Open Access Peer-reviewed Research Article

Impact of overall equipment effectiveness on return on investment in the Nigerian cement manufacturing industry

Main Article Content

Ebomah Ernest Monday corresponding author
UGBOMHE O. Ugbomhe

Abstract

The formidable challenge of maintenance of heavy duty equipment for the day-to-day manufacturing activities informed this research investigation. The study examined the impact of overall equipment effectiveness on return on investment in the Nigerian cement manufacturing industry. It focused on the key indicators of overall equipment effectiveness and their impact on return on investment. Ex-post facto research design was adopted in conducting the empirical investigation. The firms in the industry quoted in the Nigeria Stock Exchange (NSE) were studied. Longitudinal data of 15 years observation (2005-2019) were obtained and analyzed with ordinary least squares regression (system-OLS). The key indicators of overall equipment effectiveness subjected to empirical test proved positively significant to return on investment at the Coefficient values a1, a2 & a3 > 0; Prob.-values a1, a2, & a3 < 0.05 and t-Statistic values a1, a2, & a3 absolutely ≥ 2. These analysis results suggested that machine availability rate (MAR), machine production rate (MPR), product quality rate (PQR) variables of overall equipment effectiveness have significant linear effect on ROI. Based on these results, the study therefore recommends among others for top management’s support and commitment to proactive and continuous improvement production facilities maintenance for improved overall equipment effectiveness and sustainable corporate performance of firms in the industry.

Keywords
Overall Equipment Effectiveness (OEE), Machine Availability Rate (MAR), Machine Performance Rate (MPR), Product Quality Rate (PQR), corporate performance, Return on Investment (ROI)

Article Details

How to Cite
Monday, E., & Ugbomhe, U. (2021). Impact of overall equipment effectiveness on return on investment in the Nigerian cement manufacturing industry. Frontiers in Management and Business, 2(1), 87-94. https://doi.org/10.25082/FMB.2021.01.003

References

  1. Ebomah EM. Effect of production facilities maintenance o corporate performance of Nigerian cement manufacturing industry. Unpublished PhD Dissertation in the Department of Business Administration, Anambra State University, Nigeria, 2017.
  2. Blischke WR and Murthy DNP. Case studies in reliability and maintenance. New Jersey: John Wiley, 2003. https://doi.org/10.1002/0471393002
  3. Jackson MC. Systems thinking: Creative holism for managers. New York: John Wiley and Sons Inc, 2003.
  4. Liliane P and Parodi-Herz A. Maintenance: An evolutionary perspective. United Kingdom: Springer- Verlag London Ltd, 2008.
  5. Ricardo R and Wade D. Corporate performance management: How to build a better organization through measurement driven strategies alignment. United Kingdom: Butterworth Heinemann, 2001.
  6. World Bank. World development report on infrastructure for development: World development indicators. Geneva: World Bank, 2019.
  7. Ejiofor PNO. Management in Nigeria: Theories and issues. Onitsha: African-Feb Publishers Limited, 1987.
  8. Perumal P, Teoh YS and Tay CC. Consideration of demand rate in overall equipment effectiveness (OEE) on equipment with constant process time. Journal of Industrial Engineering and Management, 2013, 6(2): 507-524. https://doi.org/10.3926/jiem.537
  9. Praveen SS, Patel M and Vivek B. A Literature review on overall equipment effectiveness. International Journal of Research in Aeronautical and Mechanical Engineering, 2014, 2(2): 35-42.
  10. Ding H and Kamaruddin A. Is overall equipment effectiveness universally applicable? The case of Saint-Gobain. International Journal of Economics & Finance, 2015, 7(2): 241-252. https://doi.org/10.5539/ijef.v7n2p241
  11. Hilmola OP. Total productivity measurement and competitiveness: Towards ensuring sustainable business performance in manufacturing organizations: A literature review. International Journal of Process Management and Benchmarking, 2005, 1(1): 45-62. https://doi.org/10.1504/IJPMB.2005.006111
  12. Pradhan MK and Bhol JP. Trends and perspectives in industrial maintenance management. Industrial Maintenance Management, 2006: 27-35.
  13. Normariah CM, Salina B, Shuib S, et al. Synthesizing the machine’s availability in overall equipment effectiveness. Journal of Mechanical Engineering, 2017, 4(3): 89-99.
  14. Muchiri P and Pintelon L. Performance measurement using overall equipment effectiveness (OEE): Literature review and practical application discussion. International Journal of Production Research, 2008, 46(13): 3517-3535. https://doi.org/10.1080/00207540601142645
  15. Marcello P, Marco F and Francesco Z. Overall equipment effectiveness of a manufacturing line (OEEML): An integrated approach to assess systems performance. Journal of Manufacturing Technology Management, 2009, 20(1): 8-29. https://doi.org/10.1108/17410380910925389
  16. Jose AG, Steve E, Kelvin DB, et al. Overall equipment effectiveness (OEE) and process capability (PC) measures: A relationship analysis. International Journal of Quality and Reliability Management, 2010, 27(1): 48-62. https://doi.org/10.1108/02656711011009308
  17. Muchiri P, Pintelon L, Gelders L, et al. Development of maintenance function performance measurement framework and indicators. International Journal of Production Economics, 2008, 131(1): 295-302. https://doi.org/10.1016/j.ijpe.2010.04.039
  18. Vijayakumar SR and Gajendran S. Improvement of overall equipment effectiveness in injection moulding process industry. IOSR Journal of Mechanical and Civil Engineering, 2014: 47-60.
  19. Osama TRA. Total productive maintenance review and overall equipment effectiveness measurement. Journal of Mechanical and Industrial Engineering, 2010, 4(4): 517-522.
  20. Fore S and Zuze L. Improvement of overall equipment effectiveness through total productive maintenance. World Academy of Science, Engineering and Technology, 2010, 37: 402-410.
  21. Bangar A, Hemlata S and Jagmohan B. Improving overall equipment effectiveness by implementing total productive maintenance in auto industry. International Journal of Emerging Technology and Advanced Engineering, 2013, 3(6): 590-594.
  22. Kumar, J., Soni, V. K. & Geeta, A. (2013). Maintenance performance metrics for manufacturing industry. International Journal of Research in Engineering and Technology, 2(2), 136-142. https://doi.org/10.15623/ijret.2013.0202009
  23. Disha MN, Vijaya KMN, Naidu GS, et al. Evaluation of OEE in a continuous process industry on an insulation line in a cable manufacturing unit. International Journal of Innovative Research in Science, Engineering and Technology, 2013, 2(1): 1629-1634.
  24. Pradeep K, Raviraj S and Lewlyn LRR. Overall equipment efficiency and productivity of a news paper printing machine of a daily news paper company: A case study. International Journal of Engineering Practical Research, 2014, 3(1): 20-27. https://doi.org/10.14355/ijepr.2014.0301.04
  25. Lalit DG, Gupta MM and Zanwar DR. Overall equipment effectiveness improvement: A case of injection moulding machine. International Journal of Engineering and Sciences (IJES), 2014, 3(8): 1-10.