Process re-engineering and optimization in manufacturing industries is a big challenge because of process interdependencies characterized by a high failure rate. Research has shown that over 70% of approaches fail because of complexity as a result of process interdependencies during the implementation phase. This paper investigates data from a manufacturing operation and designs a filtration algorithm to analyze process interdependencies as a new approach for process optimization. The algorithm examines the data from a manufacturing process to identify limitations through cause and effect relationships and implements changes to achieve an optimized result. The proposed cause and effect approach of re-engineering is termed the Khan-Hassan-Butt (KHB) methodology, and it can filter the process interdependencies and use those as key decision-making tools. It provides an improved process optimization framework that incorporates data analysis along with a cause and effect algorithm to filter out the process interdependencies as an approach to increase output and reduce failure factors simultaneously. It also provides a framework for filtering the manufacturing data into smart structured data. Based on the proposed KHB methodology, the study investigated a production line process using the WITNESS Horizon 22 simulation package and analyzed the efficiency of the proposed approach for production optimization. A case study is provided that integrated the KHB methodology with data-driven process re-engineering to analyze the process interdependencies to use them as decision-making tools for production optimization.