Assessment of equipment financial performance in overall equipment effectiveness metric for gauging manufacturing equipment criticality

Chen Fung Liew, Joshua Prakash and Kok Seng Ong

European Journal of Industrial Engineering, 2025, vol. 20, issue 1, 1-31

Abstract: This paper introduces equipment cost effectiveness, a metric for evaluating the financial performance of equipment in manufacturing. While overall equipment effectiveness is widely used to assess operational performance, its limited focus on financial aspects necessitates a more comprehensive approach. Equipment cost effectiveness addresses this limitation by quantifying the wastage of equipment acquisition cost and maintenance cost at any overall equipment effectiveness level. Real-world data from the medical device, tyre flap, and semiconductor industries validate equipment cost effectiveness through correlation analysis, revealing a negative relationship between overall equipment effectiveness and both equipment acquisition cost and maintenance cost. Equipment cost effectiveness provides a holistic evaluation of equipment, enabling better decision-making and cost optimisation. By bridging the gap between operational and financial evaluations, equipment cost effectiveness offers valuable insights for enhancing equipment efficiency and resource allocation in manufacturing operations. [Submitted: 22 April 2023; Accepted: 10 November 2023]

Keywords: overall equipment effectiveness; OEE; equipment cost effectiveness; ECE; equipment acquisition cost; maintenance cost; improvement cost. (search for similar items in EconPapers)
Date: 2025
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