ENTREPRENEURS

HIP
Quarter 2 – Module 2

4Ms of Operation
The 4Ms of Operations (Batisan, 2016)
The operations plan is an important part of the business
plan because it simply states the details in operating the
business. Operations management, on the other hand,
controls the implementation of the business plan. A strong
operations plan should have the four operational aspects _
called the 4Ms of operations: the methods, or the processes
to be followed in effectively manufacturing or delivering a
product or service; the manpower, or the right human
resources who will handle certain business operations; the
machines, or the technology used in efficiently operating the
business, and the materials to be used in creating a product
or performing a service, which includes supply chain
management.
1. Methods
The methods aspect represents the day-to-day operations
of a business. It describes how an entrepreneur will run the
business from all facets of the business such as the
manufacturing of goods, service delivery process,
distribution of goods and services, logistics for delivery of
goods, and inventory management, to name a few. The
entrepreneur has to be very detailed in formulating these
processes and must ensure that the customer experience
has to be very detailed in formulating these processes and
must ensure that the customer experience will be pleasant
and seamless. Internally, the processes must also abide with
industry standards and policies where the business belongs
(e.g., ISO certification).
The entrepreneur must also set standard operating procedures (SOPs) both in
manufacturing goods and rendering of services. These SOPs must be
monitored to validate compliance. The entrepreneur must also critically
consider the effects of these processes to the environment and to the
public.
I. Manufacturing of Goods (Schaper and Volery, 2004)
The entrepreneur who will engage in producing his or her own products
will have to consider the basic guidelines and principles in manufacturing.
Manufacturing is the process of translating raw materials into
finished goods that are acceptable to the customer’s standards. It
consists of three elements:
Input – the materials or ingredients, skills, technology and
investment to be used in creating the product
Process – the transformation phase where inputs are processed
by manpower and machines to come up with the final product
Output – the final product of the process stage, which is intended
to be sold to target customers
OPERATIONS MANAGEMENT IN MANUFACTURING
The entrepreneur must also consider the efficient manufacturing
site in which the manufacturing process will take place.
Depending on the entrepreneur’s objective and financial
capacity, he or she can opt to have any of the following
manufacturing sites:
Home-based – Most startups do not have financial capacity to
establish a manufacturing site. Thus, their only option is to
manufacture goods at home. This option is the cheapest and highly
flexible.
Commercial space for rent – this is advisable if the business really
requires a commercial space for processing of goods and if the home
option is not viable anymore. A commercial space gives the
entrepreneur a more specialized and suited manufacturing site
than manufacturing at home.
Commercial space purchase – this option requires the biggest
amount of capital expenditure, but it also provides the
entrepreneur substantial freedom and flexibility to design and run
the commercial space.
 Once the entrepreneur has chosen a manufacturing site, he or she
should consider location, where the delivery of raw materials and
finished goods will be conducted. The transportation routes from or
to the manufacturing site should be efficient, so that the delivery of
raw materials and finished goods will be seamless. The location
should also be accessible to major types of transport vehicles. Last,
the location must operate in an environmental-friendly manner so as
not contribute to various types of pollution in the environment.
The internal layout or the floor plan of the manufacturing site
must also be critically done by the entrepreneur because it affects
the efficiency of the business operation. Each space should be
maximized to save on manufacturing costs (specifically overhead
costs). An efficient floor plan illustrates how raw materials and
finished goods can efficiently be transferred, processed, and released
from one processing unit to another. There are two options for the
floor plan: (1) the product- based layout where the facilities, are
prearranged according to the flow_ of the manufacturing operations,
and (2) the process-based layout, where the facilities are
prearranged. The entrepreneur must prepare a manufacturing
process flow, which serves as a step-by-step guide of the employees
and the manufacturing equipment.

BAKERY KITCHEN LAY-

II. Service Delivery Process
The entrepreneur who will engage in a service business must
be more meticulous when it comes to the service delivery
process. This is because services are intangible, and the only
way the customer can appreciate the service is by remembering
how pleasant his or her experience was. Moreover, a seamless
service saves the entrepreneur a huge chunk in operational
costs.
Service entrepreneurs must prepare a detailed flowchart of
the service business, which is also called a service blueprint.
Every process in the blueprint must be relevant to the service
business to minimize wastage. The service bottlenecks must be
addressed immediately to avoid customer complaints.
Bottleneck is a part of the process where there is an apparent
inefficiency and where the customer waits longer. The service
entrepreneur must develop scripts that the service provider
will follow to serve the customers better and to establish
standard processes. In terms of the floor plan, the service
entrepreneur must design it according to the most efficient
way in performing the service, which can be based on the
internal structure of the service business, service delivery
requirements, or customer requirements. For example, a
barber shop should place the receptionist in front so that
customers can easily inquire of the service that they will avail.
 III. Distribution Method

One of the basic processes to be considered thoroughly is the distribution

process. Distribution is the process of bringing the products or services to
customers. In selling physical goods, the entrepreneur must plan the
location, the processes, and the distribution of the products to
the customers. The entrepreneur may also buy the finished goods
from the manufacturers and plan how to distribute them
efficiently to target distribution centers or the customers.
Distribution is not a straight process from the entrepreneur to
customers; thus, the term supply chain or distribution channel
was coined. The manufacturer will deliver the products to the
distributors, to the wholesalers, to the retailers, and then finally
to customers. Each member in the supply chain will have a fair
share in the profits, which may be squeezed if the supply chain
grows longer. This is why there is a tendency to impose higher
markups on the product price. It is now up to the entrepreneur
on what distribution channel strategies he or she will employ
depending on the product or service he or she will offer.
IV. Payment Process
The entrepreneur must also establish a seamless payment process.
Generally, there are no problems if the customers pay in cash. But
there are instances when they do not want to pay in cash and are
usually attracted by flexible and customer- friendly payment terms
such as credit cards, installment plans, or a simple account payable or
pautang. The entrepreneur must ensure that credit payments are
seamless and that the customers are aware of the terms and
conditions of the credit. Some entrepreneurs put point-of-sale (POS)
machines in their shops to accommodate those who will pay through
their credit or debit cards. For traditional ones, they put the credit
purchase in a ledger and indicate the due dates. Once the due date
arrives, the entrepreneur has to collect payments from the
customers. The objective for all entrepreneurs is to ensure efficient
collection of accounts receivables and avoid bad debts. He or she
must conduct due diligence first before allowing a customer to
purchase via credit.
TYPE OF PAYMENT
2. Manpower
Manpower is one of the highest costs of operating a business but
is also the most instrumental to its success. Having the right people
encompasses a myriad of advantages.
I. Job Description
Job description enumerates the duties and responsibilities of the
potential employee, including the scope, limitations, and terms and
conditions of employment. The heading of a job description is the
job title, which is the summary of what the employee will do. The
entrepreneur should devise a respectable and decent job title
because the title boosts the self-confidence of the employee.
II.Employee Qualification
In hiring suitable employees for the job needed, entrepreneurs
will have to lookfor the following criteria:
1.Educational background — This gives the entrepreneur an idea
on the degree of the candidate's knowledge of basic things.
However, it is not the sole factor in selecting a candidate.
2.Work experience — This will tell him or her what to expect
from the applicant and what he or she can potentially contribute
to the business based on his or her past positions and
experiences. This will also establish the training needs of the
candidate.
3.Specific skill or knowledge - This one is important especially on
technical jobs that require high proficiency. It will be easy for
entrepreneurs to place highly skilled people into specialized jobs
 4. Work attitude - These deals with the worker's integrity and
how he or she deals with his or her coworkers, bosses, and
customers. Entrepreneurs also need people with relationship
skills because communication is important in applying their
expertise.

III. Selection of Job Applicants

Here are some common questions being asked in an interview.
However, it will be up to the entrepreneur or the HR personnel to
ask relevant questions to the interviewee.

1.What are your strengths that you can contribute to our

organization?

2.What are your weaknesses that can prevent you from working
3. What exactly did you do in your previous job(s)? How will
these past experiences contribute to our organization?

4. What were your significant milestones in your previous job(s),

and why do you consider them as such?

5. Can you discuss the things you know about our organization?
Why are you interested to join our organization?

6. What are your career plans for the next five years if given the
chance to work with our organization?

7. Can you describe your work ethic? How do you work with a
team and withyour superior?
IV. Job Offer
Once the entrepreneur or the hiring manager has been
convinced already of the credentials and the interview answers
of the candidate, the job contract is now prepared. A job
contract generally summarizes the terms and conditions of the
candidate's employment with the business. It usually includes
the following details:
(1) rank or position of the candidate, (2) a list of
responsibilities or deliverables and its scope and limitations, (3)
the salary and benefits including vacation and sick leaves, and
qualifications to become (4) work schedule, (5) probationary
period if any a regular employee, (6) the duration of the
contract, and (7) resignation procedure (e.g., 30-day notice or
leave immediately.
 V. Employee Development
Training people is one of the biggest investments of an
entrepreneur or a businessman. Therefore, he or she must
devise strategies on how to keep employees satisfied working in
the company. Training starts with employee orientation.
 Employee orientation is usually a one--to two-day session
that summarizes the history of the business, its vision and
mission, policies and procedures, culture, and norms of the
business This also includes introduction to the co-employees
and superiors, the tour of the work place, and the discussion of
daily responsibilities and accountabilities including key
performance indicators (KPI) and key result areas (KRA) of the
employee. KPIs and KRAs are the bases of the entrepreneur for
rating the. performance of the employee—if the employee is
exceeding meeting expectations, or seldom meeting
expectations.
3. Machines
Machines are not only limited to physical equipment but can also
pertain to new technologies that help business operations become
standardized and seamless. Without machines, business operations
will be cumbersome, costly, and with low quality. Machines are
the best friend of Manpower.
I.Equipment and Other Facilities
Depending on the product that the entrepreneur produces or the
service that he or she offers, the facilities must be strategically placed
in the manufacturing site or in the service delivery area. The
entrepreneur must prepare a facility plan that details the most
economical way to manufacture the product or offer the service by
placing the facilities where they can be efficiently used.
 The sizes and shapes of the facilities and equipment affect the entire
operations process, so the site must adapt to how big or small the pieces of
equipment are. The site must also be conducive, well- ventilated, and well-
lit, so that the employees can manage the machines efficiently. There
should be fire exits and safety reminders on how to use the facilities to
ensure safety of the employees. The equipment to be used should all be
compliant with safety ensure safety requirements to prevent accidents.

FACILITY PLANNING KITCHEN

II. Telecommunications and Information Technology
Regardless of any business the entrepreneur will venture into,
telecommunications and information technology
equipment is mandatory. These pieces of equipment include
mobile phones or smartphones, tablet computers, phablets (phone
and tablet in one), landline phones, laptops or desktop
computers, POS machines, software programs, and business
Web sites. These tools aid the entrepreneur in making
business processes fast and convenient. Here are the
advantages of having telecommunications and information
technology equipment ina business:

•Landline phones — order-taking, telemarketing, and

teleconferencing with business partners and customers.
•Mobile phones (smartphones, tablet computers, phablets) —
mobile application for order-taking, mobile application for
payments, mobile marketing, social media marketing,
teleconferencing with business partners and customers,
marketing research, mobile banking, and Internet promotions.
•Laptop and desktop computers — order-taking, Internet
marketing, making conference calls with business partners
and customers, marketing research, online banking,
preparing reports such as financial statements, business case,
inventory reports, and legal and compliance reports.
•POS machines — charging customers' debit or credit card,
tracking analyzing purchases sales, storing data,
 •Accounting and inventory software — accounting all
business transactions and profitability, monitoring sales and
inventory

•Web site — order-taking, 24/7 marketing, having online

conversations with customers, tracking customer activities
online, collecting customer information.

The responsibility of the entrepreneur is to protect these

pieces of equipment physically and against fraudsters who will
be using this information to align or steal from the business.
These machines carry confidential information. Therefore,
they should be protected with strong passwords and used only
by authorized employees. Employees must be trained to keep
every piece of important information confidential, including
passwords. Software programs must always be updated and
checked against viruses and hackers. POS machines must
always be in working condition and must be referred to the
banks when not properly working. Equipment should be
covered in the event of loss of property due to accidental
events and accidents, machine breakdown, manual faults, or
interruption of business.

4. Materials

Whether the entrepreneur will offer products or cater

services, he or she has to pinpoint a number of dependable
suppliers of quality raw materials and supplies. The supplier
must have a consistent and sufficient number of raw
materials and supplies that can accommodate the demand of
the entrepreneur. In short, the selection of suppliers
depends largely on how the suppliers will not cause
interruptions in the production of goods or serving the
customers. From the onset, the entrepreneur should decide
on what route to choose when it comes to materials
requisitioning. Options include the following:

(1) Manufacturing own products or offer services

A huge chunk of capital must he prepared because all the
expenses in manpower, machines, and materials will be borne
by the entrepreneur. The entrepreneur must have studied the
business feasibility thoroughly, as the risk is larger with this
option. A set of competent employees can be augmented because
the machines or service the customers. But these challenges
entrepreneurs can be very specific in the details that he or she
wants for the product or service lie or she can also closely monitor
the quality of products or services, strategically design the
production or service blueprint, as well as its schedule, and be
more flexible in deciding on the' production quantity.

34

SUMMARY –RAW MATERIALS AND PROCESSING TO

2) Outsourcing of manufacturing or service activities to a third
party

Outsourcing is the process of appointing a third-party

manufacturer to do the manufacturing operations of the business.
These third-party companies already have an expertise in handling
and manufacturing these products, supplies, or inventories, and
because they manufacture, they produce goods in bulk. These
drive the companies to create products or services tailored to the
entrepreneur's needs at a lower cost. Some outsource companies
offer to provide the services for the entrepreneur.
3) Purchasing own product or service from present suppliers

Purchasing finished products from a manufacturer or offering the services of

another company is another viable option for the entrepreneur. In this setup, the
entrepreneur cannot own the brand name of the product or service. Moreover, the
manufacturer or the original service provider is allowed to sell to the entrepreneur's
competitors. In short, the entrepreneur is just one of the many distribution hubs of
the manufacturer or the original service provide. This setup is prevalent in
distribution businesses, finished retailers, sari-sari stores, and franchises.
 Logistics
Entrepreneurs/manufacturers can also venture into distributing their
products on their own without the aid of a distributer or agent. This is
where the entrepreneur must understand and implement efficient logistics
management. As discussed earlier, the entrepreneur/manufacturer is
responsible for manufacturing, warehousing, transportation, inventory
management, marketing, and selling the product or service.
 Warehousing is storing the finished goods manufactured in a
facility until they are distributed to end users. Warehousing
cost is usually substantial. Therefore, the entrepreneur should
think of ways on how to reduce the cost of warehousing by
either buying an economical warehouse or renting an
inexpensive space.
Transportation will also be a major cost in logistics
management. It is the process of efficiently transferring the
products to retailers or consumers. The
entrepreneur/manufacturer must purchase energy- efficient
vehicles that can carry a reasonable amount of merchandise to
prevent inefficient trips. The entrepreneur/manufacturer can
also use the presence of distribution hubs. The distribution
hub is where the entrepreneur/manufacturer combines the
before delivery to retailers or end consumers. Consolidating
different products in the distribution hub elicits efficiency
because, more often than not, a manufacturer carries multiple
products. Instead of delivering per product to retail outlets,
the entrepreneur/manufacturer can consolidate all the
products needed by the retail outlet and deliver just once.

Inventory should also be tracked religiously by the

entrepreneur/manufacturer. Each of the inventories in the
warehouse, distribution hubs, and manufacturing sites should
be monitored. The law of supply and demand must always be
taken into account. There shouldn't be a surplus of inventory
especially if the entrepreneur is selling perishable goods. The
entrepreneur must be knowledgeable about the life span of the
products that will be sold. The entrepreneur/manufacturer
must also ensure that there is enough space to store and stock
inventory, depending on storage requirements (e.g., product is
required tobe stored in cold temperature).
 ACTIVITY
Instruction: People buy only the most needed products. Identify those
basic needs. Find suppliers available in your area using the format below.
INGREDIENTS SUPPLIER PLACE PRODUCT SPECIFICATION PRICE ( Php )
Anna's Store Minglanilla Small 6.00
Ben's Store Minglanilla Small 8.00
#1. Egg Charlie's Store Minglanilla Small 7.00

#1.RICE KILO

#2. OIL LAPAD

#3. TOYO PACK

#4. ARIEL SOAP PACK
#5. MEGA LATA
SARDINES
 Assessment

1.What is the asset and the most significant factor in the

production?
A.Machine
B.Method
C.Manpower

2.What is the equivalent term of Process in 4Ms?

A.Material
B.Machine
C.Method
3. Which one does not belong to 4Ms?
A.Method
B.Marketing
C.Manpower

4. Which of the following is not considered as qualification of

the employee?
D.Work experience
E.Curriculum Vitae
F.Educational Background

5. What is the equivalent term of People in 4Ms?

G.Material
H.Machine
I.Manpower
6. What is the term that controls the implementation of the
business plan?
A.Business Operation
B.Bottleneck
C.Distribution Method

7. What is recruitment?
D.Hiring staff
E.Training staff
F.Rewarding staff

8. What purpose of job description classified as specific?

G.Job Title
H.Job Duties
I.Sub Tasks
11. What are activities involved in logistics?
A. Procurement of resources
B. Distribution of products
C. All of the above

12. What is the main purpose of any supply chain in terms of

pleasing customer needs?
D. Profit
E. Expenses
F. Commercial

13. What is the management of the flow of goods?

A.Distribution Method
11. What are activities involved in logistics?
A.Procurement of resources
B.Distribution of products
C.All of the above

12. What is the main purpose of any supply chain in terms of

pleasing customer needs?
D.Profit
E.Expenses
F.Commercial
13. What is the management of the flow of goods?
A.Distribution Method
B.Supply Chain Management
C.Standard Operating Procedure

14. What is SOP stands for?

D.Sale of Point
E.Sales of Product
F.Standard operating Procedure

15. Is outsourcing increases costs of the products?

G.True
H.False