Lister Petter

Source: Manufacturing Digital

Date :17/03/2008 13:33:38

This iconic British engineering company has been through hard times but is now growing sustainably and expanding globally

Written by John O’Hanlon and Produced by Ben Weaver

Both Lister and Petter, companies which came together in 1986, date back to the 19th century, and Lister manufactured its first diesel engines on the site it still occupies at Dursley, Gloucestershire, in 1929.

The company has changed hands several times in recent years and in the late 1990s the company saw a downturn in engineering that hit its markets. This, coupled with under-investment at the plant resulted in the company going into administration in 2004. In a reverse buyout led by Managing Director Roland Smith the company was taken out of receivership and has since been restructured to focus on its best established global markets, while developing its lucrative engine remanufacturing operations based in Birmingham. It now has engine manufacturing facilities in the UK, the USA and India, with joint venture operations in Poland and China.

In 2007, Lister Petter increased its global turnover to £52.2 million (from £43 million in 2006). In terms of engine production at Dursley this means an increase from 19,400 units in 2006 to a projected 28,200 this year. For the 200 employees this has meant a new approach to the business, based initially on trust that growth can be achieved and their jobs secured.

“We have introduced KPIs to the business, and given the workforce some tools so they can see how they are performing,” says Keith Eckford, head of global quality. In 2004, people were uncertain of the company’s future and not clear as to their goals. That has begun to change, he says, by small increments. “Once you get people to look, in production terms, at where we are, where we need to be and how we can get there, the battle is largely won.”

Keith, and head of global procurement Darren Wick, who both joined Lister Petter early in 2007 from the automotive industry, are part of the new dynamic management team. We were joined by Ben Whitmarsh, more recently recruited as new business development manager.

Power where it’s wanted

Up to 90 percent of the engines manufactured at Dursley are destined for electricity generation, and are either supplied to customers who put them into their own generators, or ‘gensets’, or used to power Lister Petter’s own gensets, from the 4 kW A Series air cooled gensets to the 2 tonne Omega Series delivering up to 132 kW.

In the western world, gensets are chiefly used as standby power or in difficult-to-reach locations. In large tracts of the developing world there is no national network and they are the only power option for businesses. “We sell a lot of machines to banks in the Indian subcontinent,” says Ben Whitmarsh. “But the fastest growing market is in telecommunications. Mobile substations need a constant and absolutely dependable power supply. They are often in very remote and inaccessible places. We have been working very hard to consolidate our local network of partners, and we do select them very carefully, training them locally where possible or even bringing them back to the UK. We have to be able to follow up every sale and still be there whenever they need to reorder.”

Of course remote stations like these are difficult to supply: however reliable the equipment is, it won’t work without fuel. This is why Lister Petter developed its Bio Rig 400, a unit that can produce biodiesel from any kind of vegetable oil. The Bio Rig can produce 10,000 litres of fuel a day and this can either be used neat or blended and used in place of regular diesel.

Lister Petter is attacking the market head on, concentrating on its most exacting requirements and building on the brand’s reputation for reliability. Confidence in the product is backed by a five year warranty, unique to Lister Petter. “Extending the warranty three or four years beyond the industry standard isn’t as much of a risk as it sounds,” says Wick. “In any case we have improved supply chain quality enough to have confidence that it won’t stretch us to provide this level of service.”

Sourcing best practices

By the end of 2008, assembly will have been moved to a new building at the edge of the present site. “When that happens we can expect to see a lot of change in the way things are done, with cellular manufacturing, changed working practices and probably more kanban and vendor managed inventory,” says Darren Wick.

Coming from the car industry, Wick and Eckford scratched their heads over the dual sourcing policy they found, fearing that it wasn’t the best way of obtaining the most competitive prices. However Wick says he is now persuaded that having more than one supplier for key components is a good way of keeping volumes from loyal suppliers constant, while providing flexibility as demand increases from the market.

It also facilitates the establishment of global sourcing. Wick has teams in India and China to identify, audit and manage suppliers. They have already reached agreements with more than 40 exclusive suppliers, giving Lister Petter additional security of supply. About 75 percent of supplies are forecast, the remainder are spot orders for which long lead times are not an option. By maintaining incumbent suppliers while developing low cost suppliers for the bulk of the increasing demand, the former remain available to mop up any spikes in demand that might arise.

In general, he adds, 70 percent of dual source items are obtained from the low cost source, 30 percent from the incumbent. “As the demand for industrial engines has increased, so have the lead-times. Most of our competitors’ lead-times have been extended to over 16 weeks on some products. At Lister Petter we have been able to continue to provide our standard engine at four weeks lead-time, which has been winning us market share. Even better, we have recently been able to offer a special seven-day service. The cost is higher, because we use more components from higher cost sources, but many customers are willing to take advantage of this service.”

Integrity of data

This gives Lister Petter another advantage over its European competitors who source from a single low cost supplier – it eliminates the need for buffer stock. Furthermore, Lister Petter works very closely with its shipping agent, he adds, with a member of its staff permanently present at Dursley. All product is collected ex-works, ensuring the cheapest cost and also control of the shipping chain, with the added benefit of port consignment providing competitive pricing and improved traceability.

When it comes to purchasing, the most important thing is the integrity of data, says Darren Wick. He and his colleagues have been developing the bespoke Lister Petter Global Sourcing Tool, a programme that is now being rolled out across the company. It logs all the costs and other variables such as delivery time, quality and process time and helps to support the suppliers both old and new.

Long term suppliers, which supported Lister Petter in its problem years, need to be looked after, Darren Wick believes passionately: better performance means better results for them too and he has encouraged them to use VAVE (value analysis/value engineering) to improve their processes while cutting costs. The purchasing software will sit alongside the new £300,000 Sage Line 500 ERP system replacing the former Baan system, and which will improve financial control, streamline business processes and significantly reduce running costs.

Before I left, Darren Wick showed me the factory. It’s not yet the lean environment it’s going to be once it’s moved to the new building, but there has been a good deal of investment.

Meanwhile the really big opportunities for Lister Petter are in China, where it is in a joint venture with China National Heavy Truck Co, and India, where it is assembling more than 500 engines a year and building a new factory. The new Gamma series engines and gensets, which fill a gap at the heavier end of the product range is based on a CNHT engine and are expected to sell well, combining the core Lister Petter qualities of reliability and ruggedness with the flexibility of remote or manual operation.

Click here to view the corporate brochure on Lister Petter