Cellular manufacturing (CM) is a modern manufacturi ng concept based on the Group technology (GT) philo sophy. CM enables a manufacturing unit to enhance its productivity subs tantially through improved utilization of resources . In Cellular manufacturing system design process the task of solving cell form ation problem (machine ‐component grouping) is the central issue. Cell formation problem is considered as complex one due to its combinatorial nature. Research interest is g rowing towards development of novel solution methodologies for the purpose of cell formation. Even though numerous ap proaches have been implemented by researchers for the task of machine- component grouping, the effectiveness of multi stag e solution procedures based on the integration of traditional and non-tra ditional optimization techniques needs to be invest igated adequately. This paper demonstrates the development and implementati on of a multi stage heuristic based on the integrat ion of traditional cluster analysis technique and non- traditional simulated a nnealing technique for standard cell formation. The proposed heuristic is tested using a number of binary and non-binary data sets and computational results are presented. Resul ts indicate that proposed heuristic is capable of generating promising qualit y solutions when compared with a few alternate cell forming approaches.