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Business Functions and Business Processes
information (such as the cost of purchasing an extra coffee machine to make the special
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fair-trade decaffeinated brew) and materials management data (the cost of decaffeinated
coffee beans and chai tea).
This is a very small coffee shop, and you know most of your clientele. Therefore,
although you run a cash business, good repeat customers are allowed to run up a tab—up
to a point. Thus, your records must show how much each customer owes as well as his or
her available credit. It is very important that the data be available and accurate at the
time of a customer’s credit request. Since Accounting and Finance records must be
accessed as a part of the selling process, the accounting function has a critical role to play
in the sales process.

Supply Chain Management
The functions within Supply Chain Management (SCM) include developing production
plans, ordering raw materials from suppliers, receiving the raw material into the facility,
manufacturing products, maintaining facilities, and shipping products to customers. In our
coffee shop example, Supply Chain Management functions involve making the coffee
(manufacturing/production) and buying raw materials (purchasing). Production is planned
so that, as much as possible, coffee is available when needed, without excess that must be
disposed of. This planning requires sales forecasts from the Marketing and Sales functional
area. Sales forecasts are estimates of future product demand, which is the amount of a
product customers will want to buy. A forecast’s accuracy will be improved if it is based on
historical sales figures (for example, factors such as cold weather or local downtown social
events would impact the forecast for a given time period). Thus, forecasts from Marketing
and Sales play an important role in the production planning process.
Production plans are also used to develop requirements for raw materials (coffee
beans, tea bags, sweeteners, cream, and milk) and packaging (cups, stirrers, straws, plates,
and napkins). You must generate raw material and packaging orders from these
requirements. If the forecasts are accurate, you will not lose sales because of material
shortages, nor will you have excessive inventory that might spoil.
Supply Chain Management and Marketing and Sales must choose a recipe for each
beverage product sold, such as the quantity of coffee beans used to brew each pot of
coffee. The standard recipe is a key input for deciding how much to order of each raw
material, which is a purchasing function. Access to this recipe is also necessary for
keeping good manufacturing records, allowing managers within the Supply Chain
Management functional area (working with those in Accounting and Finance) to break
down the costs to a per-cup cost. Managers can then compare how much it actually costs
to make a cup of coffee, versus how much the recipe should have cost.

Accounting and Finance
Accounting and Finance (A/F) performs financial accounting to provide summaries of
operational data in managerial reports, and it is also responsible for tasks such as
controlling accounts, planning and budgeting, and cash-flow management. Accounting and
Finance functions include recording raw data about sales transactions, raw material
purchases, payroll, and receipt of cash from customers. Raw data are simply numbers
collected from sales, manufacturing, and other operations—without any manipulation,

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