In flexible manufacturing system (FMS), it is common that most machines are multi-purpose and are capable of performing more than one operation, which makes parts rerouteing possible. In addition, due to scheduling constraints, rerouteing is often desirable. Also, interruptions in production activity due to machines failure from time to time is a common problem, and that too requires parts rerouteing to meet the due-date requirements. Historically, machine grouping procedures do not consider alternative routeings that a part may undergo during the operational phase of the system. When a part is rerouted, it adversely affects the cell performance. The existing procedures for machine cells formation in cellular manufacturing have not taken these factors into consideration. In this research, a new heuristic procedure is developed which provides the flexibility of incorporating alternative routeings in the system's design phase itself. To illustrate the validity of this heuristic, a case exampleproblem is developed using a manufacturing planning software (MANUPLAN) from General Dynamics. The results confirmed that the proposed heuristic procedure outperforms other existing methods.