1. Production Control
in Financial Operations
November 2015
No one would think of running a manufacturing operation without a
production control process to control the flow of raw materials,
coordinate operations of specialized fabrication and assembly
workstations, and efficiently load of manufacturing resources. But
that is exactly what many financial operations attempt to do. It
would be as if a manufacturing manager expected his lathe
operators, welders and assembly teams to plan their own work
schedules, manage their own raw material queues, expedite supply
chain issues that arise and provide for their own quality control, all
while efficiently performing complex operations in the production of
a complicated product with exacting quality requirements. How
can banks, insurance companies and other financial organizations
expect all of that from their middle and back office analysts and
administrators?
Application of manufacturing production
control techniques and technologies to
financial operations can lead to improved
productivity, quality and customer service.

2. © All rights reserved, 2015 Jon LaBerge2
Production Control and
Quality Control functions
have effectively been
delegated to the analysts
and administrators who
are performing the
required tasks. This is
neither fair to the
employees nor an
effective way to manage
an operation.
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Admittedly, the operations
required to process information
in the middle and back offices
of financial organizations do
not generally require special-
ized equipment like those
found on a manufacturing shop
floor, but they do require
specialized knowledge, and
the sequential steps required to
assess data quality, manipulate
data to produce analyses or
reports, reconcile accounts, or
update accounting records are
actually quite analogous to a
manufacturing process.
Perhaps there are lessons to be
learned from the transformation
in manufacturing controls and
product quality that have
taken place over the past three
decades that can be applied
to financial operations.
In some cases, typically large-
scale operations like insurance
claims processing, it could be
argued that this has already
been done using sophisticated
work flow tools, but not every
financial operation can afford
the high overhead cost of
implementing and maintaining
these applications. And the
specific tool used is not as
important as the organizational
implications of the separation
of duties between those
resources who perform the
work and those who plan,
control, monitor and record the
status of the work being done.
Without this separation of
duties, production control and
quality control functions have
effectively been delegated to
the analysts and administrators
who are performing the
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required tasks. This is neither fair
to the employees nor an
effective way to manage an
operation.
So how do the analysts and
administrators cope? Most
develop and maintain their
own ‘checklists’ of tasks to be
done at the end of each day,
week, month or quarter, and
other ‘checklists’ for event-
driven procedures such as on-
boarding of a new client,
opening of a new account, or
the addition or removal of an
employee. Problem is that the
information contained in these
checklists could be a valuable
resource to help management
to set priorities, identify and
proactively respond to poten-
tial bottlenecks, schedule
selected key resources, and
avoid the seemingly inevitable
last minute fire drills.
Production Control
Requirements
The requirements to implement
a production control function
within a financial operation are
relatively straightforward and
consist of Informational Require-
ments and Organizational
Requirements.
Informational Requirements
As described previously, the
primary informational
requirement consists of the
‘checklists’ that might currently
be maintained in some form by
each administrator or analyst.
It is important that this infor-
mation be collected and
standardized and that the

3. © All rights reserved, 2015 Jon LaBerge3
1
maintenance of these lists be
controlled centrally, but it is
equally important that the users
who will be responsible for
performing these tasks have the
ability to add notes and submit
changes to these checklists.
Otherwise the centralized
checklists will simply become a
bureaucratic headache and
the users will continue to
maintain their own ‘unofficial’
checklists.
The minimum information
required for each checklist
should include:
• Checklist Code
• Checklist Name
• Checklist Owner
• Checklist Type (routine or
event-driven)
• Checklist Cycle and
Frequency
The information required for
each task on a checklist should
include:
• Task Checklist Code
• Task Code
• Task Sequence
• Task Responsibility
• Task Backup Responsibility
• Task Offset
• Task Duration
• Task Detailed Description
• Task Precedent(s)
• Task Reference(s) (to a
regulation, corporate policy
and/or client requirement to
facilitate audit support)
With this information, a
Production Schedule can be
generated with a detailed list of
tasks, start dates, due dates
and responsibilities explicitly
defined. As a functional area
matures, additional data
elements can be defined to
facilitate additional automated
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analytic and reporting
capabilities.
Organizational Requirements
As described previously, it is
important to organizationally
separate the performance of
the tasks that make up a
checklist from the oversight and
control to schedule and ensure
that tasks are being
accomplished on a timely
basis. The organizational group
tasked with the oversight
function will:
• Maintain procedural
checklists to incorporate
incremental improvements,
eliminate redundancies,
incorporate new require-
ments, etc.
• Periodically schedule tasks
from checklist templates and
update the Master Produc-
tion Schedule.
• Identify and monitor past due
tasks on the Master Produc-
tion Schedule
• Monitor potential upcoming
production bottlenecks (i.e.,
large numbers of tasks
currently in-process or with
the same due date and with
the same ‘responsibility’)
• Expedite past due tasks or
anticipated bottlenecks to
proactively maximize on-time
delivery
• Provide periodic updates to
operations management
regarding status of operations
and recommendations for
rescheduling or reassignment
of tasks or temporary expan-
sion of production capacity
to maximize on-time delivery
• Notify downstream
consumers of any schedule
slippage to proactively
manage expectations
• Periodically meet with
downstream consumers to
ensure that all deliverables
3
are still required and that
those deliverables still
efficiently satisfy the consum-
ers’ requirements
• Work with operations to
incorporate new tasks
required by new regulations,
corporate policies, client
requirements or new
technologies
• Interface with audit resources
at the time of an audit to
provide procedural
documentation and
evidence of compliance for
every instance of every
relevant task within the audit
scope and timeframe.
Although the staffing require-
ments for this production
control function will vary based
on the nature and maturity of
the operational processes and
staff, a rough estimate is that
one full-time production control
resource is required for every
ten production resources, with
a minimum of two production
control resources. For
operations with fewer than
twenty production resources, a
company could consider out-
sourcing this function to a
vendor or to a shared
corporate resource, but it is not
recommended that this
function be performed on a
part-time or fractional basis.
Applications
A centralized set of checklists
and dedicated resources to
administer and monitor a
Master Production Schedule
create an opportunity to
improve a number of related
activities that support

4. © All rights reserved, 2015 Jon LaBerge4
1
operations, namely reporting,
training, reengineering,
incremental improvements,
and audit support.
Reporting – By maintaining and
monitoring a centralized Master
Production Schedule, a wealth
of statistics will be available
that would have otherwise
been very difficult to collect
and track. These statistics can
be tabulated and displayed on
concise “dashboard” displays
to provide near-real-time visibil-
ity into an operation and allow
management to drill into de-
tails, anticipate issues, and
proactively balance their
operations to maximize on-time
delivery. Figure 1 shows a sam-
ple format tracking on-time
delivery and Figure 2 shows a
sample format to identify
potential future bottlenecks or
capacity constraints of key re-
sources. (The next two weeks
look pretty bad, by the way.)
Training – All organizations
need to train and cross-train
their employees in order to effi-
ciently assimilate new
employees, accommodate
employee transfers and
organizational changes, imple-
ment new technology and
provide for business continuity.
By using the same set of check-
lists to schedule the operation
and train the staff, training will
be directly relevant to the train-
ees’ eventual responsibilities,
and the checklists will be
continually reviewed and
enhanced to make them more
complete, more accurate and
easier to understand.
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In addition, once the checklists
and the Master Production
Schedule become established
as the accepted way to
communicate procedural
information within an
organization, implementing
new or enhanced technology,
making organizational
changes, and outsourcing or
insourcing functions can all be
communicated by revising the
checklists and allowing new
task assignments, sequencing
and procedural details to flow
through the Master Production
Schedule.
Reengineering – The checklists
provide a valuable tool in the
reengineering of an operation
by facilitating the identification
of similar tasks performed in dif-
ferent parts of an operation.
Common functions like
Reference Data Management,
Data Quality Assessment,
Account Reconciliation, and
Regulatory Compliance (which
in many organizations are cur-
rently accomplished through a
hodgepodge of spreadsheets,
homegrown databases and
manual processes) can be
identified, standardized and
automated to improve both
the productivity and quality of
the product (data) produced
by an organization.
Continuous Improvements
Continuous improvement is
acknowledged to be an
effective approach to improve
employee engagement and
incorporate incremental im-
provements, which, in
Figure 1 – Sample On-Time Delivery
Dashboard
Current Period Start:
Current Period End:
Tasks
Delivered
Tasks
Delivered
Past Due
On-Time
Delivery
Percent
Tasks
Delivered
Tasks
Delivered
Past Due
On-Time
Delivery
Percent
Trade Settlement & Cash
Transfers
12 1 8% 60 3 5% 1,380 8 1%
Data Quality 40 4 10% 200 16 8% 4,600 307 7%
Account Reconciliations 58 6 10% 290 12 4% 6,670 505 8%
Journal Entries 15 2 13% 25 2 8% 150 5 3%
Regulatory Compliance 25 1 4% 103 4 4% 2,369 12 1%
Performance Measurement 65 2 3% 87 8 9% 2,001 57 3%
Client Reporting 123 3 2% 25 1 4% 566 2 0%
Totals 338 19 6% 790 46 6% 17,736 897 5%
Monday, November 09, 2015
Monday, November 16, 2015
Current Period Year-to-Date
Team
Tasks In
Process
Tasks Past
Due
Past
Due
Percent
Current Period Start:
Current Period End:
11/9 11/16 11/23 11/30 12/7 12/14 12/21 12/28 1/4
Trade Settlement & Cash
Transfers
32 39 19 24 21 16 16 13 28
Data Quality 60 21 40 29 12 36 35 37 22
Account Reconciliations 68 93 57 82 71 27 55 71 59
Journal Entries 16 20 16 12 12 12 14 15 15
Regulatory Compliance 83 54 52 76 57 84 53 74 21
Performance Measurement 86 84 48 51 43 64 74 79 59
Client Reporting 64 103 69 83 96 76 76 54 31
Totals 409 415 300 358 314 315 322 343 235
Tasks in Process - Week of
Monday, November 09, 2015
Sunday, November 15, 2015
Team
Figure 2 – Sample Potential Bottleneck
Dashboard

5. © All rights reserved, 2015 Jon LaBerge5
1
aggregate, can add up to sig-
nificant savings in cycle time,
productivity and product
(data) quality. Currently, an
organization might be ignoring
some opportunities for
incremental change because it
is simply to much effort to
rewrite procedures, gain
approvals, and communicate
with and retrain employees; all
for a simple little change. But
with a coherent and concise
set of checklists and an
organizational unit responsible
for maintenance of those
checklists, the cost of making
an incremental change goes
way down, thereby
encouraging continuous,
incremental improvement and
allowing employees take
ownership for their areas of
responsibility.
Audit Support
Audits of all sorts are a cost of
doing business in this day and
age. Whether driven by
regulatory or financial reporting
requirements, corporate
policies and ethics guidelines,
or client mandated reporting
and controls, support for audit
activity is a necessary but
increasingly time-consuming
function.
Each task on the production
2
control checklists described in
this article should be the result
of one or more audit
requirements, even if the
requirement is simply “good
practice” (i.e., a corporate
policy). If a task cannot be
linked to an audit requirement,
then operations management
should really ask the question
“Should we be doing this task
at all?”
While it is not necessary to
explicitly define relationships
between tasks and causal
audit requirements in order to
use the checklists as a
production-scheduling tool,
addition of this information to
the checklist database helps to
clearly define the scope of an
audit. If, at the audit kick-off
meeting, the scope can be
clearly defined in terms of a
date range and the
regulations, client requirements
and/or corporate policies to be
audited, then the checklist
database can define every
instance of every relevant task
and possibly even link to a
document that provides
evidence of compliance for
each task. Furthermore, the
production control function
should have followed up on
each task to be sure that it was
completed (and documented)
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on a timely basis. In effect, the
production control function will
be performing a comprehen-
sive, self-assessment audit in
real-time, making periodic
external audits much more
efficient processes.
Concluding Remarks
A production control function
and production control tools
like a checklist database and
master production schedule
require a commitment from
management, but can provide
a number of tangible benefits
to a financial operation. It
might seem overwhelming to
try to develop and maintain a
comprehensive blueprint for
your operations, but the
concept can be phased-in
(e.g., start with month-end
closing cycles and add other
functions over time), and the
resources shared (either
through outsourcing or use of a
shared corporate resource,
possibly internal audit?) to
reduce the start-up costs.
The end result of a successful
implementation of these
concepts should be a better-
controlled and more efficient
operation and higher quality
deliverables.
Jon LaBerge is a consultant and
operations executive with over 20
years of experience applying
process engineering and
production control concepts to
financial operations.
1223 Westover Road
Stamford, CT 06902
Phone: 203-524-8487
Email: jon.j.laberge@gmail.com