Advanced or smart manufacturing has recently been gaining increasing attention from the academia and industry in small and medium enterprises (SMEs). Smart manufacturing for Industry 4.0, which integrates resources, information, materials, and people to formulate a cyber physical system, has been the priority of many enterprises, especially those that are small and medium-sized. Threshold accepting algorithm is useful to resolve the cell formation problem which is based on the three perturbation techniques such as pair-wise exchange, insertion and random insertion perturbation schemes. This paper aims to maximise the grouping efficacy as it is one of the best performance measures for the cell formation problem. The performance evaluation of threshold accepting algorithm had actually been carried out after testing the benchmark problems of various literatures. This evaluation method proves that three perturbation schemes have the ability to sort out the cell formation problem. Among these three perturbation schemes, the random insertion perturbation scheme is providing better solutions than the others. Copyright © 2020 Inderscience Enterprises Ltd.