Jame Hardie Ltd
Write Executive Summary for Report Provided.
a copy of Report that already been done, all that you are required to do is write up an Executive Summary for the
Assignment Two-James Hardie NZ Ltd
Executive Summary 2
Legislation relevant to James Hardie Limited 3
Occupational Safety and Health 3
Business / Information 5
Demand Planning 7
Quality Improvement in Manufacturing 11
Just In Time 11
Proposed Quality control concept 12
James Hardie and Quality 13
Maintenance Schedule 14
This report will cover four topics of importance to JH limited. These are: legislation relevant to the business and why it is relevant, forecasting: issues with
current forecasts and recommendations, quality management throughout the manufacturing process and maintenance scheduling and planning.The intended audience is
directors, general managers and Unitec lecturers for the purposes of evaluation of the quality of the document.
Legislation relevant to James Hardie Limited
A number of pieces of New Zealand legislation are applicable to JH Limited. These can be grouped into three main areas, occupational safety and health, environmental
and business / information related.
Occupational Safety and Health
Occupational safety and health legislation aims to protect the health and in fact life of employees within New Zealand Enterprises. Several acts fall under this group,
Health, Safety and Employment Act (HSE) – 1992
The Health, Safety and Employment Act of 1992 (and its subsequent revision in 1998) promotes the prevention of harm to all people at work, and others in, or in the
vicinity of, places of work. It applies to all New Zealand workplaces and places duties on employers, the self-employed, employees, principals and others who are in a
position to manage or control hazards.
JH is a manufacturing organisation and there are significant health and safety risks involved in any manufacturing process. As an employer JH must ensure the safety of
its employees throughout this risky process. JH should make sure that the machines which are used by their employees for the purpose manufacturing of fibre cement are
safe to use and ensure that staff are trained properly in the use of these machines, not only in the regular day to day operations of the machine but also of what to
do in the event of malfunction. JH must ensure that the primary needs of their employees are fulfilled; such as water and toiletry facilities. JH must take all
available measures to ensure that the health and safety of its employee is forefront in their operational procedures. Resources must be directed towards training
employees to handle other potentially dangerous situations safely.
Accident Compensation Act – 2001
This came into force in 2001. The aim of this act is to enhance the life of the public. It operates a scheme known as accident compensation scheme, and this is for
manage the personal injuries. Its goal is to minimise the effect of injury on the society.
JH supports this act for the well-being of their employees. They must take steps to ensure that, in the event of a life changing accident / incident, a decent
compensation is receivedby the victim. Under section 20, 21 and 22 of the act personal injury suffered on or after 1st April 2002 is covered.
Several other acts, which will not be covered in detail are also applicable to JH limited in the OSH area, these are:
• Machinery Act 1950
• Boilers Lifts and Cranes Act 1950
• Territorial Sea Exclusive Economic Zone Act 1971
• Local government Act 1979
• National Parks Act 1980
• Conservation Act 1987
Overall Occupational safety and health legislation is extremely important to JH Ltd, the company takes it commitment to OHS very seriously and has proactive OHS
policies in place. This is evidenced by its tertiary ACC provider status, which indicates the ACC is sufficiently satisfied with its OSH practice that it offers the
business a significant discount on standard ACC premiums. OSH is critical to the ongoing safety and health of New Zealanders, however some may argue that New Zealand’s
very stringent OSH legislation is actually counterproductive and affects our ability to compete internationally with manufacturing based in countries with less focus
on OSH – however JH as an example would indicate that this theory is not correct – as they manufacture locally and export globally.
Resource Management Act (RMA) 1991
The main purpose of the RMA is ‘to promote the sustainable management of natural and physical resources. This means managing the use, development, and protection of
natural and physical resources, to sustain the potential of natural and physical resources to meet the reasonably foreseeable needs of future generations, safeguard
the life-supporting capacity of air, water, soil and ecosystems and avoid, solve and/or mitigate any adverse effects on the environment (Unitec, 2010)
The RMA is a national legislation, which makes it pertinent to JH. The operations of JH have to comply with the RMA, which may depend on the District Plan. If JH needs
to use or develop natural and/or physical resources, for example for the production of certain products, they may need to apply for Resource Consent. To find out they
need to determine in which category an activity falls in, which can be found in the regional and district plans (Unitec, 2010).
Sustainability, the triple bottom line are clearly of importance to JH Ltd, the organisation puts emphasis on environmental concerns. Our research would indicate that
JH actually goes above the minimum requirements for as defined in the legislation.
Business / Information
Privacy Act 1993
The Privacy Act came into force in 1993. The act aims to promote and protect individual privacy and applies across public and private sectors. It contains twelve
information privacy principles dealing with collecting, holding, using and disclosing personal information and enforces methods for protecting security, such as the
assignment of unique identifiers when collecting data en masse. The act also gives individuals the right to access their personal information and where errors can be
proven, to request correction of it (Unitec, 2010).
This act is pertinent to JH, because it collects, holds and uses personal information of employees, customers, suppliers and more. Should any of these parties feel
that their rights as defined by the act are not being upheld by JH then they are able to make a complaint to the privacy commissioner, who can investigate the claim
and has the power to impose a number of penalties should JH be found to be in breach of the act. In this modern age it is also critical that all practical steps are
taken to ensure the safety of data stored electronically For these reasons it is critical that JH is aware of and operates in line with the provisions of the act.
Consumer Guarantees Act (CGA) 1993
The Consumer Guarantees Act sets out the guarantees that goods and services must meet when sold by someone in trade and remedies if guarantee is not met (Ministry of
James Hardie’s products fall under the Consumer Guarantees Act which means that their products have to be of an acceptable quality, fit for particular purpose, have a
matching description, have a matching sample or demonstration model, have a reasonable price. As a manufacturer they also have to guarantee spare parts and facilities
and must provide what is set out in their written warranty (Ministry of Consumer Affairs).
A number of other acts are also relevant to the business / operations areas of JH including:
• Fair Trading act 1986
• Companies Act 1993
• Income Tax Act 2007
• Official Information Amendment Act 1987
• Employment Relations Act 2000
ES method Demand Planning data supplied to JH
Month Actual (units) Forecast with a = .10 (units) Forecast with a = (.50) (units) Deviation (units) Absolute Deviation (units) Deviation (units)
Absolute Deviation (units)
Jan 100 100.0 100.0 0.0 0.0 0 0
Feb 93 99.3 96.5 -6.3 6.3 -3.5 3.5
Mar 96 99.0 96.3 -3.0 3.0 -0.3 0.3
Apr 110 98.7 103.1 11.3 11.3 6.9 6.9
May 124 101.2 113.6 22.8 22.8 10.4 10.4
Jun 119 103.0 118.8 16.0 16.0 0.2 0.2
Jul 92 101.9 105.4 -9.9 9.9 -13.4 13.4
Aug 83 100.0 94.2 -17.0 17.0 -11.2 11.2
Sep 101 100.1 97.6 0.9 0.9 3.4 3.4
Oct 96 99.7 96.8 -3.7 3.7 -0.8 0.8
Nov 89 98.6 92.9 -9.6 9.6 -3.9 3.9
Dec 108 99.6 100.4 8.4 8.4 7.6 7.6
MAD 0.8 9.1 -0.4 5.1 MAD
There were some errors in the above forecasts. The data in the table underneath contains the correct forecasts. The better constant for this forecasting method would
be .50 for JH, because the overall error (deviation) is smaller.
The formula used is as follows:
Last period’s forecast + (a * (actual – last period’s forecast)
Month Actual (units) Forecast with a = .10 (units) Forecast with a = .50 (units) Deviation a = .10 (units) Absolute Deviation (units) Deviation a =
.50 (units) Absolute Deviation (units)
Jan 100 100,0 100,0 0,0 0,0 0,0 0,0
Feb 93 99,3 96,5 -6,3 6,3 -3,5 3,5
Mar 96 99,0 97,7 -3,0 3,0 -1,7 1,7
Apr 110 100,1 104,5 9,9 9,9 5,5 5,5
May 124 102,5 112,0 21,5 21,5 12,0 12,0
Jun 119 104,1 110,7 14,9 14,9 8,3 8,3
Jul 92 102,9 98,1 -10,9 10,9 -6,1 6,1
Aug 83 100,9 93,0 -17,9 17,9 -10,0 10,0
Sep 101 100,9 101,0 0,1 0,1 0,0 0,0
Oct 96 100,4 98,5 -4,4 4,4 -2,5 2,5
Nov 89 99,3 94,7 -10,3 10,3 -5,7 5,7
Dec 108 100,2 103,6 7,8 7,8 4,4 4,4
MAD 0,1 8,9 0,1 5,0
When the constant for the ES forecasting method is set to a = .99 the MAD for these forecasts is Deviation: 0,0 and Absolute Deviation: 0,1. This is the lowest
possible. However, when the actual demand changes, the MAD changes too, although it stays lower than when the constants were set to .1 and .5. JH should continue using
the ES method, since it can forecast the demand the best.
Using the Moving Averages method is not recommended for JH. As it shows in the table below, the MAD is a lot higher than with the ES method. The formula that was used
in this table is: (month 1 + month 2 + month 3)/3 = 3-month moving average. So, for April the formula is: (100 + 93 + 96)/3 = 96,3.
Month Actual (units) Moving Average (3 month) Deviation Absolute Deviation Weighted Moving Average
(3 month) Deviation Absolute Deviation
Apr 110 96,3 13,7 13,7 95,7 14,3 14,3
May 124 99,7 24,3 24,3 102,5 21,5 21,5
Jun 119 110,0 9,0 9,0 114,7 4,3 4,3
Jul 92 117,7 -25,7 25,7 119,2 -27,2 27,2
Aug 83 111,7 -28,7 28,7 106,3 -23,3 23,3
Sep 101 98,0 3,0 3,0 92,0 9,0 9,0
Oct 96 92,0 4,0 4,0 93,5 2,5 2,5
Nov 89 93,3 -4,3 4,3 95,5 -6,5 6,5
Dec 108 95,3 12,7 12,7 93,3 14,7 14,7
MAD 0,9 13,9 1,0 13,7
Quality Improvement in Manufacturing
Just In Time
Just-In-Time (JIT) approach is a particular type of production strategy used by the JH in order to improve the business by reducing the in hand inventory and which
ultimately results in reducing the carrying cost. The working process of JIT is that, it provides signal, which is also known as Kanban in Japanese [which is the
scheduling system for JIT production] and it provides information about which part to manufacture next to the production process (“Just-In-Time”, 2014). The principle
that underpins JIT is that production should be ‘pulled through’ rather than ‘pushed through’. This means that production should be for specific customer orders, so
that the production cycle starts only once a customer has placed an order with the producer. Partly finished products and parts are delivered when they are needed.
Consequently, this approach requires much more frequent delivery of parts and partly delivered products but wastage and costs of carrying inventory are significantly
Key Benefits Reasons
• Reduces cost for quality • Less inventory on hand, less capital tied up in inventory, improved cashflow
• Less wastage of resources
• Exposes bad quality, so preventive measures will be taken immediately
• JIT improves quality • Provides warning system
• Limits the sources of error
• Provides right materials, at right time, at the right place
• Improves stable working environment • It enables JH to remove inventories which are irrelevant for manufacturing
• Improves employee involvement.
• Increases the production at JH.
In summary, just in time is an efficient and responsive method of managing manufacturing. JIT requires giving up your “Just In Case” safety net, and controlling
supplies and inventory to levels that just support production but in returns ensures that you are utilising the minimum capital required, are experiencing the least
wastage and being as responsive to customer demand as possible.
Proposed Quality control concept
JIT can exist in conjunction with a number of continuous improvement systems. JH can use a combination of these systems in order to improve different aspects of
quality control and encourage continuous improvement in the production facility. Total Quality Management, for instance, is a program that helps one take a detailed
look at every point of the production process and identify ways to make improvements. By definition, it relies heavily on JIT therefore it would be a suitable new
quality control concept to introduce.
By using JIT, you are continuously monitoring the production process. This gives you opportunities for making the production process smoother and more efficient.
Because JIT is intended to spread throughout the organization, it can have an impact on many areas through improvements in processes. When the emphasis is on lean
production, systems, including TQM tend to be made simpler and more predictable. From final products assembly to ways to increase worker involvement in system design,
JIT concerted with TQM improves efficiency and quality of various production processes.
Benchmarking is another concept that goes well on with JIT system. JH can use a combination of this both, in order to enhance its working environment. JH being the top
level manufacturing organisation, the benchmarking quality tool helps them in determining the critical success factors, which keep them apart from its competitors.
(Cooper & Kleinschmidt, 2003)
Benchmarking is considered as the most effective tool as it gives opportunity to learn from other organisations. It makes the employees come in contact with new
systems, approaches and procedures. JH can use benchmarking to improve their competitive advantage like cost of their fibre cement, quality of their product, safe
delivery and customer satisfaction. The studies prove that, manufacturing organisation with JIT system is successful in the areas of quality improvement, inventory
reduction, quick delivery as well as new product development. By incorporating JIT system and benchmarking system, JH can develop an understanding about their business
strategy and implement those into their functional strategy. This helps JH to be consistent with its mission and goal. (Meybodi, 2009)
James Hardie and Quality
In order to survive in today’s highly competitive business environment, one has to pay extra attention for quality management. James Hardie has been working for more
than 75 years; this fact alone implies the value it places on quality. JH is involved in one of the most competitive manufacturing sectors, building products. The
improvement of their service and product quality is treated as the most critical challenge. (Reeves & Bednar, 1994)
JH has a number of initiatives to keep up their quality standards. First and foremost, they encourage an employee friendly working environment. This environment
identifies the employees as being the people who can actually control and improve quality. JH has an internal sales team for service excellence. They employ people
with technical knowledge and provide solutions for their customer which helps to continuously improve the quality of their products.JH invests significant resources in
its human resource management team and because of this has a HRM team which is very high performing. With the help of these teams and processes, JH creates a work
environment which is desirable, a place people want to work in turn this allows them to attract the best quality staff and retain existing staff.
Secondly, they focus on quality output vs production quantity. JH undergoes a weekly, quarterly and annual maintenance process in order to make sure that their
machinery is in optimal working condition. After manufacturing fibre products, they undergo different quality testing procedures, to make sure that everything is up to
standard. Having effective machinery which operates well and efficiently is underpins JH’s focus on quality management.
Finally, and most importantly, JH engages with customers directly, seeking and collecting their feedback. They use this information to make appropriate changes to
their products and serviceswith an overall focus on quality – based on customer satisfaction. Because of this focus on quality, JH can meet or exceed their customer
expectation, reduce wastage, increase profit and sales and save time and cost. (Powell, 2014)
Maintenance is defined as “the activities involved in keeping a systems equipment in working order” (Heizer and Render, 2011). For a company like James Hardie it is
very important and essential to run the business efficiently without any glitches. At James Hardie huge machines are used for the production of their fibre cement
sheets. In this case when machines are concerned it is vital to maintain all the machines so they run smoothly. Developing a maintenance schedule will keep all the
machines in operating condition and remove all snags and complications which can cause trouble to the production process.
Developing a complete maintenance schedule is challenging. A proper maintenance is a must if you want to get most out of your equipment and to avoid unnecessary costs
and delays. Below is a guideline for developing a maintenance schedule for sheet making department at James Hardie.
Analyse the system
The starting point of scheduling a maintenance system is to by listing all the equipment’s of sheet making. All the units and assets should be assigned and given
identification numbers. This makes it easy to recognise all the equipment’s. So if there are any glitches the equipment can be identified with the numbers assigned to
them. Also the identifiers help to track costs and check how many times the particular equipment is causing problems and if needed can be replaced. Determining the
health status of all equipment is a key to the smooth running of the business. It is important to check if the equipment is running as per manufacturer’s standards,
also if it is running and operating as per the management’s expectations. Assets should be categorised as per high or low priority. A downtime log should be created
for each asset that is essential for the whole business. Once the log is made it should be broken down into groups like electrical, mechanical, etc. This will help to
identify any bottlenecks that can hamper production. The log should be made simple so it is easy for the machine operators to capture the downtime and also help other
workers to understand. After all the procedures are in place it is essential to make routine inspections. All the tasks should be performed by the employees as per the
log sheet. Inspections in prospects of operators and other employees regarding their safety should also be taken into consideration.
Review the Maintenance Methods
As discussed above the assets in the sheet making are categorised as per high and low priority. All the high priority assets should be reviewed first. Each systems
downtime and production logs have to be reviewed. The parts in the inventory need to be kept well organised according to the equipment. A log should be kept to check
which parts are being used frequently and are causing issues. Operator’s manuals have to be reviewed and checked as to when the equipment needs maintenance. If there
is any damage, are all the correct procedures are being followed. Also, the daily tasks and procedures in concerns to the equipment are being carried out. It is
important to inspect all the systems, list all the areas that need repair and prioritize the repairs that need to be made.
Safety is the most important aspect when scheduling maintenance. If all issues and problems are not solved then there can be a complete shutdown of the plant. Hence,
safety should be prioritised and given first preference. With consideration of the highest asset, it is essential to set goals for operational needs. All systems do
not run at 100% capacity. Their value diminishes as the years pass by. It is important to check the production levels of all the machines as the system ages and
necessary changes should be done so that they do not cause any hazards during production. Machines should be judged according to their performance and this will
determine which machine needs more attention comparing them to the operational goals. All the issues should be listed and assigned to dedicated staff to complete and
fix the problems in due time so it doesn’t affect production.
Training is another aspect in developing a maintenance schedule. It is very crucial and also helps all the operating personnel to do their tasks accurately. Meetings
should be held with all the operating staff to check that all the procedures are being followed. Safety and operations training should be provided at regular intervals
so reduce complications. All the correct procedures should be demonstrated for daily or weekly adjustments. All the important and high risk tasks should be assigned to
qualified staff. Qualified staff can reduce downtime. All maintenance staff should be trained in correct service and repair procedures. Safety equipment must be
provided while the maintenance is in process to diminish hazards.
It is high important that basic inspection of the machines is completed before the beginning of any shift. This also involves cleaning. Old and new parts should be
kept separately. Preferably a computer with internet would be of great help as parts can be ordered online if necessary. Planning should be done before hand regarding
short term and long term maintenance. All electrical components should be kept away from moisture. Mechanical equipment’s should be protected from rust. Inventory
should be checked for parts which are wanted frequently. Preventive maintenance is essential for a scheduled maintenance. Preventive maintenance simply means checking
for basic problems which a system can cause. Preventive maintenance reduces costly emergency repairs. Breakdowns and problems occur but it is important to plan and
schedule so that it doesn’t affect the daily production.
Accident Compensation Act 2001. (n.d.). New Zealand Legislation. Retrieved fromhttp://www.legislation.co.nz/act/public/2001/0049/latest/DLM5522313.html
Cooper, G. R., Kleinschmidt, J. E. (2003). Benchmarking the Firm’s Critical Success Factors in New Product Development. The journal of product innovation management.
12(5), 374 – 391. doi: 10.1111/1540 – 5884.1250374
Health and Safety in Employment Act. (n.d.). New Zealand Legislation. Retrieved from http://www.legislation.govt.nz/act/public/1992/0096/latest/DLM278829.html
Meybodi, Z. M. (2009). Benchmarking performance measures in traditional and just-in-time companies. An International Journal. 16( 1), 88-102. doi:
Powell, S. (2014). James Hardie NZ [Powerpoint Presentation]. Retrieved from http://moodle.unitec.ac.nz/course/view.php?id=534
Reeves, A. C., Bednar, A. D. (1994). Defining quality : Alternatives and Implications. The Academy of Management Review. 9(3), 419 – 445. Retrieved from
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