP)

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 I. Title Topic
→ Describe the 4Ms (Manpower, Method, Machine, Materials) of operations in relation
to the business opportunity:
• Develop a product description.
• Create a prototype of the product.
• Test the product prototype.
• Validate the service description of the product
• Select/pinpoint potential suppliers of raw materials
• Discuss the value/supply chain
II. Concept Notes

Background Information for Learner

In the previous modules, we have discussed about marketing mix (7Ps) in relation to
the business opportunity and how one can develop their own brand name. Let us have our
review of what we have learned before we proceed with the 4Ms of Production.
If Sales is the engine that powers Auto Salvage yards, then Production is the drive
train that gets us where we are going. Production is both reactive and proactive almost
simultaneously. It reacts to what is sold today and must meet the expectations set by the
sales team; also, it must anticipate what most likely will be needed in the near future. The
key for production is to have procedures and processes that can accomplish both.
Operations Management then controls the implementation of the business plan. Once our
procedures are set up to maximize efficiency, it is time to train the production staff on
their individual responsibilities centered on the 4Ms of Production.
So, what are the 4Ms of Production? It is the Method, Manpower, Machine and
Materials. They are also called as the four critical domains, usually associated to
manufacturing. These four are also related to business opportunities since most business
is tied to manufacturing also. The businessman per se should look all four into account.

4M’s of Operations mainly represent factors that influence on results of any concern
process. A method that has been used for a long time in a root cause analysis like using a
fish-bone diagram created by Kaoru Ishikawa of Japan. It is a causal diagram that shows
potential causes of a specific event. This was used to make product design and quality
defect prevention to identify potential factors on cause and overall effect. A cause of
imperfection from a source of variation which was grouped into 4 major domains to
identify classification of each variation. In manufacturing industries this method was used
to apply on production control, improvement, overall efficiency measurement, processes,
and design. Let us now describe the 4 major domains of 4M’s of Operations in relation to
business opportunity.

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1. Method
- is a detailed procedure for accomplishing something.
- It is a systematic way of doing a particular job.
- used in business when developing or innovating a new products or services,
expanding your business enterprise, searching for skilled workers to include in the
workforce, and for improving the efficiency of its process.
- All this activity was documented as reference for every development of the business
including notations that identifies product or service and customer preferences.

This will result to a standard operating procedure in all activities that the business will
implement. In analyzing this method, an entrepreneur must do these steps:
1.Identify the operation to analyzed.
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 suggestion for improving it.
4. Chart the operation, whether you are analyzing an existing operation or a new
operation.
5. Evaluate each step in the existing operation or proposed new operation. Does the
step add value? Does it only add cost?
6. Revise the existing or new operation as needed.

If labor is abundant and cheap in the locality, the firm might use more labor-intensive
techniques. This only means that they will use labor more than other factor inputs.
However, if labor is expensive and capital is cheap the firm or company may implement a
capital-intensive technology. This means that will use more capital compared to the other
factor inputs.
Ex. Now in the production of pandesal, the mixing of ingredients will use manual
labor intensively as applied by small bakeries. On the other hand, large bakeries in
urban areas will use modern baking equipment and utensils that are capital intensive.
2. Manpower
→ A wise selection of manpower to join in your workforce provides strategic
solutions in promoting a sustainable competitive advantage that quickly adapts
changing demands in business and its operations.
→ These are employees that processes and give insights on how to reduce cost,
increase productivity to achieve a better business result.
→ Finding an honest and capable people is always a challenge in business. To have
them work happily and satisfied, an employer should always take good care and
treasure them by providing the right salaries and benefits as they are integral to the
growth of the business.
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 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 verse 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 necessary benefits. They must feel that their
work is worth performing. Not only the entrepreneur should gain, but also the
employee should benefit.
• 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.
• 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
in performing the task is essential.

As the business grows, the entrepreneurs should hire qualified employees that can
handle operational functions even without his assistance, so that he will be free
from daily activities and can focus on thinking of new strategies and functions of
the business.

Ex. In the production of pandesal, manpower resources include the baker, and his
assistants who will implement the recipe using the available equipment, and
technology. The manager, sales clerks , and janitors are also part of the manpower
of the bakery

3. Machines

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→ plays a vital part in operating a business. Aside from manpower the use of
machinery is important nowadays to make the process of production more effective
and efficient.
→ 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 the 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.

The following are the right equipment to purchase in starting a business:

1. Assess your business reality. It is important to understand your objectives why you
need to purchase machinery.
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 conduct 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.
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 to long- and short-term
technology solutions. It helps you understand your current technological systems, set
technology development priorities, and provide timeline for the implementation of a
new system.
5. Shop around for suppliers. You may browse the internet to access different
website that offers specialized machinery equipment. Check out newsletters and attend
trade shows where you can get some hands-on time equipment.
6. Keep training in mind. All to 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 uses the machine will have time to be trained.
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 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.
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.
Ex. In the production of our pandesal, the machinery comprises the oven, baking
utensils and the bakery itself.
4. Materials
→ In manufacturing industry, companies are involved in turning raw materials into
physical products, which are then sold to consumers.
→ One of the things that a manufacturing company can do to achieve efficiency is to
source quality raw materials from credible suppliers.
→ For perishable and edible products, the business should investigate how raw materials
are stored, processed, and shipped to consumers.

Ex. In the process of producing pandesal, we need several materials that serve as
intermediate inputs which include flour, sugar, butter, eggs, salt and other ingredients.
Make sure that your supplier of raw materials should have consistent and have sufficient
amount of supplies that can accommodate the demand of your company .
The selection of the supplier depends on how they will not cause interruptions in the
production of goods and serving customers.
Once the production process is in place, an entrepreneur shifts to the daily activities of
materials management, which encompass the following activities: Purchasing, Inventory
control, and work scheduling.
❖ Purchasing and Supplier Selection
o 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.
✓ E-Purchasing
▪ Technology is changing the way businesses buy things. Through e-
purchasing (or e-procurement), companies use the Internet to interact
with suppliers.
❖ 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

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 seemed like the thing to do at the time, but it often introduced a new
problem—wasting money.
✓ 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.

✓ Material Requirements Planning

- Another method, called material requirements planning (MRP),
relies on a computerized program both to calculate the quantity of
materials needed for production and to determine when they should
be ordered or made.
- The basic MRP focuses on material planning, but there’s a more
sophisticated system— called manufacturing resource planning
(MRP II)—that goes beyond material planning to help monitor
resources in all areas of the company.
❖ Work Scheduling
- 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.

Traditionally, these are the crucial four (4) domains of production where one cannot
function properly without the other. However, allow me to add another M in this list.
✓ Money – it is a financial resource used to purchase all the resources
needed by the firm for its operation. The owners of the company
contribute seed money for the initial operations of the firm. It is also
needed to purchase raw materials, pay salaries of the workers and
managers and durable equipment needed for the company.
In the economic analysis of production, the resource inputs mentioned above are grouped
into two major categories – intermediate inputs and factor inputs.
• Intermediate inputs – are semi-processed materials that need
further transformation to produced a finished product. They are
also called raw materials or materials.
• Factor inputs – are the transforming inputs that will process the
intermediate inputs into finished products. They are also called
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 productive inputs because of their transforming properties. This
includes labor (manpower), capital (machinery), land and
technology (method).
→ While money does not have a direct participation in the physical transformation of the
intermediate inputs, it is very crucial in the production process. As mentioned earlier,
we use it to purchase materials, pay workers’ salaries and wages and even the
machineries we use.

▪ DEVELOPING A PRODUCT DESCRIPTION

→ A Product description is the marketing copy that explains what a product is and why it’s
worth purchasing. The purpose of a product description is to supply customers with
important information about the features and benefits of the product, so they are compelled
to buy.
→ How will we do that? Through an effective product description, you can guarantee that
they will hit that “add to cart” button in an instant.
→ Product description is one of the important aspects of selling, you have to visualize what
your target market will patronize and would like to have.
→ A Product Description is normally written for each of the identified products in the product
breakdown structure if required. Here are some things to consider when creating the
product descriptions. Remember that quality information forms a good part of these
descriptions.
1. Know who your target audience is – you might want to highlight the things that
might interest your potential buyers. You can actually do this by knowing what
specific demographics you are going to cater. Is it for teens? Young professionals or
Seniors. By knowing such you will have a specified goal to achieve once you roll
your product.
2. Focus on the Product Benefits – know the difference between product features
and benefits. A product feature is a factual statement about the product that provides
technical information. A product benefit, on the other hand, tells how the product can
improve the buyer’s life. If you are the customer, I know you will choose the latter.
However, you can always convert the features into benefits.
3. Use good product images – aside from the description, a quality image will do the
trick. Why? Because 63% of customers think that a product image is more important
than the description or even the reviews. So an important aspect of your product
description is actually in the photo itself. Quality photos will show the customer all
of the key features about your product. They will also allow the customer to imagine
having this product in her life.
4. Tell the Full story. A good product description should give all relevant details,
convince the buyer of its benefits, and pack an emotional punch. Emotions influence
the buyer behavior, so your product description is the perfect place to elicit emotions.
How do you do this? By filling in any gaps that a potential buyer may have about the
product.
5. Use Natural Language and Tone. If you read your description aloud, does it sound
like a real conversation that you would have with your friend? Or does it sound like a
computer-generated string of words? If your product description isn’t something that
you would say to your friend about the product, then it’s time to inject a little life into
them.
6. Use Power Words that Sell. There are certain words and phrases that naturally
elicit an emotional response in humans. Luckily for Lazada online shopping store,

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 this also increases sales. By being mindful of these words and phrases, you can
more easily convince your customers to take the leap and make the purchase.
7. Make it easy to scan. If you are going to publish your product online, you can do
this by making your descriptions scannable. As in, the buyer is able to find exactly
the information they want without wasting time sifting through other pieces of
information. Make your product descriptions easy to scan by including bullet points,
short paragraph made up of just a few sentences each, lots of white space, and
different size fonts.
→ Once you already have a clear vision of what should be the description of your product. We
can now create our own prototype.

▪ CREATING A PRODUCT PROTOTYPE

→ What is Prototype?
❖ You have visualized a great product. You can imagine how this product will
make a change and how it will be a great help to make our life easier.
However, what we have in mind is sometimes a lot difficult to explain so we
create a mock-up of what the final product will look like, that is a prototype.
❖ Prototype is an initial creation of a product that shows the basics of what
product will look like, what it will do and how it will work.
❖ Creating a prototype can also be one of the most fun and rewarding steps
you’ll take. That’s because developing a prototype gives the opportunity to
really tap your creativity, using those skills that inspired your invention idea in
the first place.
one of the essential early steps in the inventing process is creating a prototype, which simply
defined as a three-dimensional version of your vision. Creating a prototype can also be one
of the most fun and rewarding steps you’ll take. That’s because developing a prototype gives
the opportunity to really tap your creativity, using those skills that inspired your invention
idea in the first place.
→ A prototype provides other advantages, as well:
1. It enables you to test and refine the functionality of your design. Sure, your idea
works perfectly in theory. It's not until you start physically creating it that you'll encounter
flaws in your thinking. That's why another great reason to develop a prototype is to test the
functionality of your idea. You'll never know the design issues and challenges until you
begin actually taking your idea from theory to reality.
2. It makes it possible to test the performance of various materials. For example, your
heart may be set on using metal--until you test it and realize that, say, plastic performs
better at a lower cost for your particular application. The prototype stage will help you
determine the best materials.
3. It'll help you describe your product more effectively with your team, including your
packaging or marketing expert, and potential business partners.
→ Why PROTOTYPE?
- Prototyping is the Design Verification phase of Product Development because
it demonstrates or proves the design. Think of a Prototype as simply taking a design
from the virtual, imaginary realm into the physical world. Of course, there are lots of
reasons we want to touch and feel and try our new widget, and a prototype is the
way to do that, But there are some specific reasons to prototype. Some of the
most common are:
o Display or Show the new product — maybe at a show or for
investors.
o Test an idea to see if it really works.
o Test the design to see if it passes certain requirements.
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 o Use it to evaluate where improvements are necessary.
o Get customer feedback.
→ Prototypes typically fit in these categories:
1. Looks Like;
2. Works Like;
3. Concepts to Test.
→ You can think of it as Form and Function. Basically, there are prototypes that look and feel
complete (but may not actually function); then prototypes that function properly (though just
cobbled together). and, prototypes for testing just a portion of the whole concept. Of
course, there are the combination versions that both Look right and Function correctly.
Those are usually the finals.
❖ With the concepts of “Functional” and “Display” (form) types in mind,
there are many levels of Prototypes:
• Some are simple duct-tape and bailing wire prototypes to visualize or test
how something might work;
• Then there is clay or paper mache to show roughly what it might look like;
• Still others are functional representations that work but may not look so good
or be as strong as needed for the final product.
• 3D printed prototypes can look great and may also function, but usually not
at full capacity.
• Some are high polish, fragile representations for show and tell.
• And some are complete representations of the final product. (Both form and
function.)
→ Prototyping Methods
❖ Traditional prototyping methods include mock-ups (clay, wood or other),
fabrication, and of course, the infamous bailing wire and duct tape. More
modern methods include CNC and rapid prototyping (like 3D Printing, SLA,
SLS and many more).
- Mock-ups are typically early in the design for visualization, feel, and to allow
adjustments or fiddling with shape and size.
- Fabricated prototypes are typically functional versions that may or may not look
like the final product but given the opportunity to test function or prove that
something works

▪ Testing the product prototype

→ Testing a prototype/developed design is a very important part of the design and
manufacturing process.
→ Testing and evaluation simply confirm that the product will work as it is supposed to, or if
it needs refinement.
→ In general, testing a prototype allows the designer and client to assess the viability of a
design. Will it be successful as a commercial product?
→ Testing also helps identify potential faults, which in turns allows the designer to make
improvements

There are many reasons why testing and evaluation takes place. Some reasons are
described below.

1. Testing and evaluation allow the client / customer to view the prototype and to give
his/her views. Changes and improvements are agreed, and further work carried out.

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 2. A focus group can try out the prototype and give their views and opinions. Faults and
problems are often identified at this stage. Suggestions for improvement are often made at
this stage.

3. Safety issues are sometimes identified, by thorough testing and evaluation. The
prototype can be tested against any relevant regulations and legislation. Adjustments /
improvements to the design can then be made.

4. Evaluating a prototype allows the production costs to be assessed and finalized. Every
stage of manufacturing can be scrutinized for potential costs. If the client has set financial
limits / restrictions, then alterations to the design or manufacturing processes, may have to
be made. This may lead to alternative and cheaper manufacturing processes being
selected, for future production.

5. Component failure is often identified during the testing process. This may mean a
component is redesign and not the entire product. Sometimes a component or part of a
product, will be tested separately and not the whole product. This allows more specific tests
to be carried out.

6. Evaluating the manufacture of the prototype, allows the designer to plan an efficient and
cost-effective manufacturing production line.

7. Prototype testing can be carried out alongside the testing of similar designs or even the
products of competitors. This may lead to improvements.

8. Testing ensures that any user instructions can be worked out, stage by stage, so that the
future consumer can use the product efficiently and safely. This guarantees customer
satisfaction.

9. Testing a prototype allows ‘concept’ designs to be evaluated fully. This is sometimes

called ‘proof of concept’. This usually happens during the early development of a product.

10. Testing against the design specification, helps ensure a full and relevant evaluation of a
prototype is carried out. This should be carried out during the entire development process.

11. The testing and evaluation phase allows fellow designers, knowledgeable in the
specialist area, to offer opinions and suggest critical improvements. This may lead to a
more successful design.

▪ Validating the service description of the product with potential customers to

determine its market acceptability.
→ One of the most important aspects of starting a business is validating that there is a
demand for your products.
→ There is nothing more discouraging than spending your time and energy creating a
product that you think people will love, only to realize that there is no interest when
you launch.
→ You can validate your service description of the product with potential customers to
determine its market acceptability using a number of means.
8. Surveys. You can create a survey using available online survey platform like
Microsoft and Google Forms and send it out to groups, to your friends, and to all
people who are your ideal clients. Gather responses about how they like to have

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 some products delivered, about their needs and their pains so you will know exactly
how to serve them.
9. Beta Test. Other ways to validate your product include creating a test version of
something and running it past a small group or audience to get their feedback. A test
version of the product can either be paid, or free, and is a great way to get
testimonials and feedback while you create. This way, the pressure is off to create a
fantastic product until you have tested that it works in the way that you hoped it
would.
10. Early Bird Offer. Another way you can validate your product is to offer to your
subscriber list, survey attendees, or people who have expressed some interest in
your product, access for an early bird price to see if people actually buy.
11. Be Yourself. It is so tempting to follow models and ideas of what other small
businesses have created – and that can be a great starting point to help brainstorm
some ideas – but we all bring a different set of skills, experiences, and benefits to
our work.
12. Stay Passionate. Once you begin to check what people need, what their pain points
are, and how you can serve them, you can stay inspired by making sure you are
using your own unique combination of skills and the passion that makes this product
unique to you.
→ What happens if no one seems interested? If your audience does not want your amazing
idea? Look at the execution; it might be they love the concept, but the delivery needs to be
different. Or, that the idea is sound, but the offer isn’t clear. If you are super passionate
about your idea and truly believe it has a place in your business, test it with a few variants
of concepts and play around with some methods of delivery and adding value.

▪ Select/pinpoint potential suppliers or raw materials and other inputs necessary for
the production of the product or service.

→ Choosing the right supplier involves much more than scanning a series of price lists. Your
choice will depend on a wide range of factors such as value for money, quality, reliability,
and service.
→ How you weigh up the importance of these different factors will be based on your business'
priorities and strategy. A strategic approach to choosing suppliers can also help you to
understand how your own potential customers weigh up their purchasing decisions.
→ This guide illustrates a step-by-step approach you can follow that should help you make the
right choices. It will help you decide what you need in a supplier, identify potential suppliers,
and choose your supplier.
1. Thinking strategically when selecting suppliers
- The most effective suppliers are those who offer products or services that match - or
exceed - the needs of your business. So, when you are looking for suppliers, it's best to
be sure of your business needs and what you want to achieve by buying, rather than
simply paying for what suppliers want to sell you. For example, if you want to cut down
the time it takes you to serve your customers, suppliers that offer you faster delivery will
rate higher than those that compete on price alone.
- The numbers game It's well worth examining how many suppliers you really need.
Buying from a carefully targeted group could have a number of benefits:

• It will be easier to control your suppliers

• Your business will become more important to them

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 • You may be able to make deals that give you an extra competitive advantage For
example, if you've got a rush job for an important customer, your suppliers will be more
likely to go the extra mile if you spend P1,000 a month than if you spend P250.
However, it's important to have a choice of sources. Buying from only one supplier can
be dangerous where do you go if they let you down, or even go out of business?
2. What you should look for in a supplier
• Reliability. Remember - if they let you down, you may let your customer down.
• Quality. The quality of your supplies needs to be consistent - your customers
associate poor quality with you, not your suppliers.
• Value for money. The lowest price is not always the best value for money. If you want
reliability and quality from your suppliers, you'll have to decide how much you're willing
to pay for your supplies and the balance you want to strike between cost, reliability,
quality and service.
• Strong service and clear communication. You need your suppliers to deliver on
time, or to be honest and give you plenty of warning if they can't. The best suppliers will
want to talk with you regularly to find out what needs you have and how they can serve
you better.
• Financial security. It's always worth making sure your supplier has sufficiently strong
cash flow to deliver what you want, when you need it. A credit check will help reassure
you that they won't go out of business when you need them most.
• A partnership approaches. A strong relationship will benefit both sides. You want
your suppliers to acknowledge how important your business is to them, so they make
every effort to provide the best service possible. And you're more likely to create this
response by showing your supplier how important they are to your business.
3. Identifying potential suppliers. You can find suppliers through a variety of channels.
It's best to build up a shortlist of possible suppliers through a combination of sources to
give you a broader base to choose from someone who has used its services.

• Recommendations. Ask friends and business acquaintances. You're more likely to

get an honest assessment of a business' strengths and weaknesses from someone who
has used its services.
• Directories. If you're looking for a supplier in your local area, it's worth trying
directories such as Yellow Pages or Google Search Engine.
• Trade associations. If your needs are specific to a particular trade or industry, there
will probably be a trade association that can match you with suitable suppliers.
• Business advisors. Local business-support organizations, such as chambers of
commerce, can often point you in the direction of potential suppliers.
• Exhibitions. Exhibitions offer a great opportunity to talk with a number of potential
suppliers in the same place at the same time. Before you go to an exhibition, it's a good
idea to check that the exhibitors are relevant and suitable for your business.
• Trade press. Trade magazines feature advertisements from potential suppliers. You
can contact our Strategic Information Centre for a list of specialist trade magazines.
4. Drawing up a shortlist of suppliers. Once you've got a clear idea of what you need to
buy and you've identified some potential suppliers, you can build a shortlist of sources
that meet your needs. When considering the firms on your shortlist, ask yourself the
following questions:

• Can these suppliers deliver what you want, when you want it?
• Are they financially secure?
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 • How long have they been established?
• Do you know anyone who has used and can recommend them?
• Are they on any approved supplier lists from trade association or government?

Do some research and try to slim your list down to no more than four or five candidates.
It's a waste of time for you and the potential supplier if you approach them when there's
little chance of them fulfilling your requirements.

5. Choosing a supplier. Once you have a manageable shortlist, you can approach the
potential suppliers and ask for a written quotation and, if appropriate, a sample. It's best
to provide them with a clear brief summarizing what you require, how frequently you'll
require it and what level of business you hope to place.
• Get a quotation. It's worth asking potential suppliers to give you a firm price in
writing for, say, three months. You can also ask about discounts for long-term or
high-volume contracts.
• Compare potential suppliers. When you've got the quotation, compare the
potential suppliers in terms of what matters most to you. For example, the quality of
their product or service may be most important, while their location may not matter.
Price is important, but it shouldn't be the only reason you choose a supplier.
• Check that the supplier you employ is the one that will be doing the work.
Some suppliers may outsource work to subcontractors, in which case you should
also investigate the subcontractor to determine if you are happy with this
arrangement.
• Negotiate terms and conditions. Once you have settled on the suppliers you'd
like to work with, you can move on to negotiating terms and conditions and drawing
up a contract. See our guide on how to negotiate the right deal with suppliers.

6. Getting the right supplier for your business

• Know your needs. Make sure you know what you need. Don't be tempted by sales
pitches that don't match your requirements. Understand the difference to your
business between a strategic supplier, who provides goods or services that are
essential to your business - such as high-value raw materials - and non-strategic
suppliers who provide low-value supplies such as office stationery.
• Spend time on research. Choosing the right suppliers is essential for your
business. Don't try to save time by buying from the first supplier you find that may be
suitable.
• Ask around. People or other businesses with first-hand experience of suppliers
can give you useful advice.
• Credit check potential suppliers. It's always worth making sure your supplier has
sufficiently strong cash flow to deliver what you want, when you need it. A credit
check will also help reassure you that they won't go out of business when you need
them most.
• Price isn't everything. Other factors are equally important when choosing a
supplier - reliability and speed, for example. If you buy cheaply but persistently let
down your customers as a result, they'll start to look elsewhere.
• Agree on service levels before you start. It's a good idea to agree on service
levels before you start trading, so you know what to expect from your supplier - and
they know what to expect from you. See our guide on how to manage your suppliers.
• Don't buy from too many suppliers. It will be easier for you to manage - and
probably more cost-effective - if you limit the number of sources you buy from. This
is particularly the case with low value-added suppliers.

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 • But don't have just a single supplier. It's always worth having an alternative
supply source ready to help in difficult times. This is particularly important with regard
to suppliers strategic to your business' success.

▪ VALUE/SUPPLY CHAIN IN RELATION TO THE BUSINESS ENTERPRISE

→ The term value chain refers to the process in which business 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 Manufacturer (OEM) and
aftermarket parts.
→ While supply term value 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.
→ The idea of a value chain was pioneered by American academic Michael Porter in
his 1985 book "Competitive Advantage: Creating and Sustaining Superior
Performance." He used the idea to show how companies add value to their raw
materials to produce products that are eventually sold to the public.
→ The concept of the value chain comes from a business management perspective.
→ Value chain managers look for opportunities to add value to the business. They may
look for ways to cut back on shortages, prepare product plans, and work with others
in the chain to add value to the customer.

There are five steps in the value chain process. They give a company the ability to create value
exceeding the cost of providing its goods or service to customers. Maximizing the activities in
any one of the five steps allows a company to have a competitive advantage over competitors
in its industry. The five steps or activities are:
1. Inbound Logistics: Receiving, warehousing, and inventory control.
2. Operations: Value-creating activities that transform inputs into products, such as
assembly and manufacturing.
3. Outbound Logistics: Activities required to get a finished product to a customer. These
include warehousing, inventory management, order fulfillment, and shipping.
4. Marketing and Sales: Activities associated with getting a buyer to purchase a product.
5. Service: Activities that maintain and enhance a product's value, such as customer
support and warranty service.
→ In order to help streamline the five primary steps, Porter says the value chain also requires
a series of support activities.
→ These include procurement, technology development, human resource management,
and infrastructure.
→ A profitable value chain requires connections between what consumers demand and what
a company produces. Simply put, the connection or sequence in the value chain originates
from the customer's request, moves through the value chain process, and finally ends at the
finished product.
→ Value chains place a great amount of focus on things such as product testing, innovation,
research and development, and marketing.
→ The supply chain comprises the flow of all information, products, materials, and funds
between different stages of creating and selling a product to the end-user.

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 → The concept of the supply chain comes from an operational management perspective.
Every step in the process—including creating a good or service, manufacturing it,
transporting it to a place of sale, and selling it—is part of a company's supply chain.
→ The supply chain includes all functions involved in receiving and filling a customer request.
These functions include:
• Product development • Marketing • Operations • Distribution • Finance • Customer
service
→ Supply chain management is an important process for most companies and involves
many links at large corporations.
→ For this reason, supply chain management requires a lot of skill and expertise to
maintain. While many people believe logistics—or the transportation of goods—to be
synonymous with the supply chain, it is only one part of the equation.
→ The supply chain involves the coordination of how and when products are manufactured
along with how they are transported.
→ The primary concerns of supply chain management are the cost of materials and effective
product delivery.
Proper supply chain management can reduce consumer costs and increase profits for the
manufacturer.

III. Learning Tasks

Activity 1: Directions: Complete the sentence by filling up the blank. Find the correct answer in
the puzzle below. (copy and answer)

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Activity 1.1 (answer directly)

Activity 1.2 (copy and answer)

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IV. Reflection
Instructions: Complete the statement:

I have learned that.

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

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Compiled by:
Name of Teacher Lenie Santos Pasigna
Designation Teacher 2
Name of School Mactan National High School- Senior High
Name of Division DepED-Division of Lapu-Lapu City

Reviewed and Checked by:

LERA R. MORA
Master Teacher I - Math

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