The Production Function 

The Production function is responsible for all activities that are required to deliver the organization’s products or services. Its primary responsibilities are as follows:-

1. Production Planning: This department sets principles and focuses on each segment of the production cycle. The number and type of defective items will be closely monitored. In lean production, quality is monitored throughout the process, rather than just at the end, as in traditional quality control.
2. Identifying Inputs: A company determines the number of goods be delivered within a certain time frame and informs the production department. The department determines the number of raw materials, hardware, and equipment required to achieve the desired yield level, and may work with the purchasing department to gather information. If there isn’t enough labor to help with production, the production department asks the firm to hire more.
3. Production Scheduling: The production department plans production measures based on data sources. This includes planning the tasks to be completed along the production line and assigning them to different workers. In a carpentry shop, for example, the department decides how long wood should dry before moving on to the machining stage for sawing and bowing, and finally assembly and finishing.
4. Minimizing Production Costs: The production department is tasked with reducing production costs. Maintaining production equipment and hardware is one simple way to avoid fixed costs. The department can also survey the production line to identify cost-saving opportunities. For wood that takes a long time to air-dry, a furniture maker may find it cheaper to buy dried wood.
5. Ensuring Product Quality: A production department must ensure finished goods meet minimum quality standards. Aside from checking all items for issues during production, the department must thoroughly test new items to ensure they meet quality standards before mass production. Strategies like waste disposal and cycle normalization also help ensure and improve product quality.
6. Improve Existing Products: From time to time, the production department will provide data to the innovative work department. For example, if a cell phone manufacturer’s production department notices that the material used to make phone housings twists underweight, it must alert the exploration group to look for more stable materials.
7. Production Control: Production planning is impossible without effective production control. It is concerned about the execution of production planning. It aims to finish products as expected and at lower costs. A good production control system ensures nonstop production, less work in progress, and less waste.

The Research and Development Function 

The Research and Development (R&D) function is responsible for the development of new products or processes as well as the improvement of existing products or processes. In order to ensure that the organization is providing exactly what its customers want in the most efficient, effective, and cost-effective manner, R&D activities must be closely coordinated with the organization’s marketing activities. It does the following functions:-

1. New Product Research: Prior to the development of a new product, a research and development department conducts an extensive study to support the project.
2. New Product Development: The research phase establishes the foundation for the development phase. This is the stage at which the new product is developed based on the requirements and concepts identified during the research phase.
3. Existing Product Updates: The company’s existing products are also included in the scope of research and development. The department conducts routine evaluations of the company’s products to ensure they remain functional.
4. Quality Control Checks: In many businesses, the research and development department is responsible for quality control of the company’s products. The department is intimately familiar with the project’s requirements and specifications.
5. Innovation and Staying Ahead of Treads: The research and development department enables the company to remain competitive in the industry. The department is capable of researching and analyzing the products created by other businesses, as well as emerging trends in the industry.

The Purchasing Function 

The purchasing function is responsible for the acquisition of goods and services for the organization’s use. These will include but are not limited to, raw materials and manufacturing components, as well as production equipment. This function is typically responsible for purchasing goods and services on behalf of the entire organization (not just the Production function), such as office equipment, furniture, computer equipment, and stationery. When purchasing goods and services, purchasing managers must consider a number of variables – collectively referred to as the ‘Purchasing Mix’ – including quantity, quality, price, and delivery as explained below:-

1. Quantity: Purchasing in bulk can result in price reductions and help prevent inventory from running out. On the other hand, maintaining a high level of inventory entails significant costs.
2. Quality: When purchasing goods and services, a trade-off between price and quality is almost always necessary. As a result, the production, research and development, and marketing functions will need to consult to determine an acceptable level of quality, which will depend on the importance of quality as an attribute of the organization’s final product or service.
3. Price: When all other factors are equal, the purchasing manager will seek the best deal on goods and services, although price must be considered alongside quality and supplier reliability in order to achieve the best value, rather than the lowest price.
4. Delivery: The time period between placing an order and receiving the goods or services, referred to as the lead time, is critical for production planning and scheduling, as well as inventory control. As a result, suppliers must be evaluated for their dependability and ability to deliver on time.

The Marketing Function 

Marketing seeks to identify and meet customer needs at the lowest possible cost. Marketing involves figuring out what customers want and how to deliver it. From the strategic (choosing product markets and how to compete in them) to the operational (organizing sales promotions, producing literature such as product catalogs and brochures, and placing advertisements in appropriate media), marketing activities range from the strategic to the operational. Marketing involves managing the ‘4Ps’ of product, price, promotion, and place:

1. Product: Possessing the optimal product in terms of customer-valued benefits.
2. Price: Setting an appropriate price that is consistent with potential customer’s perceptions of the product’s value.
3. Promotion: Promoting the product in such a way that it generates the greatest possible customer awareness and persuades potential customers to make the purchase decision.
4. Place: Making the product available in the appropriate location and at the appropriate time – this includes selecting the appropriate distribution channels.

To be successful, a business enterprise must have either a lower price than its competitors or a superior product – or both! A cost leadership strategy is a competitive strategy that is based on low prices. A differentiation strategy is a competitive strategy that is built around the development of a superior product.

The Human Resources Function

The Human Resources department is responsible for the following:-

1. Selection and recruitment: Assuring that the appropriate individuals are recruited for the appropriate jobs.
2. Training and development: Enabling employees to effectively carry out their responsibilities and maximize their potential.
3. Employee relations: This includes wage and benefit negotiations.
4. Procedures for grievances and disciplinary measures: Responding to employee or employer complaints.
5. Health and Safety matter: Assuring that employees work in a safe and healthy environment.
6. Procedures for redundancy: Administering a proper system that is perceived to be fair to all parties involved when making redundancy decisions and agreeing on redundancy payments.

Accounting and Finance Function

Accounting and finance are responsible for the following:-

1. Working capital management: Managing working capital properly can improve cash flow. This is another area where accountants and finance professionals excel.
2. Budgeting and budgetary control: Budgeting and budgetary control are tools used by businesses to keep things under control. In a small or medium-sized business, the accounting and finance department is responsible for budgeting and budgetary control.
3. Financial statement preparation: Although the financial statements are legally the responsibility of the company’s directors, the finance and accounting department is always asked to prepare them.
4. Investment appraisal: Accounting and finance departments help businesses ensure that major projects are worthwhile by applying capital budgeting and investment appraisal techniques.
5. Bookkeeping: This is the finance department’s most basic duty. It involves recording, analyzing, and interpreting daily financial transactions. This includes all expenses (purchases, payments, etc.) and finished product sales. Initially, a bookkeeper may fill this role, but as the company grows and expands, more specialized payables and receivables clerks may be hired.
6. Cash flow management: The finance department is responsible for managing all cash inflows and outflows and ensuring that funds are available for day-to-day operations. This includes the company’s credit and collections policies for customers, ensuring that vendors and creditors are paid correctly and on time.
7. Budgets and forecasts: The finance department collaborates with managers to prepare budgets and forecasts, as well as provide feedback on the company’s financial status. This data can be used to meet departmental cash needs, plan company staffing levels, and plan asset purchases and expansions ahead of time. The finance department can also use historical data to better budget and forecast long-term and short-term.
8. Tax Management: Taxes are part of running a business, and the finance department is in charge of them. This includes good corporate relationships with the government by remitting PAYE to the appropriate authority and ensuring that tax matters are implemented within the framed policies.