Lingong leads the way in changing perceptions of Chinese equipment

Shandong Lingong Machinery Co., Ltd. is a Chinese manufacturer with a difference. The company’s customer-oriented production philosophy delivers the highest quality construction equipment at a lower cost in a shorter time. The company does this by using advanced technology and lean manufacturing processes. Newer, better, smarter – in short, that’s what makes Lingong different.

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The old perception that low cost equals low quality is steadily dying out as globalization continues and customers have access to goods from more suppliers than ever before. And it’s equally true that the companies who succeed most in today’s highly competitive global environment are those who can maintain lower costs while offering higher quality.

One such company is Shandong Lingong Machinery Co., Ltd. (known as Lingong), which began manufacturing its SDLG-branded range of construction equipment back in 1972. Being based in China, the company was able to take advantage of the lower manufacturing costs and economies of scale prevalent in the country. But SDLG’s management team were also quick to understand that producing low cost machinery was not enough. To become China’s leading producer of construction equipment (which remains the company’s primary goal) it would have to maintain its low cost level but also produce equipment of higher quality than its competitors.

After a long period of research and analysis, in 2009 the company implemented what it calls the Lingong Production System (LPS), which guides all facets of the company’s design and manufacturing processes. At the same time, it also developed a set of guiding principles which drive its product development and other operations. These are:

1. SDLG machines should offer a faster return on investment for customers

2. SDLG machines should offer robust and reliable performance on the job site

3. SDLG’s distribution network should offer fast parts delivery and a high level of customer service

The combination of LPS and the guiding principles has worked well together, helping SDLG achieve its current market position as one of world’s largest producers of wheel loaders and setting it well on its way to becoming the leading name in Chinese construction equipment.

The Lingong Production System has helped drive SDLG sales through eliminating waste in the manufacturing process, improving efficiency and, most importantly, maximizing quality. Five years after the philosophy was first implemented into its production facilities worldwide, Lingong can demonstrate tangible results in the form of shorter lead times, lower prices and upgraded quality. LPS philosophies have been applied to the production of its full range of SDLG-branded wheel loaders, excavators, road machinery and other construction equipment.

But it’s not only a change in process that’s allowing Lingong to further improve its products. There have also been significant investments. For example, in August 2013 it opened a US$10 million assembly hall in Pederneiras, Brazil. At present there are four SDLG crawler excavator models produced in Brazil, ranging from 13.8 t to 24.3 t. Other investments include a new cabin production facility, paint shop and frame-fabrication factory in the company’s manufacturing headquarters in Linyi, Shandong Province, China. All are helping to raise quality levels, while the economies of scale derived from its 1 million m² Linyi factory keep costs low.

A continuous journey to success

The Lingong Production System incorporates many of today’s most advanced manufacturing processes with Kaizen as its central point of focus. The Kaizen philosophy clearly defines both human and mechanical processes to deliver the highest quality end product in the most efficient and cost-effective manner. Lingong’s factories in Linyi and Pederneiras have been rigorously benchmarked against the best factories in the world.

Wen Degang, head of operations at Lingong’s flagship factory in Linyi, China, explains that manufacturing process improvement is an ongoing journey that requires commitment from every employee – from the factory floor to senior management.

“There’s been a huge change in the way our employees think since the implementation of LPS – they are much more focused on working efficiently and they understand the value of what they’re doing. This has motivated everyone to do even better for our customers,” he says.

Agile and responsive

LPS also incorporates Just In Time manufacturing concepts that allow production facilities to quickly and cost-effectively respond to natural peaks and troughs in demand by keeping stock inventory to a minimum.

“As the export sales of SDLG products continues to grow, managing volumes, optimizing lead times and ensuring quality becomes ever more important,” Degang explains. “With Just In Time processes, components are not only delivered when we need them, but where we need them. Direct to the point of use on the factory floor. This simplifies workers’ tasks at each stage of production and reduces the capacity for error.”

In preparation for achieving its goal of becoming the largest Chinese construction equipment manufacturer, Lingong has invested a great deal of time and money into its production facilities and people. The company’s senior management team is made up of highly qualified professionals – all educated to the highest levels and with experience from some of the world’s top companies, including Price Waterhouse Cooper and global electronics suppliers.

“Our young and ambitious team understands the importance of being different in this market. Our new factories, advanced production system and knowledgeable people are what makes SDLG different,” says Degang.