Manufacturing cell formation is one of the most important problems faced in designing cellular manufacturing systems. The purpose of this study is to design effective manufacturing cell systems by developing a method which forms machines/parts into optimal machine cells/part families. The 0-1 data matrix structure is used to form a basis for manufacturing cell formation. In this paper, we propose a CE method to reorder the 0-1 data matrix for manufacturing cell formation. The resulting solutions are shown to demonstrate the effectiveness of the CE method.