MODULE IN ABM 12

ENTREPRENEURSP
Second Quarter
Week 3

MOST ESSENTIAL LEARNING COMPETENCY

Demonstrate understanding of the 4M’s of operations( TLE_ICTAN11/12EM-Ia-2)

OBJECTIVES
The learner shall be able to understand on how to demonstrate understanding of the 4M’s
of operations in relation to;
• Select/pinpoint potential suppliers of raw materials and other inputs necessary for the
production of the product or service ;
• Discuss the value/supply chain in relation to the business enterprise

Six Steps to Selecting the Right Supplier

What’s In

Selecting the suppliers who can meet your consumers’ demand for higher-quality ingredients it may bring some initial
costs, but it will pay off over time through consistent, high-grade materials.
Six Steps to Selecting the Right Supplier
1. Identifying a Supplier
It is important to gather the opinions of stakeholders and define the criteria for the selection process. This may include
members from research and development, purchasing, marketing, quality assurance and any other area of your
organization that touches the supplier selection process. Identify a few suppliers to assess their capabilities and compare
pricing. The supplier selection team should work with the potential suppliers to establish specifications. Cost should not
be the lone driver; you should instead look at the total cost of ownership, which looks at the supplier’s:
• Customer service
• Delivery commitments
• Reliability and responsiveness
• Resource savings (hard and soft)
2. Measuring Supply Performance
You should always conduct an audit before the contract is signed to confirm that the supplier does not have any
significant compliance or quality system failures that could affect your ability to produce top-quality products. Another
reason to conduct the audit beforehand is to understand the supplier’s strengths and weaknesses before the
relationship becomes official.
To determine the frequency, all suppliers should be categorized into a level of risk or importance. This prioritization will
help you be smarter and more effective with your resources and place a higher focus on your important, high-risk
suppliers, while continuing to monitor second-tier suppliers.
Beyond an established audit program, you should continuously monitor and assess each supplier’s performance. You can
track positive or sustained strong performances, as well as negative trends.
3. Gaining Supplier Feedback
Another tool you can utilize with suppliers is a self-assessment questionnaire. The supplier self-assessment can be used
to identify performance gaps, as well as discover how the supplier understands their own operation.
It also is beneficial to monitor informative metrics that direct value to the business. You should discuss and select the
appropriate metrics with suppliers to receive their input and understanding of purposeful measurements.
4. Achieving Certification
As your supplier relationship grows stronger, and both parties feel they are receiving positive performances, the supplier
may be able to achieve a certified status. This occurs when you establish a set of selected criteria to be met by your
suppliers. Certification must be obtained with sustained successful performance and can be lost with poor performance
or a negative compliance outcome from an audit.
5. Developing Partnerships
Ultimately, the manufacturer/supplier relationship is at its best when a strategic partnership is formed, allowing full
knowledge of the source of materials and ensuring high quality.
With a stronger business partnership, a supplier is more likely to:
• Anticipate what is needed from the manufacturer and begin to take the leadership role in
communication.
• Notify the manufacturer if problems occur that limit production availability, or a quality issue is
identified.
• Communicate production delays when downtime or maintenance is required.
6. Ensuring Quality for Consumers
Depending on the number of materials and ingredients needed, developing a supplier quality management program can
be a complex and upfront investment. However, once you choose to build strong relationships with reliable suppliers,
you will have peace of mind, knowing you’re delivering high quality to your consumer.
The term value chain refers to the process in which businesses receive raw materials, add value to them through
production, manufacturing, and other processes to create a finished product, and then sell the finished product to
consumers. A supply chain represents the steps it takes to get the product or service to the customer. While a supply
chain involves all parties in fulfilling a customer request and leading to customer satisfaction, a value chain is a set of
interrelated activities a company uses to create a competitive advantage.

Value/supply chain in relation to the business enterprise

KEY TAKEAWAYS
• The value chain is a process in which a company adds value to its raw materials to produce products eventually
sold to consumers.
• The supply chain represents all the steps required to get the product to the customer.
• The value chain gives companies a competitive advantage in the industry, while the supply chain leads to overall
customer satisfaction.

Value Chain

The idea of a value chain was pioneered by American academic Michael Porter in his 1985 book "Competitive Advantage:
Creating and Sustaining Superior Performance." Value chain managers look for opportunities to add value to the
business.
Value Chain Process:
1. Inbound Logistics: Receiving, warehousing, and inventory control.
2. Operations: Value-creating activities that transform inputs into products, such as assembly and manufacturing.
3. Outbound Logistics: Activities required to get a finished product to a customer. These include warehousing,
inventory management, order fulfillment, and shipping.
4. Marketing and Sales: Activities associated with getting a buyer to purchase a product.
5. Service: Activities that maintain and enhance a product's value, such as customer support and warranty service.
In order to help streamline the five primary steps, Porter says the value chain also requires a series of support activities.
These include procurement, technology development, human resource management, and infrastructure.
A profitable value chain requires connections between what consumers demand and what a company produces.
Value chains place a great amount of focus on things such as product testing, innovation, research and
development, and marketing.
Supply Chain
The supply chain comprises the flow of all information, products, materials, and funds between different stages of
creating and selling a product to the end-user. The concept of the supply chain comes from an operational
management perspective. Every step in the process—including creating a good or service, manufacturing it,
transporting it to a place of sale, and selling it—is part of a company's supply chain.
The supply chain includes all functions involved in receiving and filling a customer request. These functions
include: • Product development •Marketing• Operations
• Distribution •Finance • Customer service
Supply chain management involves many links at large corporations. Supply chain management requires a lot of
skill and expertise to maintain. The supply chain involves the coordination of how and when products are
manufactured along with how they are transported. The primary concerns of supply chain management are the cost
of materials and effective product delivery. Proper supply chain management can reduce consumer costs and
increase profits for the manufacturer