M_ _ _ O_ E _

M_ _ H _ D
M_C___E
M__E_I__S
 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.
Three important elements in the production system

INPUT PRODUCTION
PROCESS
OUTPUT
  INPUT  PRODUCTION  OUTPUT
Includes the following: PROCESS

1. Manpower Also referred to as the Represents the final

2. Materials
transformation or product from the
conversion process, is production process and
3. Machine distributed to the
the stage of
4. Design customers.
production where the
5. Instructions materials are
transformed into the
final product with the
aid of manpower and
machine.
4 M’S OF PRODUCTION
 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.
 It is said that 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.
Organizational Chart
 A diagram that displays a reporting or relationship hierarchy. The
most frequent application of an org chart is to show the structure of a
business, government, or other organization.

 Org charts have a variety of uses, and can be structured in many

different ways. They might be used as a management tool, for
planning purposes, or as a personnel directory, for example. Perhaps
your organization doesn't operate in a "command and control" style,
but instead relies on teams.
 Common Business Roles
1. Executive Business Roles
Individuals that take full responsibility for running the company.

2. Managerial Business Roles

2 Distinct Variations:
 Middle Manager- Communicating the wider business goals to all employees and ensuring that
the right systems and processes are in place
 Supervisor- helping to ensure that individual teams are working to the best of their ability.
3. Operational Business Roles
These are the roles of the individuals working on the ground.
This could be shop workers working within a retail outlet or it could be warehouse operatives
working within a manufacturing plant. At this level, you may have more than one individual
working in the same business role, especially if you are a large organization. Equally, if you are a
smaller firm, your operational business roles could be carried out by only one or two employees.
 Common Organizational Departments

 MARKETING

 HUMAN RESOURCE

 FINANCE

 INFORMATION TECHNOLOGY

 OPERATIONS
 HUMAN RESOURCE
FUNCTIONS:

RECRUITMENT, STAFFING AND EMPLOYMENT

This area of the HR department is responsible for calculating workforce projections, determining
availability of applicants and assessing the suitability of candidates for placement throughout the
organization. HR professionals in this area are likely to establish relationships with outside entities
such as colleges and universities for recruiting purposes. Recruiters also contact newspapers and
other media outlets to advertise vacancies.

BENEFITS AND COMPENSATION

Benefits and compensation specialists handle matters concerning the financial aspects of
employment. Salary administration, compensation structure, payroll distribution and coordination of
benefits such as group health insurance and retirement savings are core duties. Benefits and
compensation specialists work to create a company-wide compensation program that is satisfactory to
employees yet enhances the firm's profitability.
EMPLOYEE RELATIONS AND LABOR RELATIONS
The employee relations and labor relations areas of HR are jointly responsible for strengthening
the employer-employee relationship. Employee relations representatives resolve employee
conflicts, design performance management systems, create employee recognition programs and
assess levels of employee satisfaction. Labor relations specialists are concerned with employment
issues that involve the unionized workforce.

WORKPLACE SAFETY AND RISK MANAGEMENT

Workplace safety and risk management section is ultimately responsible for maintaining a safe
workplace.

HR TRAINING AND DEVELOPMENT

HR training and development is the area responsible for encouraging professional and personal
development in the workplace through the delivery of organized learning opportunities.
 MARKETING
 The marketing department in a company is generally responsible for
identifying, attracting and retaining customers. They manage these
responsibilities through a combination of duties in the areas of
research, promotion and customer service.
 FINANCE
 The business functions of this department include processing tax payments and
filing tax returns, invoicing customers, assessing the company's financial
performance and keeping track of orders. Your accountant will also be
responsible for calculating wages and salaries, recording cash inflows and
identifying problem areas.
 OPERATIONS
 The operations department of a company is responsible for smooth and
profitable production. If your operations department is running tightly, your
company will produce what it needs to produce when it needs to produce it —
and without undue stress or backtracking. The objectives of an operations
department revolve around high-quality effective operations.
 Materials
 It simply refers to the raw materials necessary in the production of a product.
Materials mainly form part of the finished product. Just in case the resources are
below standard, the finished product will unsatisfactory as well. The
entrepreneur may consider cost, quality, availability, credibility of suppliers and
waste that the raw materials may produce.
 MATERIAL MANAGEMENT
 The objectives of material management are sometimes referred to as the ‘Five Rs of Materials
Management:’

The right material

At the right time
In the right amount

And of the quality that is:

At the right price
From the right sources
1. Material Requirements Planning
This important step in material management directly affects
profits as the lower the amount of material used, the lower
the cost of production and the more profit is delivered.
Reducing material overspend has caused some industries to
consider ‘Just in Time (JIT)’ strategies that require very small
levels of inventory. However, this still requires careful
planning to maintain without impacting production
schedules.
2. Purchasing
Purchasing should be done economically and on time to
maintain material supplies and increase final profits by
lowering expenses.
3. Inventory Control
An inventory can include a range of goods being held including partially finished
items, goods ready for sale and those used in production. Many industries try to time
purchasing so that materials enter stores just ahead of production, although there is
also a need to gauge supplier levels so items can be stocked before they become
unavailable.
Inventories are required to control the flow of raw materials, purchased goods and
finished parts and components.
4. Material Supply Management
Supply chain management can require materials to be distributed to different sites or
production centres, each of which needs to be continuously supplied. Lack of stock
can lead to financial losses through having to source replacement production
materials or having to halt production schedules.
Poor storage can also lead to material supply disruptions through damaged or
misplaced stock. Material management teams should be able to mitigate against
these situations by using alternative supply systems.

5. Quality Control
Quality control of materials is also important, since good quality materials lead to
good quality products. Factors such as durability, dimensional accuracy,
dependability, performance, reliability and aesthetic value can all be important
quality factors for materials management, depending upon the applications.
 Machine
 Machine is about manufacturing equipment used in the production
of goods or delivery of services. 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.
 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.
 Common Method of Production
Line Production
 Just as the name suggests line production is producing goods along a line of production. The
goods will be passed along a line containing different stages. At each stage in the line the goods
will be altered. Often a person/group of people will be responsible for just one stage in the
process.
Continuous Flow Production (CFP)
 This is simply adopting line production 24 hours day/seven days a week, using automatic
equipment. The automatic equipment will operate in the same manner day in day out. The
ability to work in this manner is another advantage robots/machinery have over humans. CFP
does not involve humans so it is not used in the service industry unlike line production.
Batch Production
 This is the method employed when the organization needs to produce a fixed amount of each of
the type of goods it produces. In this instance production technique and resources will be
adapted, to produce the product required and to produce just the amount required.

Just in Time Production

 This method of production generates goods/services just in time for them to be sold rather than
preparing them months or weeks in advance. To save storage costs, the parts needed to make the
end product will arrive just before they are used to manufacture the product. This means that the
production process is carefully planned and organized. Production must be efficient and speedy
otherwise the goods will not be manufactured for the customer. Conversely if there are no or
few orders production will slow down or stop altogether.
 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.

 A product can be heterogeneous or homogeneous.

 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.
 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.
 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.
Significant Steps in creating Product Description
1. Know who your target market is;
2. Focus on the product benefits;
3. Tell the full story;
4. Use natural language and tone;
5. Use power words that sell;
6. Use good images
 PROTOTYPING
 Created before the massive production of such product, it is one of
the important early steps in the inventing process.

PROTOTYPE
A duplication of a product as it will be produced, which may contain such details
as color, graphics, packaging and directions. 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.
 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. The main goal and benefit of a value chain, and
therefore value chain analysis, is to make or support a competitive
benefit.
The purpose of a
value-chain
analysis is to
increase
production
efficiency so that
a company can
deliver
maximum value
for the least
possible cost.
 SUPPLY CHAIN
 Supply chain is a structure of organizations, people, activities, data,
and resources involved in moving a product or service from supplier
to customer. The main objective of supply chain management
includes management of a varied range of components and
procedures, for instance, storing of raw materials, handling the
inventory, warehousing, and movement of finished product from the
point of processing to the point of consumption.
 Companies seek to improve their
supply chains so they can reduce
their costs and remain competitive.
 SUPPLY CHAIN VS. VALUE CHAIN
SUPPLY CHAIN VALUE CHAIN

the process between producing and distributing the Set of activities carried out by the company which
product, dealing with the suppliers and logistics of maximizes the competitive advantage.
getting the product to market.

The major difference between a supply chain and a value chain is the simple fact that within a
supply chain, there is no value-added. In a supply chain, all that is being done is a conveyance.
One product or material is taken from one company or from one end and transported to the other.
Of course, there are procedures involved such as proper storage and careful transportation but
that is about it. In value chains, as much as there is the transportation and some storage involved,
the main purpose of a value chain is to add value to the product so as to make it presentable to
the client. This is often achieved via packaging, marketing, and sales.
 BUSINESS MODEL
 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.

 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.
 Phases in Developing Business Model
 Identifying the specific audience
 Establishing business process
 Recording business resources
 Developing strong value proposition;
 Determining key business partners
 Creating demand for today’s generation strategy and being open for innovations
 4 Types of Business Model
1. Business -To- Business Models (B2B):
When the dealings or the transactions take place between two companies or the
business then this type of business model is known as business to business models.

2. Business -To-Consumer Models (B2C):

Business-2-consumer business model is a model that refers to businesses that sell
their services or the products directly to the consumer who are the end users of the
products or services.
3. Subscription Based Models:
Any application based businesses or software companies have subscription based
business models. They offer their product as a onetime purchase, in return
company earns monthly or annual revenues.

4. On-DEMAND BUSINESS MODEL

It is the most recent form of model which is made out on the need by answering
immediately. Under this type of business model is prepared in such a way where
all the questions will be answered by just a click of a button in seconds.