The role of overall equipment effectiveness on the relationship between fit manufacturing strategies and business performance

Abstract

In the current era, manufacturing companies operate in a less secure and more complex environment. Stakeholders’ pressure on manufacturers to reduce waste and manage operations and their negative impact on the environment and society is growing. This has lead companies and researchers to highlight methods to apply viable strategies and processes in order to minimize negative impacts of industry traditional manufacturing strategies and improve business performance. On top of that, manufacturing companies need to adapt fit manufacturing (FM) strategies such as lean manufacturing (LM), agile manufacturing (AM) and sustainability manufacturing (SM) to enhance business performance (BP). Similarly, the overall equipment effectiveness (OEE) has become a major concern for modern manufacturing technology systems. This study aims to investigate the mediating role of overall equipment effectiveness (OEE) on the relationship between fit manufacturing (FM) strategies i.e. lean manufacturing (LM), agile manufacturing (AM) and sustainability manufacturing (SM) with business performance (BP). This study employed a quantitative approach to address the research objectives. The response rate was 75%. The clean data of 252 respondents were collected through questionnaires. Data were analyzed through structural equation modelling (SEM) using AMOS 22. Direct and indirect effects were calculated to test the endogenous and exogenous variables. The findings confirmed that there is a positive relationship among FM strategies i.e. LM, AM, SM and BP of Malaysian manufacturing firms. In addition, these study findings also confirmed that OEE mediated the relationship between FM strategies i.e. LM, AM, SM and BP of Malaysian manufacturing firms. This study makes a novel academic and practical contributions to the field of sustainability along with fit manufacturing strategies in addition to significant contribution to the body of knowledge. Finally, this research provides meaningful insight to manufacturing organizations, manufactures, policymakers, and government institutions related to Malaysian manufacturing industry.