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Integration of financial performance measure with overall equipment effectiveness for assessing operational performance: a structured literature review

Author

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  • Chen Fung Liew
  • Joshua Prakash
  • Kok Seng Ong

Abstract

Overall equipment effectiveness (OEE) measures the effectiveness of equipment in terms of availability, productivity and quality, but not financially. Without quantifying financial achievement, the increase in OEE has little meaning to the management. OEE can be sustained by high investment. However, organisations gain no financial benefit despite having equipment that operates at high OEE. This study reviews and classifies financial metrics that quantify the financial impact in OEE initiative into profit, revenue, equipment acquisition cost, operating cost and maintenance cost. Results suggest that equipment acquisition cost and maintenance cost are more relevant to OEE than profit, revenue and operating cost. The systematic review also reveals that all financial metrics omit the importance of improvement cost invested for enhancing OEE. The review proposes to assess the financial impact of OEE in terms of equipment acquisition cost, maintenance cost and improvement cost.

Suggested Citation

  • Chen Fung Liew & Joshua Prakash & Kok Seng Ong, 2022. "Integration of financial performance measure with overall equipment effectiveness for assessing operational performance: a structured literature review," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 37(1), pages 119-142.
    • Handle: RePEc:ids:ijpqma:v:37:y:2022:i:1:p:119-142
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