Unit 10: Method, Machine, Materials, and Manpower

(4Ms of Operations)
Lesson 1: The 4Ms of Operations

Contents
Engage 1
Introduction 1
Objective 1

Explore 2

Explain and Elaborate 3

Method 3
Machine 6
Materials 7
Manpower 9

Extend 10
Activity 10

Evaluate 11

Wrap Up 13

Bibliography 14
Unit 10.1: The 4Ms of Operations

Engage

Introduction

Fig. 1. A photo of a man during the production of a product.

Aside from making a unique distinction of a product through branding, what else should an
entrepreneur need to focus on? In opening a business, the entrepreneur should also
consider the other factors that need to be dealt with for it to become successful, particularly
the method, machine, materials, and manpower needs.

Objective
In this lesson, you should be able to describe the 4Ms (method, machine, materials, and
manpower) of operations of a business.

DepEd Competency
Describe the 4Ms (Method, Machine, Materials, Manpower) of operations in relation to the
business opportunity. (CS_EP11/12ENTREP-0h-j-12)

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Unit 10.1: The 4Ms of Operations

Explore

Assume that you are the owner of a business.

Answer the following questions. 10 minutes

Guide Questions
1. What are the qualifications that you will consider in hiring an employee for your
business?

2. How will you ensure the success of the production of your product?

3. How will you ensure the continuous availability of the raw materials needed for
production?

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Explain and Elaborate

Method
Method refers to the process that is strictly followed in the manufacturing of a business
product. The transformation of raw materials into a finished product is called
manufacturing. The sequence of operations should be clearly defined to ensure proper
execution that will guarantee the consistency of the quality of the product.

There are three elements of manufacturing:

1. Input - This refers to the materials or ingredients that are being used in creating the
product.
2. Process - This refers to the transformation phase where the raw materials or
ingredients are being processed by manpower and machines to come up with the
final product.
3. Output - This refers to the final product that is intended to be sold to the target
customers.

How will you describe the ideal set-up of your

production area/site of your business?

Manufacturing Sites Options

There are three options that an entrepreneur can choose for the operation of the business:
1. Home-based - This site option is the cheapest among the three and highly flexible.
This is the best choice for most start-up businesses that do not have the capacity to
establish a manufacturing site yet.
2. Commercial space for rent - This is the recommended option if the business
already needs a commercial space for the processing of the product and if the
home-based option is not viable or feasible.

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3. Commercial space purchase - This is the ideal option for established businesses,
but this requires the biggest amount of capital. It provides the entrepreneur with the
freedom and flexibility to design, manage, and run the commercial space completely.

Remember
The manufacturing site and production schedule are determined
based on the projected demand.

The manufacturing site layout affects the efficiency of business operations. A good layout
will result in a lower production cost. Depending on the size of the business, related areas
are either grouped in a single area or separately in medium or large enterprises. In a bigger
manufacturing setting, the receiving area is normally separated from the assembly and
delivery area.

Major manufacturing layouts are categorized into two:

1. Product-focused - These facilities are prearranged according to the flow of the
manufacturing operations. It is recommended for a job-shop type of operation.
2. Process-based - These facilities are grouped according to their function. This is used
for those with batch or continuous production operations set-up.

Table 1. Comparison between product-focused and process-based manufacturing layouts

Product-focused Process-based

Product High volume but a low variety of Low volume but a wide variety of
production products products

Production High fixed cost Costing estimate is done before

cost the production process.

Equipment Uses special purpose equipment Uses general-purpose equipment

and labor and has generally low-skilled labor and has skilled personnel

Scheduling of Relatively simple scheduling Complex scheduling

production

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Unit 10.1: The 4Ms of Operations

Remember
In determining a site, take into consideration the applicable standards
as well as necessary permits required by the authorities. Waste
disposal and water treatment facilities are necessary to protect the
environment. The requirements of the Department of Environment
and Natural Resources (DENR), Department of Health (DOH), Local
Government Units (LGU), and other government authorities should be
considered.

Example

Fig. 2. A process-based manufacturing layout of a plant

The plant is divided into several job shops. Each job shop is composed of uniquely skilled
workers that process the product. Different processing requirements are done in each job
shop to come up with a final product.

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Unit 10.1: The 4Ms of Operations

Why are machines important to a business?

Machine
Machine refers to the tools, facilities, and systems that are used to produce a product. The
machinery and equipment required can be identified after the manufacturing layout of the
business has already been determined. The determination of the equipment size should be
closely monitored with the manufacturer or suppliers. The origin of the machine, whether
local or imported, and the country where it came from should be known, and the availability
of after-sales service and spare parts should be clarified with the suppliers. The delivery
schedule, terms of payment, and other arrangements should be clearly stated in the
quotation or contract agreement.

Equipment and Other Facilities

The equipment to be used must be strategically placed within the production site or within
the service delivery area. A facility plan must be prepared to determine the economical way
to manufacture products. The site should adapt to how massive or little of the sizes of
equipment will be. It should be well-ventilated and well-lit. Employees or machine operators
should bear rigorous training before they are allowed to operate the equipment.

Information and Communications Technology

Some businesses use the following information and communication technology equipment
to better serve their customers:
● landline phones to be used for telemarketing and customer service;
● mobile phones to cater the option to have mobile applications for the business, for
order-taking, payments, marketing, marketing research, mobile banking, and
Internet promotion;
● computers for Internet marketing, taking orders, and online response and queries;
● point of sale (POS) machines for charging debit/credit card, tracking sales, storing
data, and analyzing purchases;
● accounting and inventory software for accounting business transactions,
profitability, sales, and inventory; and

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● website for order taking, 24/7 marketing, online conversations, and collecting
customer information.

Remember
Machines are not limited to physical equipment only but can also
pertain to new technologies.

Entrepreneurs’ Responsibilities in Safeguarding Machines

The entrepreneur has the foremost responsibility of safeguarding the machines used in
production. These are:
1. protecting against fraudsters by creating strong passwords and used only by
authorized employees;
2. training of employees in keeping information confidential, including passwords;
3. constant updating and checking of software programs against viruses and hackers;
4. assuring that there is a business continuity program (BCP) should machines not work
properly;
5. Appointing experts in charge of the business’s software and computers; and
6. having insurance coverage for equipment.

How are materials important in operating a

business?

Materials
Materials refer to the raw items that are used in creating a product or performing a service.
The materials’ specifications, quantity needed, and the schedule of delivery should be clearly
planned. The reliability of the suppliers should also be proven, and single sourcing of
materials should be avoided.

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Unit 10.1: The 4Ms of Operations

Materials Requisition Options

1. Manufacturing of own materials- In this option, a large amount of capital must be
prepared because all expenses in the manpower, machines, and materials will be
shouldered by the entrepreneur.

2. Outsourcing- In this option, a third-party manufacturer will do the manufacturing of

the materials needed. These third-party companies are considered well versed in
producing such material and have tailored it to the entrepreneur’s needs at a lower
cost. It saves the entrepreneur from buying expensive machinery.

Remember
There are also risks in having outsourced materials. The third-party
company may run out of supply or might produce substandard
materials. When it breaches the service-level agreement, the
entrepreneur may shift to other providers.

3. Purchasing own products from present suppliers - In this option, the

entrepreneur will purchase finished products from a manufacturer. The
manufacturer of the product is also allowed to sell to the entrepreneurs’
competitors. The entrepreneur becomes one of the distributors of the manufacturer
(distribution business, retailers, sari-sari stores, and franchises). With that, the
entrepreneur saves the cost of machines and manpower and allows him to buy and
sell a broad range of finished products.

Pricing Methods
There are three methods in determining the price of a product or service:
1. Cost-oriented pricing - It refers to a method in which some percentage is added to
the cost of the product in deciding the final price based on the desired margin.
Example: grocery stores, fast food chains

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2. Competition-oriented pricing - It refers to a method in which the entrepreneur

considers the prices of its competitors’ products to set the prices of its own products.
Example: gasoline stations

3. Demand-oriented pricing - It refers to a method in which the demand dictates if the

entrepreneur will make the price higher or lower.
Example: An airline in off-peak days will charge less in tickets or will conduct promos,
unlike in on-peak days like holidays, and on special occasions, they will spike up the
ticket prices.

Manpower
Manpower refers to the human resources who will handle the business operations. As the
business grows, the entrepreneur should hire qualified employees that can handle
operational functions so that he can focus on the strategic and management functions of
the business. Manpower requirement is one of the factors in the high expenses in business,
but it is also the most instrumental to its success.

Personnel should be arranged accordingly, from the managerial, supervisory to the staff or
workforce needed in the operation of the business. In the selection process, the
entrepreneur should identify applicants that have the necessary knowledge, skills, and other
qualifications that will help the business achieve its goals.

Why hiring employees for your business must be

taken with great precaution?

Qualification Standards
There are three kinds of qualification standards:
1. Manpower - It refers to the personality required to a worker’s overall physical
attributes.
2. Experience - It refers to the length of working experience in relation to the job
criteria required as a worker.

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3. Academics - It refers to the workers’ academic qualifications or educational

attainment required of them to perform the job.

It is important to identify the key or the best people who will manage the business. The
owner and management team should have a good track record of work experience and the
ability to help the company grow and be successful. A more thorough discussion of these
will be presented in a separate lesson in this unit.

Extend

Activity
If you are a business owner, how will you utilize the 4Ms of operations? Draw an illustration
of the 4Ms of operations in relation to the business you have in mind.

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Unit 10.1: The 4Ms of Operations

Guide
● Read the instructions carefully.
● Review and relate the discussions on 4Ms of operation to the business you have in
mind.

Evaluate

A. Explain the meaning of the following concepts in relation

to business operations.

1. Method

2. Machine

3. Materials

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4. Manpower

5. Manufacturing site options

B. Search five products or services for each category of

pricing methods. Provide a short explanation of why such a
product falls under the identified category.

Pricing Method Product Explanation

1.

2.
Cost-oriented pricing
3.

4.

5.

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Unit 10.1: The 4Ms of Operations

Pricing Method Product Explanation

1.

2.
Competition-oriented
pricing 3.

4.

5.

Pricing Method Product Explanation

1.

2.
Demand-oriented pricing
3.

4.

5.

Wrap Up
___________________________________________________________________________________________

● Method refers to the process which is strictly followed in the manufacturing of a

business product.
● Machine refers to the tools, facilities, and systems that are used to produce a
product.
● Materials refer to the raw items that are used in creating a product or performing a
service.
● Manpower refers to the human resources who will handle the business operations.

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___________________________________________________________________________________________

Bibliography
“4 Types of Pricing Methods – Explained!” Economics Discussion. Accessed April 3, 2020.
http://www.economicsdiscussion.net/price/4-types-of-pricing-methods-explained/38
41.

“Boundless Business.” Lumen. Accessed April 3, 2020.

https://courses.lumenlearning.com/boundless-business/chapter/pricing-methods/.

“Four Process Strategies.” Bilingual Online. Accessed April 3, 2020.

http://bilingualonline.net/contents/Turabo/MANA705/week_4/4_1.html.

Peters, Michael & Robert Hisrich. Entrepreneurship 4th Edition. McGraw-Hill Book Co.,
1999.

Your Guide in Starting a Small Business. Department of Trade and Industry, 2015

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