THE 4MS OF PRODUCTION IN

RELATION TO THE BUSINESS

OPPORTUNITY
 LESSON OBJECTIVES:
After going through this module, you are expected to:

1. Be able to have an understanding of the 4Ms

of Operations;
2. Describe each of the 4Ms in relation to the
business opportunity;
3. Develop an effective product description; and
4. Be able to create own product example and
test it.
 Pre-test

1. It suggest how raw materials will be transformed using the

other factors in the production.

a. Machine c. Manpower
b. Material d. Method
 Pre-test

2. It is not limited to muscular activities but also intellectual,

creative abilities etc.

a. Capital c. Labor
b. Land and technology d. Money
 Pre-test

3. It is another term used to describe factor inputs because of its

transforming properties.

a. Intermediate input c. Productive input

b. Processors d. Transformers
 Pre-test

4. The following are productive inputs EXCEPT for one.

a. Capital c. Land and technology

b. Labor d. Money
 Pre-test

5. The Kitchen Therapy bake cakes and pastries, and sugar is

one of the must have in their grocery list. What does sugar
represents in their production of goods?

a. Machinery c. Raw material

b. Decoration d. Finished product
 What is it?

If Sales is the engine that powers Auto Sales, 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.
 What is it?

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.
 What is it?

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.
 What is it?

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.
 Let’s take a look at each one:

1. Methods - suggest the process of combining

raw materials and how these are going to be
transformed using the other factor inputs of
production. This resource input is also called
technology or techniques of production since it
prescribes the intensity in the use of factor
inputs.
 1. methods

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
compare to the other factor inputs.
 1. methods

Example: 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

-The right human resources who will handle

certain business operations. It is one of the
highest cost of operating the business, but also
the most instrumental to its success.
-It does not only include labor or muscular power
but also intellectual, creative abilities and other
qualities of individuals that can contribute to the
production.
 2. manpower

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.
 2. manpower

Example: 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
- technology used in efficiently operating the
business.
- It was also described as the “best friend” of
manpower in producing goods and offering
services.
- Machines are not limited only to physical
equipment but can also pertain to new
technologies.
- It also represents all man-made physical capital
used in the production process.
 3. machines

-Aside from machines the tools, durable

equipment, and the physical plant are also part
of it. Without machines, business operations will
be too unmanageable, costly and with low
quality.
 3. machines

Example: In the production of our pandesal, the

machinery comprises the oven, baking utensils
and the bakery itself.
 4. materials

- to be used in creating a product or performing a

service, which includes supply chain
management
 4. materials

Example: 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.
 4. materials

- 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.
 Materials Requisitioning
Options
1. Manufacturing own products or offer
services – if this is the case entrepreneurs need
to prepare huge capital for the materials, machines
and manpower which we all know will cause the
company a greater risk. However, through this
entrepreneurs can closely monitor the quality of his
product and can build his own name overtime
making his own brand identity.
 Materials Requisitioning
Options
2. Outsourcing of manufacturing or service
activities to a third party – this is the process where
a company appoint a third party manufacturer to do
the manufacturing operations of the business.
Expertise wise these third party companies have
more experience and can handle manufacturing
products tailored to the entrepreneur’s needs at a
lower cost.
 Materials Requisitioning
Options

- Outsourcing also saves the entrepreneur from

buying expensive machineries, but has it also has
its risk such as: Profit shared with the third party,
they run out of supply, when the outsource party
closes its business and if they produced sub-
standard products
 Materials Requisitioning
Options

- When outsourcing the entrepreneur

must protect its product through a
trademark or a patent and a
noncompeting or nondisclosure
agreement.
 Materials Requisitioning
Options
- Patent – the right to protect the
entrepreneur regarding the product
or service.
- Trademark – a sign or symbol
that helps to distinguish the product
from the others.
 Materials Requisitioning
Options

- Nondisclosure Agreement
states that the third party will be given
full access to any confidential
information provided that it should be
disclosed to anyone else.
 Materials Requisitioning
Options
3. Purchasing own products or services from
present suppliers – this is where entrepreneurs
purchased finished products from manufacturer or
offering the services of another company. The
company can save the cost of the machines and
manpower. However, the entrepreneur cannot own
the brand name of the product or service and the
manufacturer is not restricted to sell to the
entrepreneur’s competitors.
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

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

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

Factor inputs – are the transforming inputs that

will process the intermediate inputs into finished
products. They are also called 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.
 PRODUCT DESCRIPTION

Product description is one of the important aspect

of selling, you have to visualize what your target
market will patronize and would like to have.
 3 Rules to Visualize a
Product Descriptions
That Sell.
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
 3 Rules to Visualize a
Product Descriptions
That Sell.
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 Rules to Visualize a
Product Descriptions
That Sell.
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.
Once you already have a clear vision of what
should be the description of your product.

We can now create our own prototype.

What is Prototype?
 PROTOTYPE

A 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.
However, it is not meant to be the final version
as there will be lots to improve.
EXAMPLE OF PROTOTYPE
ADVANTAGES OF PROTOTYPE
1. Creating prototype gives you the opportunity to
test and refine the functionality of your design.
2. It makes it possible to test the performance and
quality of the materials.
3. It will help you describe your products more
effectively with potential buyers.
4. It will encourage others to treat you more
seriously.