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

Author

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  • Chen Fung Liew
  • Joshua Prakash
  • Kok Seng Ong

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]

Suggested Citation

  • Chen Fung Liew & Joshua Prakash & Kok Seng Ong, 2025. "Assessment of equipment financial performance in overall equipment effectiveness metric for gauging manufacturing equipment criticality," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 20(1), pages 1-31.
    • Handle: RePEc:ids:eujine:v:20:y:2025:i:1:p:1-31
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