Performance measurement based on a total quality approach

Purpose – The steel industry is a capital‐intensive industry and equipment utilisation as effectively as possible is of high priority. One of the key difficulties in the steel industry is the need to synchronise several processes to create a flow through every machine and plant. This paper aims to introduce the concept of integrated equipment effectiveness (IEE), which is a new approach for overall equipment effectiveness (OEE) measurement in three elements, consisting of “OEE loading‐based”, “OEE capital‐based”, and “OEE market‐based” so as to meet these essential requirements. Design/methodology/approach – Based on a comprehensive scheme for loss analysis, the concept of integrated equipment effectiveness is developed. The case study is conducted in the factory of one large Asian steel‐making company in order to examine the proposed model. Findings – The case study reveals the importance of the new scheme for loss analysis in a steel‐making plant. IEE gives managers of steel plants a whole perspective on effectiveness. It also indicates the level of synchronisation of a specific machine for making steel within an entire organisation. Practical implications – IEE monitors the manufacturing process to utilise equipment effectively as much as possible and also measures equipment effectiveness for the full process cycle in order to respond to the market. IEE makes communication easier and more efficient. It provides a sound perspective on improvement in steel making and also can be used as a benchmark. Originality/value – The paper provides information on a new method for precise estimation of equipment effectiveness in a steel‐making plant. It helps in optimising resource allocation and in improving strategic decision‐making.