Content uploaded by Shaukat Ali Brah
Author content
All content in this area was uploaded by Shaukat Ali Brah on Dec 26, 2015
Content may be subject to copyright.
How does TPM affect the performance of companies?
ABSTRACT
In this paper, we focus on gaining insights into the impact of Total Productive
Maintenance (TPM) on the performance of the organization. Our study finds support for
positive correlation between TPM and business performance. We find positive correlation
between TPM and business performance shown by all the six general constructs of
corporate planning, top management leadership, human resource focus, process focus, TQM
focus and information system focus and the three specific constructs of TPM strategies,
TPM teams and TPM process focus. Clearly, this indicates the need for TPM to be an
integrated effort of the entire organization. Also, experienced and large TPM firms fare
better in terms of business performance, while we find no differences in the performance of
manufacturing and services.
Keywords: TPM, total productive maintenance, maintenance and reliability, business
performance, productivity.
Introduction
Total Productive Maintenance (TPM) represents the next step in improving upon the
Total Quality Management (TQM) concept. It involves the whole organization and when
implemented effectively, benefits all sections of the business through improved efficiency
and better overall performance. TPM is emerging to become a strategic necessity tool for
companies and its importance is no longer restricted to just the manufacturing sector. The
scope of TPM, besides manufacturing, applies to other areas, such as, the research and
development and logistics. While TPM was the focus of automobile industry, it is now
spreading towards other industries such as paper, food, and oil refinery industries as well as
the service industries.
TPM is gaining recognition gradually and is spreading around the world. The
recognition given to the TPM Excellence Awards, offered by the Japan Institute of Plant
Maintenance (JIPM), substantiates its importance. JIPM awards TPM Excellence Awards to
plants all over the world for successful TPM implementation. The assessment of
applications is on the basis of improvements achieved through proper equipment
maintenance, increased productivity, elimination of accidents, and creation of favorable
work conditions.
In this paper, we examine the relationship between TPM and business performance
and show the extent of differences between firms implementing TPM and those without
TPM. The study seek to gain insights into the success factors of a TPM program and
examine the factors of successful TPM implementation to arrive at a better understanding of
the implementation process.
How does TPM affect the performance of companies?
2
Background
Organizations are continuously looking for strategies to improve operations and gain
competitive advantage. Tracking the performance of maintenance is a key management
issue for many organizations. Wilson et al (2000) argue that a properly executed
maintenance program is a strategic tool that could ensure continued generation of benefits.
TPM and similar strategies promise to improve performance though they require increased
commitment to training, resources and integration (Swanson, 2001).
TPM is a proactive and cost-effective approach to equipment maintenance. It is an
integrated process requiring the support of all levels of the organization. TPM maximize
equipment effectiveness by establishing a comprehensive productive-maintenance system
covering the entire life of the equipment and spanning all equipment-related fields. TPM
improves business performance in many aspects such as operations performance, safety and
cleanliness, employee morale and customer satisfaction. All these aspects usually lead to a
significant improvement in the company’s bottom line. Fredendall et al (1997) conclude
that maintenance is critical to a firm’s ability to successfully compete in its market on the
basis of quality, delivery and cost. The argument is that investment in maintenance is not an
expense, but rather an investment in improved performance. The performance enhancement
brought along by TPM includes improvement in quality, safety, dependability, flexibility
and lead-time.
There is general consensus in many areas of TPM, including aspects of productive
maintenance, aims of TPM, and the ‘six big losses’ of TPM. Hipkin and Cock (1999)
propose mastering preventive maintenance, breakdown maintenance, corrective
maintenance and maintenance prevention in order to achieve productive maintenance. There
is a progressive stage of maintenance sophistication in the order of reactive maintenance,
scheduled maintenance and preventive maintenance before reaching TPM. Wilson et al
(2000) contend that achieving the main objectives of TPM reduces the “six big losses”. The
six losses draining productivity consist of breakdowns, setup and adjustment loss, idling and
minor stoppages, reduced speed, defects and rework, and startup and yield loss. The
reduction of these losses increases the overall equipment efficiency.
There is a critical role of management leadership in order to convince employees of
the importance of TPM. Also, strategic planning of TPM development is necessary to
ensure future success. McKone et al (1999) explore the contextual difference of plants and
compare managerial factors such as JIT, TQM and employee involvement against
environmental and organizational factors such as country, industry and company
characteristics. They find that managerial factors play a more important role in TPM
implementation and companies with strong process focus (efficient teams, high operator
involvement and good information tracking systems) are in a better position to implement
TPM.
TPM has a direct relationship with business excellence strategies such as Kaizen,
JIT and TQM. Kaizen, meaning improvement, has a direct link to the TPM strategy of
focused improvement, and therefore complement each other. Similarly, TPM provides a
foundation for JIT to proceed. Better maintenance and higher productivity provides
How does TPM affect the performance of companies?
3
components for JIT manufacturing at a higher quality and with better assurance of
availability of parts.
Morale and performance of employees is another performance aspect of TPM.
Conceivably, morale of both group of employees turn out to be higher as operators get a
sense of ownership of the equipment and the maintenance crew avoids calls for simple
maintenance jobs. Hence, with operators and maintenance crew working as a team, the
result is fewer breakdowns and higher productivity.
Nakajima (1988) observes it takes five years to feel full benefit of TPM. He stresses
TPM would run smoothly only after the pilot phase, promotion and consolidation phase and
maturity phase of implementation. Nakajima thinks the TPM implementation should be in
three main stages, namely preparation, implementation and stabilization. The preparation
phase includes getting top management support and establishing key TPM policies. The
implementation phase includes activities such as developing an autonomous program and
conducting training for employees. The stabilization phase perfects the activities in the
TPM implementation phase and works toward getting the productive maintenance prize
awarded by JIPM. Furthermore, he highlights TPM benefits business performance in all
aspects, justifying the long waiting period.
The critical success factors of TPM implementation include aspects such as top
management support, TPM teams, continuous improvement and education of employees,
though with different emphases in each case. A TPM manager can act as a product
champion who helps educate and push the program to all levels of management. Also, prior
management level training can help generate sufficient support for the TPM implementation
and ensures enough knowledge for active involvement of the management in TPM
implementation, which in turn serves to increase the employees’ commitment.
A TPM Framework
The internal and external environments affect the success or failure of the TPM
endeavor of an organization. External factors are beyond the control of an organization,
while some of the internal factors are critical to the success of TPM. The external
environment consists of mainly market, legal, technological, socio-cultural and international
factors. Market context includes factors such as market competitiveness and buyer power.
High market competitiveness makes TPM a requirement while strong buyer power pushes
manufacturing to produce better quality goods by focusing on TPM and TQM. Laws make
certain maintenance policies regulatory while socio-cultural conditions like better-educated
workforce means faster adoption of new TPM concept. Better-educated consumers also
demand better quality product. International TPM awards and standards provide target
standards for companies in order to stay in competition for international projects.
Although many of these external factors affect various aspects of TPM, in many
cases, they are beyond the control of management. The focus of this study is on the internal
environment affecting TPM. We propose that achieving the objectives of TPM leads to
better business performance. Though implementing TPM differs from a company-to-
company, there is general consensus of the critical success factors of TPM. Successful
How does TPM affect the performance of companies?
4
TPM requires top management commitment, good management of teams and policies and a
holistic approach towards TPM. It entails commitment from top managers to floor
operators to the ideas of continuous improvement and autonomous maintenance. McKone et
al (1999) propose a framework to understand how TPM depend on managerial factors such
as JIT, TQM and employee involvement and uncontrollable external factors. Tsang and
Chan (2000) add that corporate planning and top management leadership are important too.
We adapted the following general constructs after a careful review of related
literature.
Corporate Strategic Planning: Strategic planning and implementation of plans,
coupled with emphasis on the requirement of buyers, suppliers and other
stakeholders are critical to successful TPM implementation.
Top Management Leadership: Leadership and top management involvement in TPM
projects are important to achieve holistic adoption of TPM plans to achieve
maximum impact. Rewards and appraisals by management act as positive
reinforcement.
Contextual Focus: Organizational factors such as equipment age and company size
affect implementation of TPM. Measurements include views of whether TPM is
more important relative to other policies and whether new equipment equals easier
TPM implementation.
Human Resource Focus: This focuses on how the company aligns its human
resource practices with its strategic directions. Measurements include employee
involvement, empowerment and training.
Process Focus: The process focus investigates how the company operates and how
it carries out its autonomous and planned maintenance. Measurements include safety
standards, statistical control and autonomous maintenance plans.
TQM Focus: This analyzes the impact of how the focus on TPM predecessor affects
TPM implementation. Measurements include consideration for customer focus,
reward for quality work, and equal sharing of resources among these two business
policies.
Information System Focus: This construct handles the issue of the use of information
in the company to analyze performance of employee, machines and management in
the TPM plan.
The specific constructs adapted from review of literature are TPM strategies, TPM
teams and TPM process focus. Together, they provide an integrated implementation
approach for TPM. A brief description of the three TPM specific constructs follows.
TPM Strategies: This construct measures the use of a TPM plan to achieve success
implementation of TPM. Measurement includes plan for equipment maintenance,
technical training plan, and plans to integrate safety and environment issues.
TPM Teams: This construct measures the direction and usage of TPM teams in the
firm. Measurement includes leadership quality and communications standards.
How does TPM affect the performance of companies?
5
TPM Process Focus: This construct focuses directly on the specific TPM processes
used to implement TPM. Measurements include company wide participation in
TPM, schedule planned maintenance and regular checks on quality of products.
Hypothesis Formulation
The primary objective of the study is to establish the effects of TPM program
implementation in Singapore. As literature review indicates, it is reasonable to assume a
positive impact of TPM on business performance. We define business performance as
combined effect of financial, managerial and operational performance of an organization.
Separating the financial and operational performance of a company can have negative
influence leading to, for example managers and workforce having different focus of
performance, producing divergent goals, and eventually leading to conflicts. Hence, it is
appropriate to evaluate managerial, operational and financial aspects of a firm to gauge its
performance. Therefore, the primary hypothesis of this research is as follows:
H1: There is a significant positive relationship between TPM and business
performance of an organization.
Our secondary objective is to examine the relationship between the internal general
organizational constructs, measured by corporate planning, top management leadership,
human resource focus, process focus, TQM, and information system focus, with TPM. We
expect each general organizational construct affects TPM and each one of them contribute
to a successful TPM program. Hence, the following hypothesis under this objective:
H2: There is a significant positive correlation between general organizational
constructs and business performance of an organization.
Furthermore, we test the three TPM specific organizational constructs, measured by
TPM strategies, TPM teams and TPM process, to see if these lead to better business
performance. Consequently, the hypothesis is as follows:
H3: There is a positive correlation between TPM specific organizational constructs
and business performance of an organization.
Next, we set out to test any significant differences between firms that adopt TPM
and those that do not. Hence, the following hypothesis:
H4: There is a significant difference between TPM and Non-TPM firms in terms of
business performance.
It is rational to expect firms implementing TPM longer implement TPM better and
achieve better business performance. This may be due to the infrastructure, more
experienced workers, better methods acquired over the years or the learning curve effect.
This leads to the following hypothesis:
H5: There is a significant difference between experienced and inexperienced TPM
firms in terms of business performance.
How does TPM affect the performance of companies?
6
Lastly, we test for a significant difference in business performance of small and
large companies adapting TPM. Hence, we propose the following hypothesis:
H6: There is a significant difference between small and large firms in terms of
business performance.
Questionnaire
The questionnaire consists of four sections, each collecting a specific type of
information. Section A comprises of 33 questions about general aspects of the company,
which affect maintenance programs and subsequently business performance. These factors
help to assess the relationship between the general aspects and business performance.
Section B gathers information on three specific aspects of the implementation phase of
TPM. These factors assess the impact of each construct to implementation of TPM and
subsequently, business performance.
Section C aims at measuring the business performance of the respondent’s company.
This information will demonstrate the difference in performance of various groups of
companies. We categorize business performance into financial, managerial, and operational
aspects of the organization. Financial performance deals with major corporate goals such as
profitability, market share, sales turnover and return of capital. Managerial performance
deals with employee and customer satisfaction, flow of materials, training of workforce,
cleanliness, safety and other managerial aspects. Operational performance deals with the
day-to-day running of the organization in terms of quality, cost, delivery, productivity, and
safety measures.
Since the pool of companies in the survey spanned across many industries, we
choose to use subjective performance measures obtained from company executives rather
than publicly available financial statements. We believe this eliminates the effect of any
significant differences in capital structure, depreciation accounting conventions etc.,
between companies. Further, many privately held firms in the pool may lack such public
information, or may be unwilling to provide such confidential financial information as a
matter of policy.
Finally, Section D obtains a brief profile of the organization. The information assists
in testing contextual differences between the companies.
For consistency and ease of completion, we standardize most of the scales in this
study to five-point Likert scales, with 1=strongly agree, 3= Neutral, and 5=strongly
disagree. We reverse score some of the measures to reduce possible bias in responses. The
remaining questions are in the form of multiple-choices.
Survey Procedure
Considering the manufacturing origin of TPM and its relative infancy state in
Singapore, we took a skewed sample of about 80% manufacturing firms and 20% service
firms through random sampling. The sampling frame for the research, based upon mail and
online survey, comes from few directories of companies in Singapore. Mail survey sample
How does TPM affect the performance of companies?
7
list comes from certified companies list available on the web sites of Productivity and
Standards Board (PSB) and Singapore Confederation of Industries (SCI). The companies on
the PSB web site are either ISO certified, or certified for Singapore Quality Award, and thus
most likely candidate for TPM implementation. The SCI web site companies are
manufacturing firms, and were expected to be more familiar with TPM. Online survey
sample comes from the list of companies in the Singapore Logistics Directory 98 published
by Press Communication in 1998 and the SCI web site.
Operations and quality managers are the target respondents as some of the questions
required knowledge of the TPM practices and TPM performance of the company. In cases
where there are no such positions, the survey was referred to higher authorities such as the
CEO or whoever with access to the relevant information. Lower level employees might not
have the relevant information or background knowledge to answer the survey accurately.
Hence, the management level is the most appropriate to answer the questionnaire.
After pre-testing, we mailed the questionnaire to a randomly selected sample of 600
out of 2400 companies. Also, we sent electronic mails to a random sample of 800
companies drawn from relevant sampling frame of 3000 companies. Later, we made follow-
up telephone calls to companies not responding by the due date. Ten companies declined
participation citing busy schedule and confidentiality of requested data as the reasons.
Analysis and Findings
Table 1 presents demographic profile of respondents. Of the 151 responses, 3 are
unusable because of incomplete data. Of these, 112 usable responses came through mail,
making up a response rate of 18.7%. The remaining 36 usable responses came from the
Internet survey making up a low response rate of 4.5%. A sizeable, 67 of these 148 firms
(45.3%), claim to use TPM in their operations. This speaks well of TPM acceptance in
Singapore. However, 59.7% of these TPM firms adopted TPM for less than 4 years,
indicating relative early stages of TPM in Singapore. An encouraging 21 of 51 (41%),
respondents of service firms claim to use TPM. Out of 126 respondents of ISO certified
companies, 60 uses TPM, compared to 7 out of 22 for non-ISO certified companies.
Respondents from 44 large firms (100 or more employees) and 23 small firms claim to
practice TPM.
Table 1 about here
Verification of scales
First, we use Cronbach’s Alpha to assess the reliability of scales before testing
hypotheses. Reliability is the degree to which measures are free from errors and thus yield
consistent results. The recommended minimum acceptability value for Cronbach’s
standardized is 0.70, although some studies use as low as 0.60. In recent times, many
survey researches have successfully used this methodology.
How does TPM affect the performance of companies?
8
Next, we perform factor analysis to determine the validity of the constructs. This
attests that items meant to measure a given factor actually load together. We extract the
factors using principal component factor analysis with varimax rotation. The rotation
achieves a simple and easy to interpret structure by transforming the factor matrix such that
each variable loads highly on only one factor and low on the others. Nunnally (1978)
recommends a factor loading of at least 0.30 as a guideline to determine whether a variable
is part of a factor.
Thereafter, we use Pearson’s Correlation to measure the correlation. This
establishes correlation between TPM and business performance, and tests specific
correlation between each individual TPM construct and business performance. Also, we use
Independent sample t-tests to test any significant difference in business performance
between TPM and non-TPM firms, experienced and inexperienced firms, large and small
firms, and manufacturing and service firms.
General TPM constructs
In order to understand the underlying structure of the general TPM constructs, we
forced the thirty-three items into six-factor structure via the varimax rotation. Table 2 sums
up the results of the general TPM constructs of six main factors after removing two
variables with factor loadings of less than 0.3. Two variables do not load into the original
constructs. We expected, “Resources are made available for employee training” to measure
human resource focus, but it loaded highly on the construct of corporate planning instead.
Similarly, the expectation for “Our Company draws up cleaning and lubrication standards”
was to measure process focus, but it loaded highly on top management leadership.
Table 2 about here
Specific TPM Construct
Similar to the general TPM constructs, we forced the 22 specific TPM constructs
into a three-factor structure. Table 3 shows the results of the specific TPM constructs after
removing one of the items “TPM is essentially viewed as a part of TQM by our company”
due to its low loading. A very high value of above 0.97 for all of the three factors
indicates high internal consistency.
Table 3 about here
Performance Measurements Constructs
The 30 items are put into a three-factor structure after removing two variables,
“There is a lower employee turnover rate in our company” and “Running the machine faster
leads to quality defects,” due to reliability requirements. Table 4 summarizes the results of
the three performance factors.
How does TPM affect the performance of companies?
9
Table 4 about here
TPM and Business Performance
The main hypothesis in this study is to find out TPM implementation correlate to
better business performance measured by financial, managerial and operational
management aspects. Hypothesis H1 proposes business performance, measured by
financial, managerial and operational performance, to have a significant positive correlation
with TPM. We test the hypothesis for overall business performance, as well as individual
financial, managerial and operational performance for a significant positive relationship
with TPM using the Pearson’s correlation. Table 5 summarizes the results.
Table 5 about here
Here, TPM-G consists of general TPM aspects of the company and TPM-S consists
of the specific aspects of TPM implementation. There is a significant positive correlation of
TPM-G with each of the measurement of business performance, with marginally higher
value for managerial performance. All of the correlations TPM-S and business performance
and its components are higher as compared to corresponding values for TPM-G measures.
Perhaps, TPM-S aspects more directly affect the TPM implementation and hence, have a
stronger influence. The combination of TPM-G and TPM-S shows a significant positive
correlation on business performance and its three components. As before, the results show
managerial business performance to have a higher positive correlation with TPM.
Therefore, due to the support shown in each performance constructs, we conclude that TPM
has a positive correlation with business performance. The findings are consistent with the
results of McKone et al (2001) of TPM having a positive impact on manufacturing firms’
performance.
General Success Factor of TPM
Next, we test the relationship between TPM general constructs and performance,
measured by financial, managerial and operational management aspects. Table 6 presents
the summary of the correlation results. All general success factors correlate significantly to
business performance at 99% confidence level, except top management leadership, which is
significant at 95% level. Closer examination of Table 6 reveals top management leadership
correlates significantly to only managerial performance. Also, information system focus
does not correlate significantly with financial performance.
Table 6 about here
There are no negative correlations implying all six constructs are crucial in a fully
integrated approach to implement TPM. Brah and Lim (2006) find similar trends in related
field of TQM, reporting positive correlation between various TQM constructs and financial
How does TPM affect the performance of companies?
10
and operational performance. In addition, TQM studies find management commitment and
human resource focus together with quality rewards to be important to integrated programs.
Specific Success Factors of TPM
Table 7 shows the results of TPM specific constructs (strategies, teams and process
focus) and performance, measured by financial, managerial and operational management
aspects. As expected, the TPM specific implementation factors have a positive correlation
with business performance. Also, they significantly correlate to the three measures of
business performance with the exception of TPM teams to financial performance. Perhaps,
TPM teams’ activities concentrate more on operational aspects such as productivity and
employee satisfaction; hence it correlates only to managerial and operational performance.
Table 7 about here
This is similar to the findings of Maggard and Rhyne (1992), who find through their
investigation of TPM implementation in the Tennessee Eastman Company that good TPM
teams and TPM process focus improves business performance. Similarly, Tsang and Chan
(2000), in their case study of a China machining factory’s use of a TPM master plan, show
that business performance improves with proper TPM strategies.
Business Performance Between TPM and non-TPM Firms
The preceding tests show significant positive correlations between TPM and
business performance. Therefore, we expect TPM firms to fare better, in terms of business
performance, than non-TPM firms. Hypothesis H4 tests for significant differences between
these two types of firms. Table 8 provides the summary of the results. The p-values for all
performance indicators are all below the 0.01 significance level. Thus significant
differences in the business performance measures indicate a significant positive impact of
TPM.
Table 8 about here
Experienced versus Inexperienced Firms
Next, we examine if experienced TPM firms perform better than inexperienced TPM
firms. Nakajima (1988) argues for five years of TPM to fully benefit from it. Since, TPM is
relatively new to Singapore and technology has made it easier to implement TPM strategies,
we use 4 years time frame to separate experienced and inexperienced firms. This also helps
to get a better distribution of firms on both sides of the divide. Table 9 provides the
summary of the differences.
Table 9 about here
How does TPM affect the performance of companies?
11
There are significant differences in managerial and overall business performance
between experienced firm and inexperienced firms at 99% confidence interval. While, the
differences between operational performance of experienced and inexperienced TPM firms
is significant at a 95% confidence interval. The differences between financial performance
of experienced and inexperienced TPM firms are not as obvious as indicated by a p-value of
0.156. Perhaps, financial returns take a longer time to detect for any significant differences.
This indicates, longer the period of implementation, better the firm would be in terms of
business performance. Possibly, as employees practice TPM they become efficient due to
the learning curve effect, and with TPM related infrastructures in place, the returns from
each investment are higher due to economies of scope and scale.
Large and Small Firms
H6 proposes significant differences in business performance between large (100 or
more employees) and small firms. This study finds significant differences in overall
business and financial performance at 99% confidence interval. However, the differences in
managerial and operational performance are only significant at the 90% confidence level,
given the p-value for both is close to 0.06. This indicates performance differs significantly
between large and small TPM firms, where large firms tend to better in overall business
performance and its three components. McKone et al (1999) also found partial support that
company size significantly affect TPM implementation. Incidentally, the study does not find
any significant differences between manufacturing and service firms, and between foreign
and local firms, in terms of business performance or any of its three components.
Table 10 about here
Limitations of the Study
One of the limitations of this study is the relatively small sample size. Due to the
lack of adoption of TPM in Singapore, only 67 respondents indicate the use of TPM in their
company. We recommend caution in the interpretation of factor analysis results. More so in
the factor analysis of the thirty-three items making the TPM general management
constructs. Thus, use prudence in generalizing the analysis on the associated hypothesis
tests. In addition, the sample is taken from both the service and manufacturing sectors with
a wide variety of industries. Different industries have their specific environment effects
such as entry barriers or industry competitiveness. Naturally, a larger number of usable
surveys are likely to improve the quality of the data and results.
Another limitation to this study is self-reporting bias. This is a common problem
when one collects data from managers about their organizations, particularly about the
managerial issues they are closely associated with. Perhaps, multiple responses from
different individuals in each company can reduce this bias. However, it is difficult to
identify respondents with appropriate functional background with knowledge about both the
TPM practices and the business performance of the company.
How does TPM affect the performance of companies?
12
Finally, it is important to note that the significant correlation in hypotheses only
shows an association and does not imply causation. TPM practices may cause good
performance or good performance may lead to TPM practices or TPM and good
performance both may be caused by a third factor not included here.
Summary
The study finds significant support for positive correlation between TPM and
business performance. It finds business performance of TPM firms to be significantly
superior to the non-TPM firms. The same is true for the experienced firms in TPM
implementation when compared with inexperienced firms in terms of business performance.
The study reveals TPM implementation requires an integrated effort of the whole company.
The positive correlation of most of the general and specific TPM construct with the
financial, managerial, operational, and overall business performance allude to such
relationship. Perhaps, the general TPM constructs of corporate planning, top management
leadership, human resource focus, process focus, TQM focus, and information system
focus, are crucial to the well being of the TPM program. Whereas, the specific TPM
constructs of TPM strategies, TPM teams and TPM process focus, yield successful
implementation. Table 11 presents a summary of the findings.
Table 11 about here
The general company aspects affecting TPM have a significant positive impact on
success of the TPM program. However, different constructs affect financial, managerial and
operational aspects of performance in different ways, though 22 out of 24 have significant
positive correlation. The three specific implementation constructs of TPM are also crucial to
successful TPM implementation leading to better business performance. The three
constructs of specific TPM implementation affect financial, managerial and operational
aspects of performance in positive and significant different ways, except for correlation
between TPM teams and financial performance.
How does TPM affect the performance of companies?
13
References
Brah, S.A. and Lim, H.Y., 2006. The effects of Technology and TQM on the Performance
of Logistics Companies, International Journal of Physical Distribution & Logistics
Management, 36(2), pp:192-209.
Fredendall, L.D., Patterson, J.W., Kennedy, W.J., and Griffin, T., 1997. Maintenance:
Modeling its Strategic Impact, Journal of Managerial Issues, 9(4), pp: 440-453.
Hipkin, I.B. and Cock, C.D., 2000. TQM And BPR: Lessons for Maintenance Management,
Omega: International Journal of Management Science, 28(3), pp: 277-292.
Maggard, B.N., and Rhyne, D.M, 1992. Total Productive Maintenance: A Timely
Integration of Production, Production and Inventory Management Journal, 33(4), pp: 6-
14.
McKone, K.E., Schroeder, R.G., and Cua, K.O., 1999. Total Productive Maintenance: A
Contextual View, Journal of Operations Management, 17(1), pp: 123-144.
McKone, K.E., Schroeder, R.G., and Cua, K.O., 2001. The Impact of Total Productive
Maintenance Practices on Manufacturing Performance, Journal of Operation
Management, 19(3), pp: 39-58.
Nakajima, S., 1988. Introduction to TPM”, Productivity Press, Cambridge, MA.
Nunnally, J.C., 1978. Psychometric Theory, McGraw-Hill, New York.
Swanson, L., 2001. Linking Maintenance Strategies to Performance, International Journal
of Production Economics, 70(3), pp: 237-244.
Tsang, A.H.C. and Chan, P.K., 2000. TPM Implementation in China: A Case Study,
International Journal of Quality & Reliability Management, 17(2), pp: 144-157.
Wilson, S., Black, R., Masters, K. and Millard, D., 2000. Strategic Maintenance Approach
Produces Best Return on Capital”, Pulp & Paper; 74(10), pp: 45-54.
How does TPM affect the performance of companies?
14
Table 1. Demographics of Respondents.
Respondents
Respondents
Number
Percent
Number
Percent
Nature of Firm
Services
Manufacturing
ISO Certification
With ISO
Without ISO
TPM Program
With TPM
Without TPM
Adoption of TPM
Less than 4 years
4 years and more
51
97
126
22
67
81
40
27
34.5
65.5
85.1
14.9
45.3
54.7
59.7
40.3
Ownership
Joint Venture
Foreign
Local
Number of
Employees
20 or less
21-50
51-100
101-500
501 or more
11
65
72
2
21
36
62
27
7.4
43.9
48.6
1.4
14.2
24.3
41.9
18.2
Table 2. Factor Loading of General TPM Constructs.
Factors
Loading
Corporate Planning
0.7520
Top Management Leadership
0.7035
Human Resource Focus
0.7042
Process Focus
0.8332
TQM
0.7181
Information System Focus
0.7570
How does TPM affect the performance of companies?
15
Table 3. Factor Loading of Specific TPM Constructs.
Factors
Loading
TPM Strategies (
= 0.9860)
Our company provides technical training in equipment maintenance and
operation
0.877
Our company has a system for increasing the efficiency of administrative and
support function (Office TPM)
0.752
Our company has a set of autonomous maintenance activities to be carried out
0.709
Our company’s maintenance department has a planned maintenance schedule
0.691
Our company has plans to make equipment more efficient
0.679
Our company has quality maintenance planning
0.408
Our company has an early equipment management program
0.407
Our company has a system for management of safety and environment issues
0.325
TPM Teams (
= 0.9719)
TPM teams are focus on the set goals
0.753
TPM teams’ goals are the same as the plant-wide TPM goals
0.738
TPM team leaders are experienced and have leadership qualities
0.584
There is effective communication between teams transcending every level of
hierarchy in the company
0.580
TPM Process Focus (
= 0.9820)
There are plans to reduce the 6 major loss of TPM to zero loss
0.803
Our company has safety precautions to ensure the safety of employees
0.574
Our company plans to achieve TPM Excellence Award
0.513
There are plans to maintain motivation by utilizing independent small group
activities
0.507
There are regular checks on quality of products and working environment
0.479
Our company follows the schedule planned maintenance of the equipment
0.466
There is companywide participation in TPM
0.395
Resources allocated for TPM are not compromised for other focus such as TQM
0.352
Our company has established a total preventive maintenance program that takes
into account the entire life of an equipment
0.317
How does TPM affect the performance of companies?
16
Table 4. Factor Loading of Performance Measurements Constructs.
Factors
Loading
Financial Performance (
= 0.7934)
Inventory cost has decreased
0.744
Sales has increased
0.716
There is a higher return on investment
0.663
Operating profits has increased
0.483
Material and energy conservation has increased cost savings
0.358
Streamlining and realignments has increased cost savings
0.324
Managerial Performance (
= 0.8927)
The layout and placement of items are increasingly better determined
0.884
Team activities have increased employees’ skill level
0.703
The general cleanliness of the company has increased
0.677
There is a less absenteeism among employees in our company
0.636
There is an increase in personal cleanliness of all employees
0.610
There are fewer customers’ complaints
0.596
The flow of material is increasingly better managed to avoid stagnation
0.558
There is an increase in suggestions to improve conditions in preventive
maintenance by teams
0.540
There is an improvement in the discipline of all employees
0.529
There is an increase in number of times one-point lessons are practice
0.457
Number of repeat customers has increased
0.350
Operational Performance (
= 0.7067)
Number of defective produce has decreased
0.821
Minor stoppages have decreased
0.797
Setup time and adjustment time has become shorter
0.788
Products are in perfect conditions when delivered
0.787
There is a decreased in late delivery
0.778
Vendor defects has decreased
0.640
It takes a longer time to get machine started
0.631
The number of accidents is lower in our company
0.581
Defects and rework losses have decreased
0.571
There are fewer breakdowns
0.559
Warranty pay out has decreased
0.420
Delivery amount is correct
0.399
Our company has higher success in meeting anti-pollution regulations
0.338
How does TPM affect the performance of companies?
17
Table 5. Correlation of TPM and Performance Objectives.
Financial
Managerial
Operational
Business
TPM-G
0.448
0.722
0.610
0.679
TPM-S
0.526
0.757
0.667
0.744
Combined
0.518
0.780
0.672
0.752
* All correlations are significant at the 0.01 level.
Table 6. Correlations of General TPM Factors and Performance.
Financial
Managerial
Operational
Business
Corporate Planning
0.292**
0.581*
0.504*
0.526*
Top Management Leadership
0.161
0.357*
0.177
0.259**
Human Resource Focus
0.461*
0.698*
0.575*
0.660*
Process Focus
0.501*
0.651*
0.569*
0.657*
TQM Focus
0.460*
0.374*
0.451*
0.495*
Information System Focus
0.146
0.485*
0.410*
0.398*
* Correlation significant at the 0.01 level;
** Correlation significant at the 0.05 level.
Table 7. Correlation of Specific TPM Factors and Performance.
Financial
Managerial
Operational
Business
TPM Strategies
0.702*
0.660*
0.605*
0.751*
TPM Teams
0.177
0.542*
0.481*
0.460*
TPM Process Focus
0.426*
0.732*
0.626*
0.681*
* Correlation significant at the 0.01 level.
Table 8. Performance of TPM and non-TPM Firms.
TPM Firms
Non-TPM Firms
Mean
S.D
Mean
S.D
p-Value
Financial
2.2090
0.4600
2.5267
0.5722
0.000
Managerial
2.1020
0.4409
2.6831
0.7640
0.000
Operational
2.2049
0.4939
2.5738
0.4058
0.000
Overall Business
2.1053
0.4079
2.5969
0.5151
0.000
Table 9. Performance of Experienced and Inexperienced Firms.
Experienced Firms
Inexperienced Firms
Mean
S.D
Mean
S.D
p-Value
Financial
2.1025
0.3950
2.2458
0.4738
0.156
Managerial
2.0758
0.4143
2.6833
0.4292
0.006
Operational
2.2550
0.4921
2.2636
0.4502
0.045
Overall Business
2.1444
0.3850
2.3976
0.4182
0.017
How does TPM affect the performance of companies?
18
Table 10. Performance of Small and Large Firms.
Small Firms
Large Firms
Mean
S.D
Mean
S.D
p-Value
Financial
2.4130
.3619
2.1023
.4731
.004
Managerial
2.2319
.3760
2.0341
.4608
.059
Operational
2.3640
.3848
2.1223
.5312
.060
Overall Business
2.3363
.3493
2.0862
.4152
.014
Table 11. Summary of Results of Hypotheses.
Study Objectives
Hypotheses
Support at
p<0.05
TPM and Business
Performance
There is a significant positive correlation between
TPM and
Financial performance
Managerial performance
Operational performance
Overall business performance
General Success
Factors
There is a significant positive correlation between
performance and
Corporate planning
Top management leadership
Human resource focus
Process focus
TQM
Information system focus
TPM Specific
Success Factors
There is a significant positive correlation between
performance and
TPM Strategies
TPM Teams
TPM Process Focus
TPM vs Non-TPM
Firms
There is a significant difference in performance
between TPM and non-TPM firms
Experienced vs
Inexperienced TPM
Firms
There is a significant difference in performance
between experienced and inexperienced TPM
firms
Small vs Large
Firms
There is a significant difference in performance
between small and large TPM firms
