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Chapter 1
with their customers and suppliers. In later chapters, you will learn how successful businesspeople
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use ERP programs to improve how work is done within a company and between companies.
Chapter 1 provides a background for learning about ERP software.
FUNCTIONAL AREAS AND BUSINESS PROCESSES
To understand ERP, you must first understand how a business works. Let’s begin by
looking at a typical business’s areas of operation. These areas, called functional areas of
operation, are broad categories of business activities.
Functional Areas of Operation
Most companies have four main functional areas of operation: Marketing and Sales (M/S),
Supply Chain Management (SCM), Accounting and Finance (A/F), and Human Resources
(HR). Each area is composed of a variety of narrower business functions, which are
activities specific to that functional area of operation. Examples of the business functions
of each area are shown in Figure 1-1.
Functional
area of Marketing and Supply Chain Accounting and Human
operation Sales Management Finance Resources
Marketing a Purchasing Financial Recruiting and
product goods and raw accounting of hiring
materials payments from
customers and
to suppliers
Taking sales Receiving Cost allocation Training
orders goods and raw and control
materials
Customer Transportation Planning and Payroll
support and logistics budgeting
Business
functions
Customer Scheduling Cash-flow Benefits
relationship production runs management
management
Sales Manufacturing Government
forecasting goods compliance
Advertising Plant
maintenance
Source Line: Course Technology/Cengage Learning.
FIGURE 1-1 Examples of functional areas of operation and their business functions
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