Staff View: Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources

Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources

This thesis investigates the limitations of relying solely on the overall equipment effectiveness (OEE) metric to evaluate equipment performance in manufacturing environments, emphasising the need for financial quantification. Current OEE assessments, while effective operationally, lack a comprehens...

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Main Author:	Liew, Chen Fung
Format:	Final Year Project / Dissertation / Thesis
Published:	2024
Subjects:	TA Engineering (General). Civil engineering (General) TJ Mechanical engineering and machinery TS Manufactures
Online Access:	http://eprints.utar.edu.my/6790/1/2004659_%2D_Liew_Chen_Fung.pdf http://eprints.utar.edu.my/6790/
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spelling	my-utar-eprints.67902024-10-22T03:23:13Z Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources Liew, Chen Fung TA Engineering (General). Civil engineering (General) TJ Mechanical engineering and machinery TS Manufactures This thesis investigates the limitations of relying solely on the overall equipment effectiveness (OEE) metric to evaluate equipment performance in manufacturing environments, emphasising the need for financial quantification. Current OEE assessments, while effective operationally, lack a comprehensive financial perspective, leaving high OEE devoid of meaningful significance to management without corresponding financial benefits. A systematic review of financial metrics reveals that equipment acquisition cost and maintenance cost are more relevant to OEE than profit, revenue, and operating cost. Notably, improvement cost, crucial for OEE enhancement, is often overlooked. To address these gaps, the study proposes evaluating OEE’s financial impact in terms of equipment acquisition cost, maintenance cost, and improvement cost. Additionally, it introduces the equipment cost efficiency (ECE) metric within a comprehensive framework, providing a systematic problem-solving approach. Real-world case studies in diverse manufacturing environments, including a medical device manufacturer, a tyre flap manufacturer, and a semiconductor manufacturer, showcase the effectiveness of the ECE framework. Implementation results in a 15.3% increase in OEE and 77.7% improvement in the ECE metric for the medical device manufacturer, a 20.2% increase in OEE and a 74.3% improvement in the ECE metric for the tyre flap manufacturer, and a 21.6% increase in OEE and a 56.4% improvement in the ECE metric for the semiconductor manufacturer. The research broadens OEE to encompass both operational and financial performance, challenging traditional metrics like profit, revenue, and operating cost as relevant OEE indicators. Instead, the study advocates for ECE as a metric that quantifies equipment acquisition and maintenance cost wastage. This approach bridges the operational-financial gap, enhancing decision-making, cost optimisation, and resource allocation in manufacturing operations. The ECE framework emerges as a valuable tool for organisations seeking to improve equipment efficiency and financial outcomes. 2024-01 Final Year Project / Dissertation / Thesis NonPeerReviewed application/pdf http://eprints.utar.edu.my/6790/1/2004659_%2D_Liew_Chen_Fung.pdf Liew, Chen Fung (2024) Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources. PhD thesis, UTAR. http://eprints.utar.edu.my/6790/
institution	Universiti Tunku Abdul Rahman
building	UTAR Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Tunku Abdul Rahman
content_source	UTAR Institutional Repository
url_provider	http://eprints.utar.edu.my
topic	TA Engineering (General). Civil engineering (General) TJ Mechanical engineering and machinery TS Manufactures
spellingShingle	TA Engineering (General). Civil engineering (General) TJ Mechanical engineering and machinery TS Manufactures Liew, Chen Fung Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
description	This thesis investigates the limitations of relying solely on the overall equipment effectiveness (OEE) metric to evaluate equipment performance in manufacturing environments, emphasising the need for financial quantification. Current OEE assessments, while effective operationally, lack a comprehensive financial perspective, leaving high OEE devoid of meaningful significance to management without corresponding financial benefits. A systematic review of financial metrics reveals that equipment acquisition cost and maintenance cost are more relevant to OEE than profit, revenue, and operating cost. Notably, improvement cost, crucial for OEE enhancement, is often overlooked. To address these gaps, the study proposes evaluating OEE’s financial impact in terms of equipment acquisition cost, maintenance cost, and improvement cost. Additionally, it introduces the equipment cost efficiency (ECE) metric within a comprehensive framework, providing a systematic problem-solving approach. Real-world case studies in diverse manufacturing environments, including a medical device manufacturer, a tyre flap manufacturer, and a semiconductor manufacturer, showcase the effectiveness of the ECE framework. Implementation results in a 15.3% increase in OEE and 77.7% improvement in the ECE metric for the medical device manufacturer, a 20.2% increase in OEE and a 74.3% improvement in the ECE metric for the tyre flap manufacturer, and a 21.6% increase in OEE and a 56.4% improvement in the ECE metric for the semiconductor manufacturer. The research broadens OEE to encompass both operational and financial performance, challenging traditional metrics like profit, revenue, and operating cost as relevant OEE indicators. Instead, the study advocates for ECE as a metric that quantifies equipment acquisition and maintenance cost wastage. This approach bridges the operational-financial gap, enhancing decision-making, cost optimisation, and resource allocation in manufacturing operations. The ECE framework emerges as a valuable tool for organisations seeking to improve equipment efficiency and financial outcomes.
format	Final Year Project / Dissertation / Thesis
author	Liew, Chen Fung
author_facet	Liew, Chen Fung
author_sort	Liew, Chen Fung
title	Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
title_short	Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
title_full	Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
title_fullStr	Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
title_full_unstemmed	Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources
title_sort	development and validation of an equipment cost efficiency framework (ecef) for improving operational and financial performance of production resources
publishDate	2024
url	http://eprints.utar.edu.my/6790/1/2004659_%2D_Liew_Chen_Fung.pdf http://eprints.utar.edu.my/6790/
_version_	1814061987334717440
score	13.23648

Development and validation of an equipment cost efficiency framework (ECEF) for improving operational and financial performance of production resources

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