New model transforms Shandong's manufacturing sector

In an astonishing feat of efficiency, a raft of 1,000 printer scanner components were produced by manufacturer Weihai Hengke Precision Industrial Co Ltd – located in Weihai city in East China's Shandong province – and delivered to Jabil Electronics (Weihai) Co Ltd within just half an hour.

Work gets underway at the premises of Weihai Hengke Precision Industrial Co Ltd. [Photo by Gao Xin for chinadaily.com.cn]

This remarkable speed is said to be attributed to the "Factory within a Factory" model rolled out by Hengke. It involves leasing factory space from downstream enterprises, creating a seamless production process from top to bottom in the industrial supply chain.

The primary goal of the approach is to minimize production costs for the company, which has resulted in exceptionally fast delivery times.

Before entering into a partnership agreement with Jabil Electronics, Hengke had been exploring ways to ensure the timely supply of components and seamless integration with production lines. Then, the company boldly ventured into an innovative cooperative model and became a pioneer in implementing the "Factory within a Factory" concept among more than 110 Jabil factories globally.

In addition, the distance between these two companies is about 25 kilometers. With the help of the "Factory within a Factory" model, Hengke was able to reduce the daily transportation of goods by 20 truckloads, not to mention the considerable savings in logistics expenses.

According to Hou Yuantao, vice general manager of Hengke, the company saved nearly a million yuan ($137,06) in logistics costs last year.

What's more, under the model, warehousing costs have decreased significantly. There is no need for extensive stockpiling since qualified products can be delivered directly to Jabil Electronics. This reduces the need for warehouse managers and logistics personnel, resulting in lower labor costs. (Edited by Zhou Yunlai)