Production System: The Four M's

• The quality of inputs and the transformation process are critical determinants of output quality in a production system.
• The Four M’s of production are Manpower, Method, Machine, and Materials which are the factors involved in the input and the production process.

Manpower

• Manpower refers to the human labor force involved in manufacturing products.
• It is crucial to match competent and skilled employees to the right jobs at the appropriate time.
• Important manpower criteria include educational qualifications, experience, employment status, number of workers needed, and job-specific skills.

Materials

• Materials are the raw materials necessary for production and form a major part of the finished product.
• Substandard resources lead to unsatisfactory finished products.
• Entrepreneurs should consider cost, quality, availability, supplier credibility, and potential waste when selecting materials.

Machine

• Machine refers to the manufacturing equipment used to produce goods or deliver services.
• Selection criteria for equipment include types of products, production system, cost, capacity, spare parts availability, efficiency, and required skills.

Method

• Method refers to the process of transforming raw materials into finished products.
• The selection of production methods depends on the product, mode of production, equipment, and required skills.

Product Description

• A product description explains what a product is and why it is worth buying.
• It provides customers with details about the product’s features and benefits.
• Effective product descriptions target the market, focus on benefits, tell the product's story, use natural language, employ power words, and include good images.

Prototyping

• A prototype is a product duplication that includes details like color, graphics, packaging, and directions.
• Creating a prototype is an important early step in the inventing process.

Benefits

• These are reasons why customers buy products, such as affordability, efficiency, or ease of use.
• Features are descriptive facts about a product or service.
• Testing a product prototype ensures it meets customer needs and is marketable.
• Pretesting involves giving consumers a free sample to try before purchase.

Supplier

• A supplier is an entity that provides goods and services to another business.
• The supplier is part of a business's supply chain.
• Some suppliers participate in drop shipping, sending goods directly to the buyer's customers.
• It’s important to choose a supplier that values partnership and helps achieve business objectives.

Value Chain

• Value chain is the 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 of value chain analysis is to create or support a competitive advantage.

Supply Chain

• A supply chain is a network of organizations, people, activities, data, and resources involved in moving a product or service from supplier to customer.
• Supply chain management includes storing raw materials, handling inventory, warehousing, and moving finished products from processing to consumption.

Business Model

• A business model describes how an organization creates, delivers, and captures value.
• Business model innovation involves developing and modifying business models and is part of business planning.
• A business model is a company's plan for how it will generate revenue and make a profit.
• It details what products or services the business will manufacture and market, and the associated expenses.

Developing a Business Model

• Identifying the specific audience
• Establishing business processes
• Recording business resources
• Developing a strong value proposition
• Determining key business partners
• Creating a demand for today’s generation strategy and be open for innovations

Business Plan

• A business plan is an important tool for understanding the future of a business.
• It guides the implementation and operation of a business proposal.
• Business plans can help secure investment, attract employees, obtain credit from suppliers, and attract potential customers.

Business Plan Components

• Introduction: Describes the purpose of the business plan.
• Executive Summary: A summary of the business plan (written last but presented first).
• Management Section: Explains how the business will be managed and the personnel needed.
• Marketing Section: Details product/service design, pricing, sales locations, and marketing strategies.
• Financial Section: Shows the capital needed, income, and expenses.
• Production Section: Lists the area, equipment, and materials required.
• Competitive Analysis: Identifies major competitors and researches their products, sales, and marketing strategies.
• Market: Defines the target customers who will buy the products or services.
• Organizational Chart: Graphically represents the relationships between company officials.