This study examined the extent of optimal materials handling equipment impact on defective product reduction skills to enhance overall production efficiency, taking steel and iron factories as a case study. To achieve this end, the study was performed by using qualitative and quantitative methods of data collection was employed which represented in the questionnaire survey and semi-structured interviews. Questionnaire instrument already has been tested. Findings of the study revealed that optimal materials handling equipment, particularly storage and handling equipment and engineered systems assist significantly in improving defective product reduction skills by facilitating a shorter operating cycle, reduces handling costs, eliminates unproductive handling of materials, reduces idle machine capacity, and eliminates factory hazards. All this, in turn, enabling optimum usage of space and maintains the quality of materials toward enhancing overall production efficiency in terms of facilitating better customer care and ensuring the production of quality products and in a timely. Based on findings, the study recommended manufacturing organizations management in order to succeed in enhancing operational and production efficiency as a whole, it should give a keen interest in optimal materials handling equipment and give them prioritize as a very vital cost center to defective products reduction.