An Analysis of Asset Maintenance Management at Toyota and ISO 55001

This report delves into Toyota's asset maintenance management practices, contrasting them with the ISO 55001 standard. It examines the company's approach to asset acquisition, operations, and disposal, highlighting the use of lean six sigma and just-in-time techniques. The report identifies key differences between Toyota's methods and ISO 55001, particularly in the emphasis on internal versus external asset management and the inclusion of financial liquidity considerations. It analyzes Toyota's asset lifecycle management, risk management strategies, and the role of the maintenance department in ensuring efficient operations and financial stability. Furthermore, the report evaluates the integration of asset management costs and the involvement of various departments in the asset lifecycle. Finally, it provides insights into Toyota's financial performance, including return on assets and equity, to illustrate the effectiveness of its asset management strategies.

Running Head: ASSET MAINTENANCE MANAGEMENT
Asset Maintenance Management
Name of the Student
Name of the University
Author Note

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Question 2:
Answer 1:
The asset management processes at Toyota is differs from ISO 55001 in several aspects.
The first point of difference lies in the approach to asset management which ISO 55001
advocates and the methods which are followed in Toyota. ISO 55001 emphasises on asset
management from three perspectives. They are acquisition process, analysis and storage and
quality assurance approach (Iso.org. 2018). Toyota on the other hand uses lean six sigma
management of assets to ensure ‘zero breakdown’. The approach involves recycling the
wastes into the production line in order to utilise them for further production of finished. The
global automobile manufacturer uses lean production techniques like total productive
maintenance and just in time or JIT in asset management (Godau and Mary McGeoch 2016).

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Figure 1 Asset management steps as per ISO 55001
(Source: Iso.org. 2018)
The second difference between the ISO 55001 and the asset management method of
Toyota is that while the former mainly emphasises on internal asset management, the latter
stretches to external asset management which in turn contributes to asset management in Toyota
(Toyota-global.com. 2018). This is evident from the fact that the company has set up Toyota
Financial Services to finance sale of its vehicles. This results in faster generation of sales of
models of vehicles and spare parts, which form of parts of its inventory which in turn form of a
part of its assets. This results in more dynamic sale of goods for the company enables unlocking
the financial assets invested or locked in manufacturing and warehousing these finished
products. Thus, it can be inferred the asset management of Toyota attributes financial liquidity to
the company which ISO 55001 does not cover (Iso.org. 2018).
Figure 2. Asset management stages at Toyota
Need
identification:
Toyota
recognises the
need to acquire
assets bsaed
on the business
requirements
Justification
: The
manageme
nt makes
the actual
decision to
acquire
assets and
approves
financing
Specification:
The
management
along with the
production
departments
specifies the
particulars of
the equipment
like make,
efficiency etc.
Commissio
ning:Testin
g of the
asset
against the
specificatio
ns
Utilisation:Toy
ota utilises the
equipment in
production to
earn back of
invested
amount(return
on asset or
ROS)
Disposal:The
management
of Toyota
either
disposes or
reuses the
machine

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(Source: Toyota-global.com. 2018)
Answer 2:
Toyota places equal emphasis on all the four stages while managing asset lifecycle
namely planning, acquisitions, operations and maintenance and disposal. The automobile
manufacturer uses automatic asset management to plan and acquire assets. The company uses
lean six sigma to operate and maintain assets. Toyota uses methods to integrate the assets to
workflow to enable maximum utilisation of assets, thus reducing the disposed amount of assets
(Lee, Bagheri and Kao 2015). The lean management enables the company to adjust its workflow
of manufacturing to remove non-productive steps, thus enabling use of assets in more productive
activities, thus enabling their maximum utilisation.
Answer 3:
Toyota implements all the aspects of ISO 55001 but omits the policies coined down for
other industries. This is because this several policies are meant for companies operating in the
road sector organisations. Toyota operates in the automobile manufacturing and financing
industries and hence, the policies applicable for road sector or infrastructure sector does not
apply to the former (Bloom, Sadun and Van Reenen 2015).

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Figure 3. Asset management system according to ISO 55001
(Source: Iso.org. 2018)

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Answer 4:
The asset management of Toyota adopts the basic concepts of the asset management of
ISO 55001. ISO 55001 mentions that the main aims of asset management systems in
organisations are to improve financial decisions, more accurate investment in assets, risk
management, boosting productivity, minimising social impacts and compliance with legislations
in power (Kerzner and Kerzner 2017). The asset management strategies of Toyota comprising of
lean six sigma and JIT also aim to achieve these aims. Thus, it can be inferred from this
comparison that the asset management processes of Toyota aims to achieve the same aims the
asset management processes of ISO 55001.
Answer 5:
The safety plan and risk management plan at Toyota is made by the maintenance by
following the asset management policies laid down by the apex management of the company.
The maintenance department keep record of all the assets throughout their lifecycle. They take
record of the operations of the assets and compare between the actual productivity against the
standard productivity. If the machine are not able to achieve standard productivity levels, then
the maintenance departments make strategies either to service and reuse the plant or dispose it.
This maintenance actually enables management of four main types of risks. First, proper
maintenance of assets ensure reduction in accidents, thereby managing workplace risks or OHS
risks. Secondly, efficient and timely maintenance of plants ensure that they do not emit large
amount of wastes like smoke (Bromiley et al. 2015). This enables Toyota utilise maximum
portion of the fuel to produce good and reduce financial losses or risks due to wastage of fuel.
Thirdly, this enables the firm to reduce environmental pollution, thus reducing environmental

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risks and penal charges for breaching environmental laws (Mooren et al. 2014). Fourthly, proper
maintenance of plant ensure ‘zero breakdown’ in the production system of Toyota, thus enabling
the company to ensure huge production. This enables Toyota to generate immense revenue, thus
managing financial risks (Kerzner and Kerzner 2017). Thus it can be inferred that the
maintenance department of Toyota enables risk management by efficient maintenance of the
plants.
Answer 6:
The production department is not directly involved in asset acquisition stage processes
like allocation of funds towards acquisition of assets. This allocation of funds to acquire assets
comes under the purview of the accounts departments. Similarly, the production department of
Toyota is not directly involved in the disposal of plants which comes the responsibility of the
waste management department. The production department should directly be involved in these
steps to ensure more efficient management of plants throughout its lifecycle (Kahn and Lemmon
2016).
Answer 7:
Toyota adequately considers the costs of maintenance as a part of its asset acquisition
process. This is evident from the table below showing the return on assets and return on equity.
The ROA and ROE as shown are 4 percent and 7 percent respectively. Thus, it can be inferred
that Toyota efficiently manages the acquisitions of its assets and takes into consideration the
amount of income the assets being acquired would attribute to the company (Garleanu and
Pedersen 2018).

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Particulars
FY2017 first
half (Six
months ended
September
30, 2016)
Current assets
15,653,139
.00
Fixed assets
9,288,831
.00
Total assets
24,941,970
.00
Total liabilities
43,776,105
.00
Shareholder's equity
16,958,812
.00
Sales
12,216,706
.00
Operating profit
1,116,865
.00

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ROA (Operating
profit/total assets)
4%
Return on
equity(Operating
profit/shareholders'
equity)
7%
Figure 4. Calculation of ROE and ROA of Toyota
(Source: Toyota-global.com. 2018)

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Reference:
Bloom, N., Sadun, R. and Van Reenen, J., 2015. Do private equity owned firms have better
management practices?. American Economic Review, 105(5), pp.442-46.
Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk management:
Review, critique, and research directions. Long range planning, 48(4), pp.265-276.
Garleanu, N. and Pedersen, L.H., 2018. Efficiently inefficient markets for assets and asset
management. The Journal of Finance, 73(4), pp.1663-1712.
Godau, R. and Mary McGeoch, F.A.H.R.I., 2016. ISO 55001 Ready–Focus on improving Asset
Management Maturity. Change.
Iso.org. 2018. Iso.org. [online] Available at: https://www.iso.org/standard/55089.html [Accessed
9 Oct. 2018].
Kahn, R.N. and Lemmon, M., 2016. The asset manager’s dilemma: How smart beta is disrupting
the investment management industry. Financial Analysts Journal, 72(1), pp.15-20.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Lee, J., Bagheri, B. and Kao, H.A., 2015. A cyber-physical systems architecture for industry 4.0-
based manufacturing systems. Manufacturing Letters, 3, pp.18-23.
Mooren, L., Grzebieta, R., Williamson, A., Olivier, J. and Friswell, R., 2014. Safety management
for heavy vehicle transport: A review of the literature. Safety science, 62, pp.79-89.

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Toyota-global.com. 2018. Toyota-global.com. [online] Available at: https://www.toyota-
global.com/company/history_of_toyota/75years/data/business/finance/overview.html [Accessed
9 Oct. 2018].