International Journal for Quality Research 9(4) 565–576 ISSN 1800-6450 565 Ladan Hassani Gholamreza Hashemzadeh 1 Article info: Received 03.05.2015 Accepted 14.07.2015 UDC – 54.061 THE IMPACT OF OVERALL EQUIPMENT EFFECTIVENESS ON PRODUCTION LOSSES IN MOGHAN CABLE & WIRE MANUFACTURING Abstract: OEE is one of the most popular methods of evaluation of the performance in the manufacturing process to identify and eliminate the causes of production losses. This study has a significant importance due to demonstrating the existing loss and identifying indicators of OEE and their impact on production losses. The main purpose of this study is to minimize the losses of equipment by utilizing the available resources. For this purpose, Moghan Cable & Wire Manufacturing Company was selected as a case study. After collecting equipment data, a questionnaire was designed that its validity was approved by group of experts and its reliability was calculated by using Cronbach's alpha method which was equal to 0.901. Data were analyzed by Structural Equation Model, in order to examine the relationship between variables. The results showed that the high levels of overall equipment effectiveness have a significant impact on the reduction of production losses. Keywords: OEE, Production Losses, Performance, Quality, structural equation modeling 1. Introduction 1 Measurement of the performance is one of the basic principles in the management and its measurement is very important because it identifies the gap between the actual, optimal and expected performance. To this end, the key performance indicators are selected carefully and then they identify the parts that their performances need to be improved. (Weber and Thomas, 2005) Also, today, regarding the dramatic advances in the field of manufacturing machinery and equipment, major part of assets of factories have been 1 Corresponding author: Gholamreza Hashemzadeh email: gh_hashemzadeh@azad.ac.ir concentrated in this sector which is the main source of added value as well. With the stop and breakdown of the machinery, consequently, production process of the value added will be also stopped. Three main specifications of quality, price and delivery time are considered for each product (Tucker, 2004) and equipment has impact on all of these criteria. Also achieving objectives, such as increased productivity, health and safety, quality and the like, in industries, all depend on the effective performance of the devices and equipment. The capability of industries in manufacturing products with lower costs and higher production also depends on efficient performance of equipment and devices. Overall equipment effectiveness is one of the