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Int. J. Production Economics 104 (2006) 214229

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An empirical investigation on the relationship between

business and maintenance strategies
Srinivas Kumar Pinjalaa, Liliane Pintelona,, Ann Vereeckeb
a
Center for Industrial Management, Katholieke Universiteit Leuven, Heverlee, B-3001, Belgium
b
Vlerick Leuven Gent Management School and Ghent University, Ghent, Belgium
Received 14 April 2004; accepted 21 December 2004
Available online 5 February 2005

Abstract

All manufacturing companies choose to compete in the market based on some competitive priorities like cost,
quality, exibility and other priorities, depending upon their manufacturing capabilities. Equipment maintenance being
an integral part of manufacturing, can inuence these competitive priorities and hence the business strategy directly in a
negative or positive way. Over a period of time, there had been signicant developments in the eld of manufacturing
and maintenance. These are in the areas of technology, concepts, methodologies, and philosophies. Examples are
Advanced Manufacturing Technologies (AMT), JIT, Total Productive Maintenance (TPM), and Outsourcing.
Maintenance, directly inuenced by these developments, has risen from a mere tactical to a more strategic level. Hence,
there is a growing need to study the relationship between business and maintenance strategies. The paper is supported
by a survey conducted in a sample of about 150 companies within Belgium and to some extent in the Netherlands. In
this paper, our empirical study investigates whether companies with different competitive priorities pursue different
maintenance strategies. The results indicate that quality competitors have more pro-active maintenance policies, better
planning and control systems, decentralized maintenance organization structures when compared to others. They
manage maintenance much more effectively when compared to others. There is also a difference in the distribution of
AMT usage, automation, maintenance personnel (management/supervision and technicians), expenses and budget
gures. Quality competitors have more AMT usage, automation, maintenance personnel and spend more on budget,
followed by cost and exibility competitors.
r 2005 Elsevier B.V. All rights reserved.

Keywords: Business strategy; Maintenance strategy; Competitive priorities

1. Introduction
Corresponding author. Tel.: +32 16 322496;
All manufacturing companies invest a substan-
fax: +32 16 322986.
E-mail address: liliane.pintelon@cib.kuleuven.ac.be tial amount of capital in procuring physical assets.
(L. Pintelon). One of the important factors that inuence the

0925-5273/$ - see front matter r 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2004.12.024
 ARTICLE IN PRESS
S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
return on investments is maintenance of these
assets. However, when it comes to maintaining
these assets, maintenance is being treated as any
other budget line item. On the other hand, many
developments have taken place in terms of
technology, concepts, and philosophies both in
production and maintenance. Some examples can
be Advanced Manufacturing Technology (AMT),
JIT, Total Productive Maintenance (TPM), and
Outsourcing. These developments inuence di-
rectly or indirectly some of the maintenance
elements like organization structure, human re-
source policies (training, recruitment, etc.), main-
tenance policies and concepts. For instance, AMT
and automation require continuous training pro-
grams for craft workers and supervisors to
enhance their technical expertise. It also requires
recruitment of professional staff to raise the level
of technical expertise in maintenance department
(Swanson, 1997). Also, with the introduction of
AMT and high automation, the nature of main-
tenance has become increasingly complex and
costly. According to Maggard and Rhyne (1992)
and Mobley (1990), 1540% of production costs
can be attributed to maintenance costs. With the
onslaught of more automation, robotics and
computer-aided devices, maintenance costs are
likely to be even higher in the future (Blanchard,
1997; Niebel, 1985). According to a study con-
ducted in 1989, the estimated cost of maintenance
for a selected group of companies increased from
$200 billion in 1979 to $600 billion in 1989 i.e.
three-fold in just 10 years (Wireman, 1990). On the
other hand, the Overall Equipment Effectiveness
(OEE) for a typical factory is only 45% (Kotze,
1993). OEE is a function of Equipment avail-
ability, Performance efciency and Quality rate of
products. It is the performance metric often used
for TPM (Nakajima, 1988).
The above paragraph indicates that if main-
tenance is tapped effectively there is a scope for
improving the prots and productivity of a
company. For maintenance to make these im-
provements it should be recognized as an integral
part of business strategy or the competitive
strength equation (Hora, 1987). In particular,
there is a growing need to understand the relation-
ship between a companys business and mainte-
215
nance strategies. Lack of understanding this
relationship and only cutting down the costs of
maintenance can effect the companys competitive
strength equation and its ability to compete in the
market.
1.1. Strategy
Strategy can have various denitions depending
upon different contexts. However, the elements
within it can provide us more insight in under-
standing the type of strategy and its content.
Strategy at any level, say at business level or
functional level will provide the company a sense
of direction, integrity and purpose. In general,
Hax and Majluf (1991) provide a comprehensive
denition. According to them Strategy is a
coherent, unifying and integrative pattern of
decisions; determines and reveals the organiza-
tional purpose; selects the businesses the organiza-
tion is in or is to be in; attempts to achieve a long
term sustainable advantage in each of its busi-
nesses, engages all the hierarchical levels (corpo-
rate, business and functional) of the rm and;
denes the nature of the economic and non-
economic contributions it intends to make.
1.1.1. Business strategy
Porter (1985) identies three generic choices of
strategies at business level. They are cost leader-
ship, differentiation, and focus. Cost leaders
compete in the market based on the low price of
their products. Differentiators compete based on
certain distinct competence like quality, customer
service, image, etc. Focus players compete by
serving the needs of a particular market or product
segment. Hax and Majluf (1991) dene business
strategy in terms of three elements: the mission of
the business, the attractiveness of the industry in
which the business belongs, and the competitive
position of the business unit within that industry.
They view Porters generic choices of strategies as
generic competitive strategies, which determine the
competitive position; the business unit will adopt
in order to gain a sustainable competitive advan-
tage. According to Mintzberg et al. (1995),
locating, distinguishing and elaborating the core
business is more relevant for a business-level
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216 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
strategy. They consider Porters framework of
generic strategies as those that distinguish the core
business. Further, they present two types of
strategies for distinguishing a core business. These
are the strategies of differentiation and scope.
They consider cost leadership or low price strategy
as a part of differentiation strategies along with
quality, image and design. Further they consider
focus as a part of scope strategies along with
customization. The business strategy choice ele-
ments like cost (or price), quality, customization,
or exibility were termed as competitive priorities
by Hayes and Wheelwright (1984). They dened
competitive priorities as the ways in which a
company chooses to compete in the market place
and the types of markets it pursues. Further, they
stress that, within the industry, different compa-
nies, or business units differ in the emphasis given
to each competitive priority. The competitive
priorities in principle are the basis on which a
business unit will achieve and maintain a compe-
titive advantage. In this paper the term business
strategy is considered with respect to a competitive
priority, or business strategy element. Since our
main aim is to study the maintenance behaviors,
by segregating companies based on certain generic
business strategy element.
1.1.2. Maintenance strategy
The term maintenance strategy is generally
viewed from the perspective of maintenance
policies and concepts. For instance, it is dened
in terms of reactive or breakdown maintenance,
preventive and predictive maintenance (Kevin and
Penlesky, 1988; Cooke, 2003). Swanson (2001)
explains three types of maintenance strategies:
reactive strategy (breakdown maintenance), proac-
tive strategy (preventive and predictive mainte-
nance), and aggressive strategy (TPM). However,
from our view, these maintenance policies and
concepts form one of several elements of main-
tenance strategy. The list of those elements is
presented in Table 2. Maintenance though closely
related to manufacturing is a business function of
its own. Its business is to provide dependable
service to manufacturing. Hence, maintenance
strategy can be dened at a functional hierarchy
level. It can be dened as coherent, unifying and
integrative pattern of decisions in different main-
tenance strategy elements in congruence with
manufacturing, corporate and business level stra-
tegies; determines and reveals the organizational
purpose; denes the nature of economic and non-
economic contributions it intends to make to the
organization as a whole. This denition is based
on the strategy denition given by Hax and Majluf
(1991).
1.1.3. Relationship between business and
maintenance strategies
The relationship between business and main-
tenance strategies can be well understood through
the famous value chain framework of Porter
(1985). The underlying principle is that all of the
tasks performed by a business unit can be classied
into ve primary and four support activities. The
primary activities constitute inbound logistics,
operations, outbound logistics, marketing and
sales and service. Here, maintenance is considered
as a part of operations activity. The support
activities constitute procurement, technology de-
velopment, human resource management and
company infrastructure. However, several authors
subsequently altered the above classication sys-
tem according to their own perceptions. For
instance, Hax and Majluf (1991) considered in-
bound logistics, operations and outbound logistics
as manufacturing. Whether maintenance is a part
of operations or manufacturing it should be
managed as a separate value chain activity. For
instance, maintenance is often ignored as a part of
the value-added chain by considering it as a part of
manufacturing overhead (Hora, 1987). By con-
sidering it as a separate value chain activity,
management can visualize the effects of mainte-
nance costs on the value-added chain and the
business strategy. Moreover, the maintenance
function plays a critical role in a companys ability
to compete on the basis of cost, quality and
delivery performance (Swanson, 1997; Pintelon et
al., 2000). Hence, maintenance should be consid-
ered as a part of primary activities but as a
separate service function of its own. This will allow
proling the competitive position of a business
unit with respect to maintenance against its
competitors. In addition, every function or activity
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S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229 217

in the value chain is a potential source for pursuing automation and usage of AMT like (CIM)
either cost leadership or differentiation (Hax and computer-integrated manufacturing, (CAM) com-
Majluf, 1991). To be effective, each functional puter-aided manufacturing, (CAD) computer-
strategy must support, through a specic and aided design (Hayes and Jaikumar, 1988). How-
consistent pattern of decisions, the competitive ever, with more automation and AMT usage, even
advantage being sought by the business strategy though there are cost advantages with less direct
(Hayes and Wheelwright, 1984). For example, labor costs, it can be offset by increase in indirect
decisions in areas such as capacity, organization costs.
structure, maintenance policies, and planningall This can be one of the reasons that can be
sub-parts of the maintenance functional strategy attributed for the increase in maintenance costs
can be different, if the desired business strategy over the past few years. In addition to this, the
were cost leadership rather than superior product maintenance complexity has also increased (Mor-
quality with low price. As shown in Fig. 1, the rison and Upton, 1994). In such situations,
decision patterns of some of the maintenance maintenance has a crucial role to play in achieving
strategy elements differ, if the competitive advan- superior product quality and cost-effectiveness of
tage sought by business strategy is superior operations. This means more focus is needed in
product quality with low price rather than only some of the maintenance strategy elements like
low price. The effect on maintenance can be maintenance modications and human resource
viewed either directly through business strategy policies. With more equipment design modica-
requirements or indirectly through manufacturing tions and continuous improvements the number of
strategy decision patterns. In most of the cases the maintenance tasks required can be reduced and
effect will be through manufacturing strategy hence the related costs. Moreover, complex main-
decision patterns. For instance, superior product tenance environments require high training and
quality at low price can be achieved through more recruitment of professional staff and crew with

High Volume, standardized products. Product & Volume flexibility

Strategy

Strategy

Continuous flow line production Production process varies but associated, with more
process. automation, Advanced Manufacturing Technology
Specialized & high technology with like CAD, CIM, CAM etc.
high interdependency of equipments.
(Superior product quality with low price)

High training & highly skilled workforce.

(Cost Leadership (low selling price)

Manufacturing

Manufacturing

High level of vertical integration. Integrated production planning & control systems,
Performance measurements tied to Performance measurements tied to quality & cost.
cost.
Business Strategy
Business Strategy

Centralized or mixed type of De-centralized organization structure.

organization strucutre. High focus on maintenance planning & control
Strategy

Strategy

High focus on maintenance planning systems.

& control systems. High preventive & predictive maintenance.
High corrective/shutdown Professional staff & workforce recruitment, more
maintenance, with medium preventive team-oriented maintenance involving production
& predictive maintenance. More opeartors.
stand-by equipments. High focus on equipment modifications,
Maintenance

Maintenance

High outsoucing of maintenance continuous improvements with a motive to reduce

activities. the number of maintenance tasks, hence costs.
Performance measurements tied with Performance measurements tied with product
reliability and maintenance costs. quality and maintenance costs.

Fig. 1. The relationship between business and maintenance strategy through manufacturing strategy.
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218 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
high skills. In addition, more team-oriented main-
tenance involving production operators is crucial
to maintain product quality and reduce mainte-
nance costs. In other words, there is a relationship
between business and maintenance strategies. In
that spirit, this paper explores whether there is a
relationship in practice, that is, whether companies
pursuing different business strategies differ in the
way of carrying out the maintenance of their
equipment.
In the past few years, several studies have
emphasized on new theoretical concepts, frame-
works and models both related to manufacturing
and maintenance. For instance, Demeter (2003)
studies manufacturing strategy and its competi-
tiveness. She explains that a smoothly running
production system will have a positive inuence on
business performance. However, smooth running
mainly depends on equipment performance, hence
maintenance. Several other studies mainly focus
on the connection between business and manufac-
turing strategies. There are meagre or no direct
studies on the relationship between business and
maintenance strategies. However, some of the
recent studies like Waeyenbergh and Pintelon
(2004) and Al-Najjar and Alsyouf (2003) empha-
size the importance of maintenance and its role in
contributing to positive business performance. The
subject topic of this paper in that respect is new. In
other words, the contributions of this paper are
contemporary and are relevant both in practice
and academic eld. The empirical study in this
paper is an effort to build a theory on the
relationship and create a starting point for further
exploration and testing. Understanding the theory
will help to develop the right maintenance strategy
that is consistent with the business strategy.
The remaining part of this paper is organized
into four sections. In Section 2, the theoretical
Maintenance as Maintenance
Production task Department
Necessary evil Technical
Specialization
1940 1950 1960
Fig. 2. Maintenance management on a time perspective (Pintelon et al., 2000).
background is reviewed. The literature on manu-
facturing strategy is reviewed. Using the manu-
facturing strategy elements as a guiding
framework the elements of maintenance strategy
are developed. In Section 3, the research metho-
dology is explained. Then, some tentative hypoth-
eses are developed on the relationship between
business and maintenance strategies. In Section 4,
the data and analysis are presented. Note that this
empirical study was carried out on the whole
manufacturing industry and not pertaining to any
particular segment of the industry. Finally, in
Section 5, the results are discussed and the
conclusions with implications for future research
are highlighted.
2. Theoretical background
Few decades ago, the maintenance function was
regarded as an unavoidable part of the production
function and difcult to manage. This view only
changed gradually and maintenance became a
separate, fully recognized and essential business
function (Pintelon et al., 2000). Fig. 2 shows the
evolution of maintenance on a time perspective.
2.1. Maintenance strategy elements
The operating dimensions of cost, quality, and
exibility are dependent upon the key choice
elements of manufacturing strategy. These choice
elements are plant and equipment, production
planning and control, labor and stafng, product
design and engineering, organization and manage-
ment (Skinner, 1969). Here we can assume
maintenance to be a part of engineering. Hayes
et al. (1988) expanded the list proposed by Skinner
to 10 structural and infrastructure decision
Integration External &internal
Efforts Partnerships
Profit Positive
Contributor Cooperation
1970 1980 1990 2000 time
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S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229 219

Table 1
The summary of manufacturing strategy decision elements

Structural decision elements

Capacity Production capacity, shift patterns temporary subcontracting policies.
Facilities Size, location and specialization of resources.
Technology Production equipment, automation and conguration of equipment.
Vertical integration In-house production versus outsourcing, and relationship with suppliers.
Infrastructure decision elements
Organization Structure and design.
Quality policy Quality assurance, control practices and policies.
Production control Production planning and inventory control systems.
Human resources Policies and practices, including management selection and training policies.
New product development Process and organizational aspects.
Performance measurement and reward Performance recognition and reward systems.

Table 2
The summary of maintenance strategy decision elements

Structural decision elements

Maintenance capacity Capacity in terms of work force, supervisory and management staff. Shift patterns
of work force, temporary hiring of work force.
Maintenance facilities Tools, equipment, spares, workforce specialization (mechanics, electricians, etc.),
location of workforce.
Maintenance technology Predictive maintenance, or condition monitoring technology, expert systems, e/i
maintenance technology (intelligent maintenance).
Vertical integration In-house maintenance versus outsourcing and relationship with suppliers.
Infrastructure decision elements
Maintenance organization Organization structure (centralized, de-centralized, or mixed), responsibilities.
Maintenance policy and concepts Policies like corrective, preventive and predictive maintenance. Concepts like
Total Productive Maintenance (TPM), Reliability Centered Maintenance (RCM).
Maintenance planning and control systems Maintenance activity planning, scheduling. Control of spares, costs etc.
Computerized Maintenance Management Systems (CMMS).
Human resources Recruitment policies, training and development of workforce and staff. Culture
and management style.
Maintenance modications Maintenance modications, equipment design improvements, new equipment
installations and new machine design support.
Maintenance performance measurement and Performance recognition, reporting and reward systems.
reward systems

elements as shown in Table 1. Hill (1993)
compressed the choice areas into process and
infrastructure. However, it is Hayes, Wheelwright
and Clarks decision elements that are widely used
in manufacturing strategy development processes
(Mill et al., 2002). Maintenance as a function of its
own, similar decision elements is worthwhile to be
considered in maintenance strategy. An overview
of those elements can be seen in Table 2. The way
these maintenance strategic elements are managed
or utilized can have an impact on the operating
dimensions of cost, quality, and exibility. An
effective maintenance is one that ts the needs of
the business. To manage a company with several
equipment, a diversity of maintenance decisions
must be made over time. The framework provided
in Table 2 groups those decisions into two
categories, namely, structural and infrastructure
elements. This framework can be useful in
formulating a companys maintenance strategy.
Also, the maintenance strategy elements can be
used to perform competitive assessment of a
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220 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
company. This process leads to the identication
of the major strengths and weaknesses of a
companys maintenance against its most relevant
competitors.
The rst four decision elements in Table 2
consume a majority of the maintenance budget.
They are structural in nature because decisions
made in these areas are generally assumed to xed.
For instance, a company outsourcing its entire
maintenance activities cannot revert immediately
to in-house maintenance. This requires enough
time and capital investment to gather the necessary
resources and skills. Similarly, predictive main-
tenance requires enough initial capital investment
for acquiring necessary equipment, instruments
and skills before implementation.
The last six infrastructure decision elements in
Table 2 are generally linked with specic operating
aspects of a company like production process, size,
degree of automation, etc. For example, with
increasing interdependency and automation of
equipment companies tend to have more decen-
tralized maintenance organization structure
(Swanson, 1997). It should be emphasized that
both structural and infrastructure elements are
closely interrelated. For example, if we consider
structural elements as the maintenance resources,
the decisions taken in the infrastructure elements
decide on how effectively the resources are being
utilized. Over a period of time decisions must be
made both in structural and infrastructure ele-
ments. However, both the elements can present a
variety of decision choices. They can have a major
impact on the maintenance functions ability to
implement and support the companys business
strategy.
From a system perspective the elements pro-
vided in Table 2 cover most of the elements of a
maintenance system. Visser (1998) models main-
tenance as a transformation process, encapsulated
within an enterprise system. Based on Vissers
inputoutput model, Tsang (2002) identies four
strategic elements of maintenance. These elements
as listed below are similar to some of our elements
presented in Table 2.
1. Service-delivery options: the choice between in-
house capability and outsource service.
2. Organization of the maintenance function and
the way maintenance tasks are structured.
3. Maintenance methodology: the selection of
maintenance policies.
4. Design of the infrastructure that supports
maintenance.
Service-delivery options are similar to our
structural decision element, namely, vertical inte-
gration. The second element, organization of the
maintenance function and the way maintenance
tasks are structured are split in our case. We
consider organization structure as a separate
element, while structuring of maintenance tasks
is included in maintenance planning and control
systems element. For maintenance methodology
element his maintenance policies are similar to our
maintenance policies, while TPM and RCM we
distinguish as maintenance concepts, he chose to
call them maintenance methodologies. For the
fourth element, i.e. infrastructure that supports
maintenance he combines training, reward and
recognition, team work, communication, e/i-main-
tenance, CMMS, and performance measurement
systems into one element, while we split them
according to their relevant positions.
3. Research methodology
3.1. Maintenance link with business strategy
elements
In this paper, maintenance link with business
strategy elements, or competitive priorities is
explored based on production process character-
istics given by Hayes and Wheelwright (1984). The
generic way of dividing production process can be
job shop, batch, assembly line and continuous ow
line. Process choice is a key decision element that
links operations to business strategy (Hossein et
al., 1996). In an empirical study their ndings
support the expectation that rms with different
process choices emphasize different business strat-
egy elements, or competitive priorities. Flexibility
is the most important competitive priority for job
shops. Quality can be a top priority for all the
process choices (job, batch, assembly and ow). It
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is presumed that quality and innovativeness go
together. Cost and deliverability can be most
important priorities for continuous ow shops
(Hax and Majluf, 1991), as most of these industries
produce standard products in high volumes. Very
few companies have deliverability as their sole
competitive priority. In fact, Hossein et al. (1996)
found no statistically signicant differences be-
tween the four process choices on this priority.
The effect of maintenance on business strategy
elements or competitive priorities can be studied
by focusing on the end points, namely, job shop
and ow lines. The maintenance strategy elements
that are investigated in this paper constitute
outsourcing, organization structure, maintenance
policies, planning and control systems and nally,
human resource policies. In addition, the effect of
AMT and automation of equipment is studied
through technical complexity of maintenance.
Technical complexity can be measured by the
amount of time spent on trouble shooting process
and the type of problems encountered in equip-
ment. Morrison and Upton (1994) divide trouble-
shooting process into four stages, namely (1) fault
detection, (2) information collection, (3) elimina-
tion and (4) diagnosis. Further, the trouble-
shooting process also depends upon the type of
problems, which occur in equipment. They are (1)
expected or familiar faults, (2) intermittent faults,
(3) novel or unfamiliar faults. According to
Morrison and Upton (1994), high technical com-
plexity environments require teamwork between
operators and maintenance crew in addition to
more training. In our survey technical complexity
is measured based on two dimensions, namely,
trouble-shooting time and type of problems in
equipment.
3.2. Cost competitors
Cost competitors generally produce standard
products in high volumes by having continuous
ow line production process. They try to gain
prot margins through economies of scale. Equip-
ment are capital intensive, specialized and with
high technology. Hence, the technical complexity,
teamwork and training requirements of workforce
and staff will be high. Since most of the processes
221
are totally automated and equipment is seldom
idle, maintenance of equipment in such situations
is highly critical. Hence, most of the critical
equipment will have a standby to prevent total
shutdown of the plant. Majority of maintenance is
done during day shifts and during plant shut-
downs. Also, equipment availability for doing
preventive or predictive maintenance may be
limited unless there is standby equipment. It may
not be possible to always have a standby-equip-
ment due to cost considerations. Hence, the
maintenance policies can be highly corrective, or
shutdown maintenance followed by medium level
preventive and predictive maintenance. Moreover,
shutdown maintenance requires more manpower;
hence many of the maintenance jobs may have to
be outsourced. Since the nature of the plant
operation is continuous and the objective is to
keep running, some of the total maintenance work
forces may be working on shift basis (three shifts a
day) to do minor maintenance tasks. However,
major maintenance is carried out during the day.
Hence, mixed type of maintenance organization
structure may be used instead of purely de-
centralized structure. For cost competitors, keep-
ing costs under control is highly critical. Niebel
(1985) views that maintenance costs can be kept
under control by effective planning and control
systems. Hence, they may have highly effective
planning and control systems supported by Com-
puterized Maintenance Management System
(CMMS).
Hypothesis 1. Cost competitors have a mixed type
of maintenance organization structure; high cor-
rective, medium preventive and predictive main-
tenance; high outsourcing; high technical
complexity, training and teamwork and high use
of CMMS.
3.3. Quality competitors
Quality can be a top priority for all the process
choices (job, batch, assembly and ow line). To
produce high-quality products, quality competi-
tors may have to use more of AMT and
automation. AMT and automated equipment can
produce products to more exacting specications
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222 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
when compared to the most skilled human
machinists or operators (Hayes and Jaikumar,
1988). Hence, technical complexity, teamwork and
training requirements will be high. Equipment can
produce defective products prior to, or after
reaching complete failure. Hence, the intensity of
maintenance interventions can be high in quality
production environments so as to ensure superior
product quality and less defective products.
Maintenance policies like preventive and predic-
tive maintenance will help to know the condition
of the equipment before it can produce defective
products. The maintenance decision is usually
based on the use of a threshold which, when
reached, means that maintenance is to be carried
out. This will ensure to maintain high product
quality, especially, if the thresholds are chosen so
that equipment does not deteriorate to the extent
to which defective, or near defective products are
generated (Ben-Daya and Duffuaa, 1995). Hence,
quality competitors do high preventive and pre-
dictive maintenance of equipment. Moreover,
planning and control systems using CMMS also
become crucial in such situations. Quality envir-
onments require high speed of maintenance
response to prevent defective products. The loss
associated with defective products can be very
high, and especially with high-speed automated
lines. Hence, such environments require more of
de-centralized maintenance organization struc-
tures. This will also allow workmen to get familiar
with, and specialized to solve complex equipment
problems. In complex equipment environments the
skills required are not readily obtainable and
interchangeable. They have to be cultivated over
a period of time by getting familiar with the
equipment. Moreover, outsourcing of mainte-
nance in such environments can be only at medium
levels, because with high speed of maintenance
response and complex equipment problems out-
sourcing may be more expensive than in-house
maintenance.
Hypothesis 2. Quality competitors have de-centra-
lized maintenance organization structure; low
corrective, high preventive and predictive main-
tenance; medium outsourcing; high technical
complexity, training and teamwork and high use
of CMMS.
3.4. Flexibility competitors
Flexibility competitors generally have job or
batch shop production environments. They tend to
have more of generalized equipment. However, in
some cases to have more exibility, job and batch
shops may also use AMT-like exible manufactur-
ing systems comprising multiple computer-con-
trolled processing stations (e.g. CNC metal cutting
machines). In such situations the technical com-
plexity may be high. In general, exibility compe-
titors have low technical complexity, training and
teamwork. Since the interdependency of equip-
ment is low, equipment maintenance is not much
critical. Hence, exibility competitors may do
more of corrective or breakdown maintenance
than preventive or predictive maintenance. More-
over, such situations may also not require thor-
ough maintenance planning and control systems.
Most of the maintenance jobs can be easily
outsourced since the skills required for maintain-
ing general-purpose equipment are readily obtain-
able and interchangeable. The relative size of
maintenance crew is also low in job or batch
shops. Hence, maintenance can be managed with a
centralized organization structure.
Hypothesis 3. Flexibility competitors have centra-
lized maintenance organization structure; high
corrective, low preventive and predictive main-
tenance; high outsourcing; low technical complex-
ity, training and teamwork and low use of CMMS.
Even though the three hypotheses are built on
certain theoretical background, in some cases,
some assumptions were also made. Hence, these
hypotheses can be considered as tentative. The
purpose of our study is to mainly build a theory
for further research and testing. As per Flynn et al.
(1990) theory building study is not a hypothesis,
but rather, some assumptions, frameworks, a
perceived problem or perhaps, very tentative
hypothesis.
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S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
4. Data and analysis
4.1. Data
A sample of 140 companies were identied using
the Trends 30 000 (2002) from Belgium and the
remaining 10 companies are from The Nether-
lands, chosen from NVDO (2003) a handbook of
The Netherlands maintenance association. This
comes to a sample of total 150 companies. This
sample was stratied to ensure that all major
industries would be represented. All of the
companies were chosen to have minimum 100
employees. Plants1 with minimum 100 employees
are expected to have a reasonable maintenance
activity. The standard European industrial classi-
cation two-digit code-NACE was used to identify
the type of industry. The industries that were
targeted are: chemical (NACE 24), petroleum
products (NACE 23), machinery and equipment
(NACE 29), basic metals and fabricated metal
products (NACE 27), electrical and optical equip-
ment (NACE 30), paper and paper products
(NACE 21,22), food products (NACE 15) and
nally, transportation equipment (NACE 34). The
distribution of plant sample was proportionate to
the industry population in Belgium as our major
sample comes from Belgian industries.
First, a pilot study was done in four different
types of companies, to ascertain that there is no
ambiguity in understanding the questions by
respondents. Minor modications were made in
the questionnaire according to the feedback
received from this pilot study. Questionnaires were
sent either to maintenance or production mangers
via email. This was done to overcome the common
method variance problem to a certain extent, as
practical considerations required single respon-
dents. According to Phillips (1981) high-ranking
informants tend to be more reliable sources of
information. We also took several other steps so as
to reduce response bias and measurement error
due to mono-informants. The survey instrument
was long and variables in each part were randomly
placed, reducing the chance that respondents could
1
In 2000 out of total 22 301 manufacturing plants in Belgium
only 1043 plants have 4100 jobs (Bertinelli and Decrop, 2002).
223
Table 3
The prole of respondents representation
Industry Respondents (%)
Transportation equipment 45
Chemical industry 23
Food industry 04
Basic and fabricated metal products 16
Paper and paper products 04
Machinery and equipment 03
Electrical and optical equipment 05
cross check for their own internal consistency. A
total of 10 companies were deleted from the
sample, as they did not have manufacturing units
in Belgium. In total, 50 lled in questionnaires
were received out of which 4 questionnaires were
eliminated for reporting fewer than 100 employees
and incomplete answers. This brings us to a total
of 46 usable responses, representing a response
rate of 32.85%. A review of respondents showed a
proportionate distribution (except food industry)
to the top 10 manufacturing industries in Belgium
(Bertinelli and Decrop, 2002). The prole of the
respondents representation is shown in Table 3.
Based on the prole of respondents, it can be
seen that most of them belong to a process choice
of either assembly line or continuous ow line.
These process choice category companies are
bound to have signicant maintenance activity.
4.2. Analysis
4.2.1. Business strategy elements, or competitive
priorities
In the survey, the questionnaire was split into
two major parts. The rst part consisted of
manufacturing variables measuring the competi-
tive priorities, namely, cost, quality, exibility, and
deliverability. The second part consisted of vari-
ables, measuring various elements of maintenance
strategy. The Cronbachs alpha for various vari-
ables measuring the competitive priorities reached
more than 0.70 indicating that the reliability of the
variables is sufcient. To further assess the
reliability of these variables and to identify the
latent factors, conrmatory factor analysis apply-
ing maximum likelihood estimation procedure was
 ARTICLE IN PRESS
224 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
carried out. Conrmatory factor analysis was used
since the structure of the factor model is based on
theory in manufacturing strategy literature. Two
tests, namely, KaiserMeyerOlkin (KMO) test
measuring sampling adequacy and Bartletts test
of sphericity were done. The KMOs measure
reached a middling level of 0.704, indicating that
the data are sufcient for factor analysis. Accord-
ing to Sharma (1996) a cutoff point of 0.60 is
tolerable. Bartletts test is a statistical test to assess
whether or not the correlation matrix is appro-
priate for factoring. It also examines the extent to
which the correlation matrix departs from ortho-
gonality. For our data set, the Bartletts test
statistic is signicant (po0:005), implying that
the correlation matrix is not orthogonal i.e. the
variables are correlated among them and is there-
fore appropriate for factoring. The variables were
then reduced into 4 factors. Variables are mea-
sured on a scale from 1 to 5. Higher value means
very high importance or achievement. Since a
correlation is expected between the latent factors,
an oblique (promax) rotation was done to the four
factors. Table 4 shows the factor loadings after a
promax rotation. Five variables dealing with
quality of the product have high loadings on
factor 1; hence we can label this factor as Quality.
The rst two variables, namely, consistent product
quality and superior product performance are
measured by the level of importance given to these
variables on a scale of 1 to 5. Quality dimensions
are measured by the level of importance given to
sub-variables like conrming to specications,
reliability and customer quality perceptions. Qual-
ity improvement programs are measured through
the degree of use of sub-variables like TQM,
continuous improvement, quality circles etc.
Rework rate was measured directly by asking
the re-work rate in percentage. Four variables
have high loading on factor 2, which we can label
as Deliverability. The rst two variables were
measured by the level of importance given to them.
Distribution network was measured by asking how
they react to customer needs. The options given
were wide network of distribution depots, extra-
net/EDI usage, wide-transportation network and
distribution software usage. Delivery rate was
measured by their percentage rate of deliveries
on time. Two variables, namely, the importance
given to introducing new products and the rate at
which new products are introduced (like every 1 yr,
2 yr, etc.) have high loadings on factor 3, which we
can label as Companys innovativeness. Based on
one variable i.e. customized product with a
positive loading, the fourth factor can be taken
as Flexibility. The variable was measured by the
percentage of customized product manufacture.
Based on two variables with a negative sign,
namely, low selling price and standard products
have high loading on factor 4; therefore, it can also
be labeled as Cost factor. These variables were
measured by asking the level of importance given
to low selling price and the percentage of standard
product manufacture.
It is presumed that quality and innovativeness
go together. Cost and deliverability can be the
combined priority for cost competitors (Hax and
Majluf, 1991). In a total of 46 cases, there were 14
with cost priority, 21 with quality priority and 11
with exibility priority. The competitive priorities,
which have been identied, closely correspond to
those discussed in the literature (Hossein et al.,
1996; Gerwin, 1993; Noble, 1997; Gif et al., 1990;
Flynn et al., 1999). In the next part of the analysis,,
the relationship between the competitive priorities
identied above along with those of maintenance
strategy elements is presented (Table 4).
4.2.2. Relationship with maintenance strategy
variables
Three competitive priorities were used, namely,
cost, quality and exibility to compare with
following maintenance variables:
1. Maintenance organization structure.
2. Outsourcing of maintenance activities.
3. Maintenance policies (corrective or breakdown,
preventive and predictive maintenance).
4. Human resource policies like training and
teamwork.
5. Maintenance planning and control systems
associated with CMMS use.
In addition to the above, the effect of AMT and
automation of equipment is studied through
technical complexity of maintenance.
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S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229 225

Table 4
The factor loadings after promax rotation

Factor

1 2 3 4

Low selling price
0.347 0.098 0.012
0.639

Consistent product quality 0.924
0.027
0.080 0.043
Superior product performance 0.919 0.090
0.040 0.201
Consistent deliveries
0.097 0.942
4.632E-05 0.000
Fast deliveries
0.045 0.912
0.056 0.096
Introduce new products 0.072 0.010 0.968
0.094
Customized products
0.203 0.041 0.236 0.769
Standard products
0.047
0.007 0.112
0.962
Distribution network 0.085 0.857 0.082
0.082
Delivery rate 0.084 0.880 0.050
0.064
Introduce new product rate 0.063 0.116 0.860 0.022
Quality dimensions 0.900
0.101 0.209
0.162
Quality improvement programs 0.892
0.098 0.066
0.091
Product with multi features
0.163
0.128 0.543 0.337
Rework rate 0.779 0.183
0.087 0.107

Bold numbers indicate high loadings under each factor.

The variable organization structure was mea-
sured by asking the type of maintenance organiza-
tion in use. The choices were central, de-central
and mixed type of maintenance organization.
Outsourcing of maintenance was measured di-
rectly by the percentage of maintenance activities,
which are outsourced. Also, maintenance policies
like corrective, preventive and predictive were
measured directly by asking the percentage of
maintenance carried out in those categories. The
measurement of technical complexity was made on
two dimensions, namely, faultnding dimension
and level of failure pattern of equipment. Fault
nding dimension was measured by the time spent
(minimum time 1, maximum time 5) on four
sub-variables, namely, fault detection, information
collection, eliminating prospective faults before
approaching at component level and nally, the
time spent on diagnosis. The time spent on
faultnding dimension was measured both with
electricians and mechanics separately. The level of
failure pattern of equipment was measured with
three types of problems, namely, expected or
similar faults, intermittent faults and novel or
unfamiliar faults (1 very low and 5 very high).
Training was measured directly by the number of
hours that maintenance craftsmen, supervisors,
engineers; production operators are trained per
year. Team work was measured by the level of
production operator involvement on a scale 15
(1 very low and 5 very high) in maintenance
tasks such as equipment cleaning, lubrication,
minor maintenance tasks, helping maintenance
workers during breakdown, shutdown, etc. Com-
puterized maintenance management usage was
measured at rare use to frequent use on a scale
of 15 with the following 8 sub-variables:
1. Work order planning and scheduling.
2. Preventive and predictive maintenance plan-
ning.
3. Equipment repair history.
4. Spare parts inventory.
5. Work force planning for maintenance.
6. Spare parts purchase.
7. Maintenance cost control and budget.
8. Making detailed maintenance reports.
A binomial test with a correction of the p-value
using the Bonferronis principle was performed. A
pair-wise comparison is made between the compe-
titive priorities. The variable organization struc-
ture has three levels, namely, central, de-central
and mixed. Corrective and preventive maintenance
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226 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229

were re-coded at low (o30%), medium (3045%)
and high (445%). Predictive maintenance and
outsourcing were re-coded at No (No outsourcing/
No predictive maintenance), low (o20%) and
high (420%). Training was re-coded at low
(o100 h/yr), medium (100150 h) and high
(4150 h). The remaining variables were re-coded
at low (a score of 12), medium (a score of 3) and
high (a score of 45), respectively. The results are
displayed in Table 5. The table shows the
frequency count in terms of number of respon-
dents at each level of the maintenance variables.

Table 5
The comparison between maintenance variables and competitive priorities

Maintenance variables Cost Quality Flexibility

Organization structure
Central 4 9 7
De-central 2 9* 1 * Signicant at po0:05
Mixed 8 3 3
Corrective maintenance
Low 4 5 0
Medium 3 9* 3 * Signicant at po0:05
High 7 7 8
Preventive maintenance
Low 5 5 3
Medium 5 5 8
High 4 11* 0 * Signicant at po0:05

Predictive maintenance
No 5 5 3
Low 5 5 8
High 4 11* 0 * Signicant at po0:05
Outsourcing
No 5 6 4
Low 2 4 5 * Signicant at po0:05 with exibility
High 7] 12* 2 ] Signicant at po0:05 with exibility
Technical complexity
Low 3 5 4
Medium 4 8 4
High 7 8 3

Training
Low 6 8 6
Medium 1 4 1
High 7 9 4
Teamwork
Low 4 7 4
Medium 10] 10* 3 * Signicant at po0:05 with exibility
High 0 4 4 ] Signicant at po0:05 with exibility
CMMS use
Low 5 6 4
Medium 2 5 5
High 7 10* 2 * Signicant at po0:05 with exibility
]
Note: * Done at one-sided pair-wise comparisons of competitive priorities.
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S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
5. Discussion
The purpose of this study was to see whether
there is a relationship between business and
maintenance strategies. In comparison with the
elements identied in Table 2, only some elements
were used to check if there is really a trend. It has
been found that cost competitors tend to do high
corrective, medium-level preventive and predictive
maintenance. They also have high technical com-
plexity and training, but teamwork is only at
medium level. Also, they tend to do high out-
sourcing. Even though they had high count on
mixed type of organization in comparison to
others, it was not signicant. A large-scale survey
can show us the clear picture. Also, organization
structure may depend more upon the size of
maintenance employees, geographical size of the
company, company policy, etc. However, except
outsourcing and teamwork none of them are
signicant enough compared to other competitors.
Hence, Hypothesis 1 is only partially supported. It
has been found that quality competitors tend to
have more de-centralized organization structure
compared with cost and exibility players. They
tend to do less corrective maintenance and more
preventive and predictive maintenance in compar-
ison with others. They also tend to do high
outsourcing and use more CMMS in comparison
to only exibility players. Teamwork is found to
be only at medium level. Hence, Hypothesis 2 is
mostly supported except technical complexity,
training and teamwork. Flexibility competitors
tend to have mostly centralized organization
structure. They tend to do high corrective,
medium-level preventive and low predictive main-
Table 6
Distribution of AMT, automation use, maintenance personnel, expenses, and budget (average gures)
Competitive AMT Automation Personnel
priority usage* usage*
Mgmt/
Supervision
Cost 3 3.6 8 28
Quality 3.7 4.1 15
Flexibility 2.6 3 7
* On a scale of 15, 1 very low and 5 very high.
227
tenance. In case of other elements, the results are
somewhat inconclusive. Hence, Hypothesis 3 is not
supported. The limited number of cases with
exibility as priority in comparison to others
might have had an inuence on the result.
The results agree with some of our hypotheses.
For technical complexity and training there is no
signicant variation between each of the players.
This is also true with the training variable. This
can be attributed to the relationship between
technical complexity and training. More technical
complexity requires more training of supervisors
and maintenance crew. This may indicate that
AMT and automation is used in all industry
sectors to some extent. Table 6 shows that quality
competitors have more AMT and automation
usage when compared to others. It also has more
maintenance personnel and expenses in compar-
ison to others.
In particular, there is a difference in the
maintenance organization structure and human
resource recruitment policies. With more AMT
and automation usage, the level of professional
staff (management/supervision) requirement along
with technicians is high. This naturally increases
the direct and indirect labor cost. Thus, the nature
of maintenance is becoming increasing costly and
complex with more AMT and automation. In
general, there is a difference in the way of doing
maintenance between the three competitors. This
can be due to two reasons. First, it can be due to
different business objectives requiring different
levels of emphasis on maintenance. Second, it
can be due to the developments that have taken
place in terms of technology, concepts and
philosophies both within manufacturing and
Expenses (% of Budget in
manufacturing costs) million euros
Crafts,
technicians, etc.
8 19.7
52 16 27.8
30 13 4
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228 S.K. Pinjala et al. / Int. J. Production Economics 104 (2006) 214229
maintenance. This study indicates that there is
certainly some relationship between the business
and maintenance strategies worth considering. It
also gives some theory behind the relationship for
further exploration.
5.1. Conclusions
The results indicate that there is a relationship
between business and maintenance strategies. The
results show some support to some of the
hypotheses, which have been formulated in Section
3 as hypothesized quality competitors have more
pro-active maintenance policies, better planning
and control systems when compared to others.
They seem to manage maintenance much more
effectively when compared to others. This is also
agrees with their business strategy, since superior
product quality can only be maintained with
effective and efcient equipment. TPM concept is
also based on this link between maintenance and
quality. Though cost competitors had high count
in some of the elements, they were not signicant.
This can become clear with a large-scale survey.
Interestingly, in most of the companies teamwork
is still only at a medium level. This can be due to
many reasons like workers attitude, training level
of operators and management philosophy. To
implement people-oriented maintenance concepts
like TPM rst improving teamwork is an impor-
tant factor. There is also a difference in the
distribution of AMT usage, automation, main-
tenance personnel (management/supervision and
technicians), expenses and budget gures. Quality
competitors have more maintenance personnel and
spend more on budget, followed by cost and
exibility competitors. Technical complexity of the
equipment does not show much variation between
different competitors. However, in a majority of
the quality competitors it is from medium to high
level. This can be due to more AMT usage and
automation in quality competitors when compared
to others. This study has been limited to only a
small population of Belgium industries; a study on
a large scale can provide us much more informa-
tion on certain issues. Some of these issues can be
training, technical complexity, teamwork, etc.
Moreover, the results of this study give us some
points for further research. The link between
quality and maintenance can be much explored
in the areas of maintenance expenditures, person-
nel, measuring and quantifying maintenance out-
put on quality. A limited study within an industry
(say an automobile sector or chemical processing
industries) producing similar products but with
differing competitive priorities may also provide us
with some more clues. In general, these types of
studies will help us to understand maintenance in
different contexts. It can therefore be helpful for
managers to devise appropriate maintenance
strategies in different contexts.
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