James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Investor Day (September 2014)
31 slides from James Hardie Industries's investor day presentation, Sep 24, 2014
Slide 1: Slide 1
Slide 2: Supply Chain
SUPPLY CHAIN Ryan Kilcullen 24 September 2014 Exhibit 99.6
Slide 3: Disclaimer
2 DISCLAIMER This Management Presentation contains forward-looking statements. James Hardie may from time to time make forward-looking statements in its periodic reports filed with or furnished to the SEC, on Forms 20-F and 6-K, in its annual reports to shareholders, in offering circulars, invitatio
Slide 4: Forward-looking statements cautionary notes
3 Words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “aim,” “will,” “should,” “likely,” “continue,” “may,” “objective,” “outlook” and similar expressions are intended to identify forward-looking statements but are n
Slide 5: Agenda
4 • Supply Chain at JH • Network Expansion Impact • Customer Focus • Freight Market and JH Performance AGENDA
Slide 6: Supply Chain Overview
5 JH SUPPLY CHAIN OVERVIEW
Slide 7: Supply Chain: managing the three flows
Raw Material Suppliers Manufacturing Scheduling Outbound Freight Channel Management Warehousing Jobsite Delivery Raw Material Requirements Inventory Strategy Capacity Planning Production Scheduling Demand Forecasting 6 JH SUPPLY CHAIN Managing the three flows: Product, Information and Cash Flow Prod
Slide 8: Supply Chain Objectives
7 JH SUPPLY CHAIN OBJECTIVES JH Supply Chain has two primary objectives 1. Customer value creation 2. Operational and financial efficiency We accomplish by • Leveraging our network scope and operating capability to enhance the profitability and experience of our customers • Deploying optimization co
Slide 9: Example 1: VMIs
8 EXAMPLE 1: VMI S VMIs increase the profitability of our channel partners VMIs are a critical element of our overall business strategy Optimizing JH Returns Customer Value Creation Lower freight costs - Weight max, ideal sourcing, lead time Order volatility is greatly reduced Increase in C+ penetra
Slide 10: Example 2: Jobpacks
9 EXAMPLE 2: JOBPACKS Customer Value Creation • To-the-piece ordering capability reduces jobsite waste and returns cost • Made-to-order at standard lead-times eliminates the need for inventory • Access to the full JH line enables selling the whole house The efficiency of our jobpack supply chain ena
Slide 11: Network Evolution: JH Network FY05
10 JH NETWORK EVOLUTION JH Network – FY05 Customer Value Creation Optimizing JH Returns • Limited non-product value creation in JH supply Chain • Product mixing rules force complexity onto our customer base • Production scheduling is focused on enabling flat sheet PcI/PdI • Freight model is optimize
Slide 12: Network Evolution: JH Network Today
11 JH NETWORK EVOLUTION JH Network – Today Optimizing JH Returns Customer Value Creation • Network density enables flexible ordering rules to mix full range of products • VMIs and jobpacks create profitable options for servicing all builder types • Focus is on internal JH optimization of production
Slide 13: Network Evolution: Future JH Network
12 JH NETWORK EVOLUTION JH Network – Customer Value Creation Optimizing JH Returns • Customer-focused value chain makes JH an easy-to-work with Business Partner • Deeper understanding of non-product value enhances customer profitability • Integrated supply chain (raw materials to market) enables tru
Slide 14: Challenges of Increasing Network Scale
13 CHALLENGES OF INCREASING NETWORK SCALE A growing network also brings supply chain challenges Capturing the full benefit of scale requires: 1. A step change in organizational capability 2. Optimization logic in our daily supply chain operations
Slide 15: Organizational Capability Pillar Strategy
14 ORGANIZATIONAL CAPABILITY 5 Pillar Strategy Recruit Engage Develop Evaluate Grow/Promote Attract, develop and retain supply chain talent that can manage the challenges of our 35/90 network External Technical Expertise Leverage the Chicago MBA Program Customer Operations as a Pipeline Quality Perf
Slide 16: Process Capability
15 PROCESS CAPABILITY Capturing the opportunities of a highly integrated network requires enhanced operating capabilities Order Flow Planning Processes Freight Management • Integration with customer ERPs • HardieLink • VMI Transaction Automation • Flat sheet scheduling logic • APO deployment • Netwo
Slide 17: Process Enhancement Example
16 PROCESS ENHANCEMENT EXAMPLE Automated order flow systems enable jobpack fulfillment with high organizational, manufacturing and freight cost efficiency Customer orders with multiple SKUs & colors Automated, optimized sequencing Re-aggregated orders, ready for shipment HardieLink Order Entry Syste
Slide 18: Customer Value Initiative: On-Time Service
17 CUSTOMER VALUE INITIATIVE: ON-TIME SERVICE
Slide 19: The Importance of Consistent Service
18 THE IMPORTANCE OF CONSISTENT SERVICE • Secures market position • Enables us to capitalize on our sales force investment • Maintains our brand • Reduces waste in our internal organization – allows us to invest in growth, rather than maintenance of our existing base Consistent on-time performance c
Slide 20: Ensuring Sufficient Capacity for Demand
19 ENSURING SUFFICIENT CAPACITY FOR DEMAND Regional Sourcing Zones Customer demand is grouped into sourcing zones Lowest Cost Sourcing Manufacturing & freight costs determine “ideal” source plant Introducing manufacturing capacities shifts the model Actual Network Sourcing Constant network balancing
Slide 21: Operational Excellence in Order Fulfillment
20 OPERATIONAL EXCELLENCE IN ORDER FULFILLMENT A strong customer focus drives our daily replenishment activities
Slide 22: On-Time Service Summary
21 ON-TIME SERVICE SUMMARY • On-time service is an important component of JH Customer Focus and has a direct link to 35/90 • Our supply chain systems are designed for on-time service at optimized total landed cost • Our recent performance has been strong – the most recent 3 quarters are our highest
Slide 23: Maximizing JH Returns: Managing the Rising Transportation Market
22 MAXIMIZING JH RETURNS: MANAGING THE RISING TRANSPORTATION MARKET
Slide 24: External Transportation Cost
23 EXTERNAL TRANSPORTATION COST Market rates* have rebounded dramatically from recession-levels External factors are driving freight costs to historic highs *Source: KeyBanc Capital Markets Truckload Spot Index
Slide 25: Headwinds in the Freight Market
24 HEADWINDS IN THE FREIGHT MARKET Fundamental shifts in the demand/supply equation driving cost The result of this shift will be a higher cost market than historical reference points – We do not expect a return to pre-recession costs Demand Drivers Supply Constraints Post-recession economic recover
Slide 26: Network and Market Freight Costs
25 JH NETWORK AND MARKET FREIGHT COSTS FY05 – FY12 JH freight cost trended inline with market rates FY13 – FY15 JH freight costs separate from the market trend as a result of multiple initiatives to improve our network efficiency
Slide 27: Progress Driving the Recent Separation
26 PROGRESS DRIVING THE RECENT SEPARATION Result How it was Achieved 14% reduction in average length of truckload haul 5% more fiber cement on every truckload shipped 7% improvement in purchasing performance vs the market • Significantly higher utilization of rail • Plant-to-plant and ColorPlus® pro
Slide 28: Transportation Summary
27 JH TRANSPORTATION SUMMARY • There are significant headwinds in the external freight market • Network efficiencies have largely offset these costs • Our ability to continue to off-set this cost pressure will become more reliant on closer partnerships with Customers and Carriers • JH Supply Chain m
Slide 29: Supply Chain Summary
28 SUPPLY CHAIN SUMMARY
Slide 30: Supply Chain Summary
29 SUPPLY CHAIN SUMMARY • JH Supply Chain is focused on delivering customer value while optimizing financial returns • Our expanding network enables us to maximize both of these objectives – while requiring improved organizational and process capabilities • FY15 YTD we are delivering on our commitme
Slide 31: Questions
QUESTIONS
James Hardie Industries — Investor Day (September 2014) on 6ix