Business Functions: Sales, Finance, and HR

Business Functions

• The four main business functions of an organization are served by its management information system.
• The major aspects of business functions include: Marketing & Sales, Production & Materials Management, Accounting & Finance, and Human Resources.

4 Main Business Functions of A Company

• The four main business functions include sales & marketing, production & materials management, accounting & finance, and human resources that all support the company.

Sales & Marketing Functions

• Determines customer demand.
• Facilitates communication between customers and the company.
• Provides customers with finished products.
• Tracks competitors.
• Determines market trends.

Financial Functions

• Manages the company's money.
• Manages assets, such as machinery and materials.
• Keeps accounts in good order.

HR Functions

• Recruitment
• Training
• Maintains personnel systems.

Typical Company's Organisation Chart

• A typical company's organization chart includes a managing director above sales & marketing, production, finance, and engineering.
• Production is above materials management, which is above purchasing, master scheduling, production control, and inventory control.
• Distribution is below purchasing and master scheduling, and stockroom is below production control and inventory control.
• Human resource reports directly to management.

Engineering

• Provides product specifications.
• Designs product.
• Creates bills of materials.
• Prepares engineering drawings.
• Develops manufacturing instructions.
• Maintains product information.

Production

• Produces according to schedule
• Updates daily activities
• Tracks performance
• Takes corrective actions

Purchasing

• Selects vendors
• Places orders
• Follows‐up

Master Scheduling

• Plans and schedules production.
• Uses a planning horizon of 1-3 years.
• Synchronizes the right parts in the right place at the right time.
• Identifies and corrects problems affecting the schedule.

Distribution & Stock Room

• Receives, stores, and issues materials.
• Ensures inventory accuracy.
• Manages warehouse activities.
• Plans shipments to customers.

Concept of Functional Area Information System

• A functional area is served by an information system.
• Information systems capture, process, and store data to provide information for decision making.
• Employees working in one functional area require data from others.

Functional Area Information System

• Information sharing between functional areas is required.
• Should be integrated into common databases for accurate and timely shared data.
• ERP software allows all functional areas to use a single common database so that accurate and timely information is available.

Marketing and Sales Activities

• Marketing and Sales include creating sales forecasts and promoting products.
• Presales activity includes tracking customer contacts, maintaining customer data, and setting product prices for inquiries and quotations.
• Takes customer orders.

Marketing & Sales: Sales Order Processing Events

• Customers communicate orders to Marketing and Sales.
• Marketing & Sales completes order-entry and inventory checking/reservation to confirm if an order can be fulfilled.
• If inventory is unavailable, sales orders are passed to production and material management for production planning and execution.
• The delivery of products to customers includes picking, packing, and shipping.
• Sales orders are sent to Accounting & Finance for billing and payment processing upon delivery.

Marketing & Sales: Pricing & Costing

• Marketing and Sales requires an understanding of market competition and the cost of manufacturing to determine product prices.
• Sales order data is used to analyze sales trends.
• The cost of manufacturing the product needs information from Accounting and Finance, which relies on Production and Materials Management data.

Production & Material Management (Logistics) Activities

• Production and Materials Management develops manufacturing plans.
• Places orders for raw materials from suppliers.
• Receives raw materials.
• Plans production schedules.
• Manufactures products and tracks their status.
• Ships products to customers.

Production & Materials Management Events

• Production plans are based on sales information from Marketing and Sales.
• Raw materials are ordered by Purchasing based on production plans, expected shipment, delivery lead times, and existing inventory levels.
• Accurate production information can reduce the need for extra inventory and manufacturing capacity.
• Production is scheduled, executed, and monitored.
• Production and Materials Management supports Sales by providing information about what has been produced and shipped.
• Production & Materials Management gives data to Accounting & Finance to determine the amount of money spent on raw materials, labor, supplies, and overheads for finished goods inventory.

Accounting & Finance Activities

• Accounting and Finance records sales transactions.
• Records customers' payments.
• Records suppliers' invoices and payments to suppliers.
• Summarizes operational data in managerial reports.
• Provides information in the balance sheet (account balances) & income statement (profitability).

Accounting and Finance: Information Flow

• Different functions provide information to Accounting & Finance.
• Marketing & Sales provides sales data to update Accounts Receivables records about customers owing money for goods received in the Financial Accounting System.
• Production & Materials Management provides production & stock movement data to update inventory records in the Financial Accounting system and product cost records in the Cost Controlling system.
• Human Resources provides payroll and benefit expense data.

Accounting and Finance: Information Flow (Continued)

• The accuracy and timeliness of Accounting & Finance data depend on the accuracy & timeliness of Marketing & Sales and Production & Material Management data.
• Marketing & Sales needs data from Accounting and Finance to evaluate customer credit.

Human Resource Activities

• Human Resources recruits employees.
• Trains employees.
• Compensates employees through payroll processing
• Oversees employee evaluations.

Human Resources: Recruitment

• Human Resources (HR) needs accurate personnel needs forecasts to properly recruit new employees.
• HR needs to know what skills are needed for a particular job and how much the company can afford to pay employees. Data comes from all functional units.

Human Resources: Information Requirements

• Companies must follow governmental regulations in recruiting, training, compensating, promoting, and terminating employees.
• HR ensures that employees receive timely training and certifications.
• Employees must be paid and considered for raises and bonuses.
• HR needs timely and accurate data from other areas.

Human Resources: Information Requirements (Cont'd)

• HR should create accurate and timely data for management use.
• Maintain a database of skills required for a particular job and the prevailing pay.
• Management can use the data to evaluate employee performance and compensation.
• Analysis can help prevent losing valuable employees because of low pay.

Explore core business functions: sales and marketing, financial management, and human resources. Understand their roles in customer demand, financial oversight, and personnel management within an organization. Learn how these functions contribute to a company's overall success.