Open Access Peer-reviewed Research Article

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

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Submitted   Apr 2, 2021
Published   Apr 27, 2021
Issue    Vol 2 No 1 (2021)
DOI   10.25082/FMB.2021.01.003

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Ebomah Ernest Monday corresponding author
Department of Business Administration, Faculty of Management Sciences, National Open University of Nigeria, Nigeria
UGBOMHE O. Ugbomhe
Department of Business Administration, Faculty of Management Sciences, Ambrose Alli University, Nigeria

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
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

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