Organizations that utilize a functional structure are divided into functions, or departments, each of which is responsible for a set of closely related activities. For example, the accounting department sends and receives payments, and the warehouse receives and ships materials. Typical functions or departments found in a modern organization include purchasing, operations, warehouse, sales and marketing, research and development, fi nance and accounting, human resources, and information systems.

Although most companies maintain vertical (or functional) silos to compartmentalize their operational units, the integrated business processes that companies use to perform their work cut across these silos horizontally. Business processes, such as the procurement and fulfi llment processes discussed later in the chapter, consist of activities that occur in different, seemingly unrelated functions or departments. In other words, these processes are crossfunctional, meaning no single group or function is responsible for their execution. Rather, it is a shared responsibility among many functional areas. The cross-functional nature of business processes is also illustrated in Figure 1-1. For a process to be successfully completed, then, the company must rely on each functional group to execute its individual steps in the process in a coordinated way, which, as we shall see, may not be an easy thing to accomplish.