4Ms of Operations in Product Development

• Learners to demonstrate understanding of the 4 Ms of operations.
• Learners to be able to understand the 4M's of operations in relation to developing a product description, creating a prototype, testing the product prototype, and validating the service description of the product.

Fundamentals of Product Development

• Product development involves developing, testing, and commercializing a product or service to solve a problem in the primary target market
• Product development has four sequential steps: product/service description, creating a prototype, testing the prototype, and validating the market.

Product or Service Description

• Product descriptions act as the blueprint for all business operations.
• The product description explains how the product/service works and benefits customers.
• Descriptions should address the primary target market using familiar language.
• Descriptions must highlight features catering to customer needs and problems.
• Realistic superlatives are best for product descriptions, avoiding general motherhood statements.

Creating a Prototype of the Product or Service

• A prototype is a preliminary model or sample crafted to test a product concept or service process
• Creating a prototype reduces implementation/commercialization risks and provides advantages
• A prototype enables trial-and-error, tests performance and specifications, and gives a specific product description.
• A prototype also helps respect customers and builds credibility.

Techniques in Creating a Prototype

• To create a prototype, first manufacture or create an actual product; study a competitor’s product or service; prepare a video presentation or a miniature prototype.

Four Steps to Build Your Product's First Prototype:

• Draw to visualize, then create graphic designs.
• Build a product replicated from the designs.
• Locate suppliers to get estimates, then find the company to manufacture you products

Testing the product

• Testing the product prototype is important
• Conduct product testing to ensure that the product or service delivers its promise

Methods for product testing include:

• Focus group discussions facilitate insights to find issues, and seek improvements.
• Legality and ethics tests ensure compliance with regulations and ethical standards.
• Safety tests confirm product safety for use, consumption, or application.
• Product costing tests evaluate expenses vs. budget, allowing for modifications.
• Component tests assess each component independently for failures, redesigning until fully operational.
• Competitor's product/service tests allows application of best practices.

Market Validation

• Market validation is determining whether your product interests a target market
• Market validation involves customer interviews and happens prior to significant investment in your product/concept
• To test your startup idea, write down your product concept and any core assumption that can be tested.
• Identify customers, state problem being solved and key features, the validate decisions by testing whether the writing and discussions are just assumptions
• Rely on customer interviews, experts, digital landing pages, and inexpensive ads to find the truth

Ways to Test your Startup Idea

• Start with your network of friends, mentors, and investors to approach potential customers.
• Interview potential customers, starting with questions but being curious about needs.
• Ask why using the Five Whys technique to find the real reason behind a customer's motivation.
• Focus less on features and more on explaining the value proposition: the customer gains from using the product
• Product validation with prospective customers is subjective, with no definite answer
• Take a big risk, have fun with the lean market validation experience to help you get closer to success

4 Ms of Operation

• Understanding of the 4Ms include Manpower, Machine, Method and Material
• Manpower considerations includes the skill and will of employees to consistently perform what is expected of them safely.
• Machine assessment includes the machine's capabilities to produce safe, reliable, quality output at the right rate, without breakdowns
• Method include whether the standardized work methods are in place, that ensure consistent and safe production
• Material checks if there are no defects nor shortages while meeting required specifications

4M Analysis

• 4M analysis evaluates conditions responsible for a defect mode.
• Ishakawa (fishbone) diagrams find the possible causes related to a problem or condition, for the team to focus on the cause over the symptom

How entrepreneurs can pinpoint dependable suppliers for raw materials.

• The selection of suppliers depends on how to handle capacity

Materials Requisitioning Options

• Requisitioning options include the following:
  • Manufacturing own products or offer services
  • Outsourcing of manufacturing or service activities to a third party
  • Purchasing own product or service from present suppliers

Advantages of Manufacturing own Product

• Entrepreneurs can be very specific in the details he or she wants for the products
• Entrepreneurs can closely monitor the quality of products or services
• He or she can strategically design the production or service blueprint as well as its schedule of production.
• Entrepreneurs are flexible in deciding on the production quantity and can build his or her own brand identity
• The profits will all go to the entrepreneur or the manufacturer.

Disadvantages of Manufacturing own Product

• A huge chunk of capital must be prepared because all the expenses in manpower, machines, and materials will be borne by the entrepreneur
• A set of competent employees must be employed to handle the machines or service the customers

Outsourcing Manufacturing or service activities to a third party

• Outsourcing is the process of appointing a third-party manufacturer to handle the process of manufacturing operations

Advantages of Outsourcing

• Saves the entrepreneur from buying expensive machines, renting locations, or hiring manpower
• Creates tailor-made products or services to the entrepreneur's needs at a lower cost

Disadvantages of Outsourcing

• Poses risks when the outsource party closes its business
• Third party runs out of supplies
• Outsourcing breeches the service-level agreement and profits are also shared with the third party

Advantages of Multiple Outsourcing

• Continues operation even if one of the third party stops;
• The entrepreneur will have a high bargaining power on the price and scope of the product
• The entrepreneur will have a choice to switch to other parties if one of them does not perform well

Purchasing own Product

• An entrepreneur can purchase products from the manufacturer

Advantages of Purchasing own Product

• Spares the entrepreneur of the costs of machines and full-time;
• He or she can use funds for other purposes
• Allows to buy and sell a broad range of finished products and established services
• Switching to another manufacturer or service provider will be easy if the sales of the products or services are not good

Disadvantages of Purchasing own Product

• The entrepreneur cannot own the brand name of the product or service and it hard to establish a selling proposition because all the competitors offer the same products
• The manufacturer can just easily take the entrepreneur off its list when it wants to and can charge to the entrepreneur with unreasonable prices
• Manufacturers can bypass the entrepreneur and sell the product directly

Value Chain vs Supply Chain

• Michael Porter's (1985) value chain (VC) model identifies sources of competitive advantage by dividing production into main and auxillary activites.
• This approach allows one to analyze costs, expenses or increase differentiation per stage of the production process profit loss
• Company value is measured by revenue, and determined by the volume of services.
• Achieving competitive advantage through differentiation can help competitors perform their activities better
• When companies can reduce cost without losing quality, they can have lower prices and gain a greater market share

Porter's Value Chain Primary Activities includes:

• Inbound logistics, for warehousing and receipt, operations, for converting raw materials to finished product
• Outbound logistics for distribution and Marketing and Sales, as strategies to enhance visibility and target appropriate customers

A supply chain has the following:

• Procurement where is the acquisition of inputs, Human resource management include hiring and relating employees who will fulfill business strategy,Infrastructure covers company's support systems and functions , technological development involves research & development

Supply Chain

• A supply chain comprises the flow of all information, including funds, materials, and products between the stages of the creation and the selling.

Supply Chain Elements

• Product Development, Marketing, Operations, Distribution, Finance, and Customer service
• Proper supply chain management reduces expenses and increases profits
• Value chains focus on investors; supply chains involve crucial partners

Manpower

• Put skilled people on the proper position
• Manpower planning for recruitment, engagement , requisition
• Manpower is a great factor for the success of a business

Manpower Planning Details

• a job description indicates the duties of the potentional employees.
• Preparatory Selection of Job Applications can be done tru Advertisements and Headhunters.
• Employee development includes Employee orientation

Six Basics Parts of a Business Plan

• An executive summary is an overview of the business.
• An Opportunity details the product's description.
• An execution includes marketing and sales plan.
• A Company and Management summary is an organization structure.
• A financial Plan include sales forcast.
• A appendix includes additional information and images.

Sources that can be taken as business capital.

• Personal savings
• People close to you
• Banks

Positive signals that can help entrepreneurs develop business models

• Target high value customers
• Give quality services
• Have a good rate of return on investment.

Satisfying customers can be costly and irrational if:

• Cost of customer satisfaction will be too high.
• Market leader is difficult to sustain.
• Roi is a rate of performance based on a series of investments.
• Financial statements provide entrepreneurs on what are the basis of his of her decisions in business.
• The economy and external market.
• Gross recipets deposit includes everything from your business such as cash,credit, and sales.