ENTREPRENEURSHIP

1
The 4M’s of Operations

Module 011 | The 4M’s of Operations

If Sales is the engine that powers Auto Salvage yards then 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. 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.

Objectives:

1. Demonstrate understanding of 4 M's of Operation.

2. Describe the 4Ms (Manpower, Method, Machine, Materials) of
operations in relation to the business opportunity.
3. Understand how to develop an effective product description.
4. Create and test a product prototype.

Method, Manpower, Machine and Materials

Method
Using the Inventory Management System to establish what is needed and at
what inventory stock levels affects the first M Method. Based on what is
known, the Manager can determine the volume of cars that need to be
processed and who will be responsible for each step of the process. The
Manager will determine the most efficient way for each portion of the process
to be done to eliminate damage to the product and to eliminate areas where
time and manpower are be wasted. Controlling waste is the key to efficient and
profitable production.
Manpower
The second M is Manpower. When examining the Methods you now have in
place, what is the ideal number of people it will take to perform these methods
and what positions should they be in? How will the personnel be trained and
measured for performance? What is the “cycle time” of each part of the
Method?
Machine
Machine is the third M in the sequence. When examining your facilities,
vehicles and tools, do you have everything you need to ensure the safety of the

Course Module
 employees while maximizing the efficiency and productivity of the
department? Do all employees have access to the same tools and equipment
if needed? Do the tools enable them to perform tasks independently? Are they
trained on how to maintain the machinery and tools?
Materials
Materials are the last portions of the M’s of Production. Do you have the
materials needed to perform all parts of production and are they conveniently
located to minimize waste? Example: All material needed to clean and package
are always available and are placed to minimize effort. Does the layout of the
production department minimize wasted movement? Example: Does the part
flow go in one direction or does it zig and zag throughout your facility.

Design Process Sequence

Method
A particular form of procedure for accomplishing or approaching something,
especially a systematic or established one.
Manpower
The number of people working or available for work or service.
Machine
An apparatus using or applying mechanical power and having several parts,
each with a defined function and together performing a particular task.
Materials
The matter from which a thing is or can be made.
Facts, information, or ideas for use in creating work.

4M’s + 1 and Cause Effect Diagram

Man, Machine, Materials, Method + Management

The name for 4M’s come from the four initial letters of the words Man,
Machine, Materials and Method. However, one more has been added here to
emphasize the importance of Management in the overall success of failure of a
manufacturing unit, whatever this could, be just a production line or an entire
factory. If Management is not properly involved in the other four M’s and it is
sufficiently aware of the process and the possible outcomes, the whole
operation and even the problems solution process could yield only mediocre
to poor results.
Management is fundamental in establishing the proper policies, leadership,
clear guidelines, work discipline, effective solution methods plus the proper
work culture. This problem solution method is fundamentally oriented to
manufacturing but it can be adapted to be used in any other scenario.
The 4M’s +1 name has to do with the concept that all problems or quality
issues are related in one way or other to these five elements.
 ENTREPRENEURSHIP
3
The 4M’s of Operations

In a process one or more of these M’s can goes wrong and produce a bad output
or product, however many times the root cause cannot be evident at glance
and a cause effect diagram analysis, involving these elements could be
necessary.
The Cause Effect Diagram Integrating the 4M’s +1
This figure represents the possible root causes of a hypothetical defective
product in any company, please be aware that the root cause sequence can
have many levels beyond the ones shown here in branches A and B

Develop a Product Description

Product development, sometimes-referred to as new product management, is

a series of steps that includes the conceptualization, design, development and
marketing of brand new or nearly branded products or services. The goal of
product development is to develop, sustain and increase an organization’s
market share by satisfying consumer demand.

Since every customer uses not every product or service, defining the target
market is necessary and should happen in the early phases of the product

Course Module
 development process. Quantitative market research should take place at all
steps of the design process, including before the product is conceptualized,
while it is being created and after it has launched.

The Seven (7) Steps of Effective Product Development

1. Solicit feedback. Now.
It is not enough to run nascent products by friends and family. Instead, vet
early-stage plans and prototypes with potential customers (in other
words, strangers).
The idea is to get people to tell you whether the product meets their needs
and, if not, what might improve it. Is the product the right shape? Are
buttons or other functional components in the right place? Is it the right
color? Does it perform the way people want it to?
2. Refine your design with simplicity in mind.
A straightforward product design is essential. The same goes for brand
continuity among every item you sell.
Your product has to capture someone’s attention within the first three
seconds of him or her glancing at it. Quality design is the best investment
you can make.
Product packaging should be clean and compelling as well, with easy-to-
read text. Busy packaging that explodes with colors or design elements will
only frustrate consumers.
In most consumer product categories, packaging is your only
communication with customers. People need to know what you are selling
from 30 feet away.
When developing packaging, consider where your product will be sold.
Retailers want packaging that will not take up too much space, and many
are looking for eco-friendly options. The cost of redoing it is not cheap.
3. Do not skimp on materials or manufacturing.
A low-cost vendor is not necessarily your best bet. It is important not to
make purchasing decisions based solely on price. You have to go for quality
and reputation. That may mean spending a little extra, given that top-shelf
suppliers, labs and manufacturers tend to charge more.
Look online, attend trade shows and collect industry recommendations.
You may need to hire an agent to find a factory for you. However, you must
personally visit any factory you are thinking of collaborating with, even if
it is 8,000 miles away.
To ensure that production is adequate, create guidelines for every
manufacturing detail.
It is not enough to outline 85 percent of the process. For example, do not
simply say that your product should be constructed of stainless steel—
specify a grade, or the factory will likely use the lowest-end option.
Do not expect a flawless product off the bat, and stay on top of every detail.
It is like a Grand Canyon-size cliff if you do not. Because that is your
 ENTREPRENEURSHIP
5
The 4M’s of Operations

opportunity to sign off that, your product is correct, and if it is not, to have
the production line stop and fix it.
4. Price it right.
Many entrepreneurs fail to factor in all overhead costs—including
shipping and duties—when considering pricing. Other mistakes: gauging
incorrectly what consumers will be willing to pay, not knowing where you
want to sell the product and thinking you can make the same profit margin
from high- and low-end retailers. For example, selling at Nordstrom will
yield a different margin than selling on Amazon and may require different
packaging.
Wait to do the math until you have nailed down all the particulars. Once
you run the numbers, if your profit margins are too low (or the price you
need to charge to make a profit is too high), you may need to whittle down
your manufacturing costs.
If you need help setting prices, enlist the services of a product development
consultant or sales broker.
5. Do not overstock.
Sure, you do not want to run out of product. Sure, suppliers offer discounts
for larger orders. However, tying up all your capital in inventory can turn
your company into the Titanic. If you think, you are going to sell 100 pieces,
do not go and buy 1,000. Instead, buy 110.
Cash flow, shipping time, storage space and shelf life will dictate how much
product you stock. It is an intricate dance, and every industry is different.
There is the matter of how many colors, styles, sizes and other variations
to initially offer. Again, fewer are better. Give consumers too many options,
and you risk overwhelming them. A confused mind will not buy according
to an old adage.
6. Protect your ideas.
Intellectual property laws can protect you only if you arm yourself
accordingly. Hiring a tough IP attorney is necessary. However, before you
shell out thousands, visit the U.S. Patent and Trademark Office website
(uspto.gov) to learn about these protections and ensure that your idea has
not already been patented or trademarked by someone else.
As early as possible, you should trademark your product name, purchase
the corresponding web domain and file a provisional patent application,
which will not break the bank but will allow you to stake a claim on your
idea while giving you a year to file a formal application.
You probably will not be able to afford to patent your products in multiple
countries from day one—you will likely file a U.S. patent first and add
Course Module
 others as it makes sense. However, it helps to determine early on where
else you may want to market your idea, because once you head down this
path, the deadlines for filing patents abroad arrive quickly.
7. Consider retailers and communicate wisely.
Landed a meeting with a potential retailer? You need to anticipate all
questions they might lob your way so you can help them see how to market
and sell your product to their particular customer base. It is all about
specificity.
Keep your pitch simple. The most effective pitches relay three concise,
memorable selling points for potential buyers. “I have to put myself in their
shoes and know that they report to someone. You do not want your
presentation to be overly complex.
You may not get into your preferred retail outlet your first time out. If that
is the case, be persistent but pleasant.
Be wary of diving into the big-box pool too soon—you need high profit
margins to do so. Many retail chains will demand that you carry a hefty liability
insurance policy and provide display boxes or fixtures for your products. You
have to spend money to make money. Moreover, you have to make sure you
have enough to spend.

Eight Major Steps in the New Product Development Process

There are eight (8) major steps in the new product development process.
Here are those:
1. Ideas. This entails generating ideas for new products. Organizations can
generate hundreds or even thousands of ideas and narrow them down to
just a few. Idea sources can be both internal and external.
2. Screen Ideas. This means narrowing the ideas to select the best ones. The
goal is to reduce the number of ideas.
3. Development and Testing. The idea must now be developed into a
concept. The organization must develop the new product into different
product concepts. Target consumers to discover the value of each concept
then test the new concepts.
4. Developing Market Strategy. A target market description, value
proposition and sales goals are conceived at this time.
5. Business Analysis. This step reviews the sales, costs and profit
projections of the new product to decide if the organizational goals are met.
6. Product Development. A physical product is developed. Often, multiple
versions or prototypes are created.
7. Test Market. The product is tested in a realistic market setting. This step
provides the organization the ability to not only test the marketing, but
also the product.
8. Commercialize. At this stage, the product is available for purchase in the
marketplace.
Out of all the steps in the new product development process, the most
important focus is to create outstanding customer value. If this is achieved, the
product is likely to be successful.
 ENTREPRENEURSHIP
7
The 4M’s of Operations

Five Tips for Creating a Prototype

Ready to test your idea's real-world functionality and appeal? Creating a

prototype is necessary.
What should a newbie entrepreneur do first?
Before you ever pick up the phone, make sure you know--and can explain--
exactly what you want in as many specifics as possible. You also have to
educate yourself on the process so you understand what the person on the
other end of the phone is talking about. A virtual prototype is not the same as
a prototype, but some manufacturers try to sell them as such. You need to
know the terminology so you can be sure you are getting what you want.
Once you identify potential manufacturers, what should you ask them?
Ask for their portfolio to see what kind of work they have done and for whom
they have done it. Make sure they have the experience and capability to do
everything you need. A smoke alarm is not an overly complicated product, but
it does have some complicated issues. You might find a prototyping shop that
can easily do the outer case but does not know anything about electronics or
how they interface with the case. You need someone with experience that
covers everything. Also, look for someone with a design aesthetic that matches
yours. You will not be happy with a futuristic designer if you are looking to
design something around a retro brand.
How can you vet references for these shops?
You can check the references they provide and clients in their portfolio to ask
about things like responsiveness and timing. Research them online to see how
long they have been in business, if they have been in the news and what others
have to say. However, keep in mind that internet information is just one data
point, because you do not know its origin. Lastly, listen to your intuition: We
all have an inner compass that guides us when we interact with others, and if
something feels off, or feels right, that is an important variable.
What can one expect in terms of prototyping time and cost?
The structure of a deal is difficult to nail down because it is dependent on so
many factors and how well prepared you are. Prototyping companies typically
set rates by the hour or by the project. The more complex the product and the
more handholding you require, the more time it will take and the higher the
cost will be. Communicating your needs thoroughly can save time and money.
Because you provide all the information they need to design it, your flow and
preparedness will typically dictate the pace of the project.
What if my invention just does not fly?

Course Module
 Millions of inventors have gone down this entrepreneurial path of
prototyping only to end up with a very nice bookshelf piece. At some point,
we all have to walk to the end of the board, jump off and hope there is water
in the pool. If not, many resources can help you revisit or decide if it is time
to move on. Whether you decide to carry on or move on, inventor education
is the key to making sure you are pointed in the right direction.

Glossary
Apparatus: The technical equipment or machinery needed for a particular
activity or purpose.
Invention: A unique or novel device, method, composition or process.
Prototype: A first, typical or preliminary model of something, especially a
machine, from which other forms are developed or copied.
Simplicity: Something, which is easy to understand or explain, seems simple,
in contrast to something complicated.

References
1. 4M's of Production;
https://www.scribd.com/presentation/322711508/4-M-s-OF-
PRODUCTION; June 5, 2017
2. The 4 M’s +1 and Cause Effect Diagram; http://www.engitek.com/the-
4m's+1.html; June 5, 2017
3. 4M's of Production; http://www.slideshare.net/robertcounts12/4-
ms-of-production; June 5, 2017
4. Effective Product Development Steps;
https://jpkgroupsummits.com/effective-product-development-
steps/; June 5, 2017
5. 5 Tips for Creating a Prototype;
https://www.entrepreneur.com/article/227975; June 5, 2017
6. The 7 Steps of Effective Product Development;
https://www.entrepreneur.com/article/244616; June 5, 2017

Online Instructional Video:

1. What is a Prototype? | Low-Fidelity Prototypes & User Research |
Rapid Prototyping | Udacity;
https://www.youtube.com/watch?v=w7Q6bHVESsE; June 5, 2017