Examples of departments are receiving, field sales, or accounts payable. A function is a collection of people in one or more locations that share a common responsibility. Examples of functions include the sales function and the manufacturing function. Functions are typically shown at the top of an organization chart. Activities are classified as either primary or secondary.
Primary activities contribute directly to the central mission of the department or organization.
For the receiving department, primary activities include receive material and move material. Secondary activities support an organizations primary activities. Virtually every department has secondary activities. The authors suggest that at least 90 percent of an organizations resources should be spent on primary activities and no more than 10 percent on secondary activities. Activities may also be classified as value added or non-value added.