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Business Functional Processes

Defining a Process

Processes are definable portions of a system or subsystem that consist of a number of individual elements, actions or steps. A process as a set of interrelated resources and activities which transform inputs into outputs with the objective of adding value.”

A brief description of common business functional processes include the following:

Human Resources

The human resources (HR) department is responsible for an analysis of the needs and training of the workforce, employee turnover analysis, absenteeism analysis and attitude surveys. In addition, the HR department may recruit, select and hire people for the organization.


As a support service, production engineering is the problem solving arm of the company. The engineering department should be proactive (always searching) in their problem solving activities. The planning of new equipment or processes is a must for this department.

Sales and Marketing

It is up to sales and marketing to develop effective plans to identify customers and markets for the company’s current products and services, and to identify wants and needs for new products. They should work with engineering in order to pass along customer ideas or desires The development of a marketing plan helps guide the production plan.


The financial department, in many plants, includes the accounting department. The accounting function compiles monthly statements and the profit or loss statements for the company. A standard cost system should be in place so that data can be collected and based against it. Budget forecasts, capital project requests and external funding can also be coordinated by the finance department.

Product Liability

In the manufacture of certain products, there are numerous legal ramifications. The theories based upon breach of warranty have a statutory basis in the Uniform Commercial Code. Product safety requirements and labelling laws not only protect the consumer, but also should reduce the liability risk to the company.


The manufacturing activity is associated with companies manufacturing a product or products. Manufacturing takes designs from engineering, schedules from planning and assembles and tests the company products. For a service organization, this function is replaced by the personnel performing the service.

Safety and Health

The safety and health department aids the company in complying with local, state, federal and industry regulations. The best known safety agencies include OSHA, state safety agencies, NFPA, etc. These agencies impact the establishment of a safety program, safety committee and special safety task-forces for the company.

Legal and Regulatory

A legal department (or attorneys on retainer) may be necessary to handle legal matters, especially in the very litigious society of today. A review of purchase agreements, land contracts, leases, right-of-ways, tax abatement's, economic impact grants, etc. are examples.

Research and Development (R&D)

Research and development activities are critical for the future of the company. The customer is satisfied for a certain time span with the existing product or service, but eventually the customer will want a new and improved product. Interaction with the marketing function and customer is needed to generate new ideas and products.


The securing of the proper raw materials, at the right time, is a basic requirement of the purchasing department. They must find ways to reduce the number of corporate suppliers, without increasing the risk of shutting down lines due to a lack of product. The forming of alliances and partnerships among suppliers and customers should always be of concern.


The information technology (IT) or management information systems (MIS) function is a key ingredient in the factory of the future. Many companies have already exploited information technology. Some of the benefits of IT or MIS include electronic data interchange with customers and suppliers, electronic e-mail for communications, bar coding for all products, data collection for analysis, use of personal computers (PCs), online order status and real time inventory.

Production Planning and Scheduling

Production planning and scheduling is a department that helps to coordinate the flow of materials throughout the plant. It tracks the levels of materials and inventory, schedules the product, tracks the product and informs customers and suppliers of progress.


The quality department has but one function in the corporation which is to coordinate the total quality effort of a company and direct the quality assurance activities.


An environmental department, separate from safety and health is desirable. The proliferation of new regulations make this a very volatile and difficult field. What was permissible in the past can be deemed a violation today. The impact of The Clean Air Act is presently a concern, as is effluent water. The Environmental Protection Agency (EPA) has jurisdiction over many of the emissions from a company.


A technology department is a luxury that many large companies can afford. This department is capable of scanning the magazines, journals, trade shows, conferences, patent applications and libraries looking for new products and technology. Such an arrangement offers a competitive advantage.


Servicing relates to either manufactured or sold products or the servicing of client accounts for non-manufacturing companies. Servicing is responsible for fixing problems with the product, and assuring that customers are satisfied.