Automakers Rev Up Data-Mining Efforts

Spurred by new government reporting requirements and the need to operate warranty programs as efficiently as possible, auto manufacturers are making increased use of business-intelligence software to mine their huge stores of warranty data.

Last week, IBM and SAS Institute Inc. unveiled a package of data-management and -analysis software and data-integration services for collecting and analyzing product-safety information and reporting it to the National Highway Traffic Safety Administration under the Tread (Transportation Recall, Enhancement, Accountability, and Documentation) Act. The legislation requires automakers to report all safety-related information such as warranty claims, consumer complaints, and production data starting April 1. The act was passed because of the safety administration's failure to quickly spot defective Firestone tires that allegedly led to SUV rollovers in 2000.

The IBM-SAS quality-warning package combines SAS applications for analyzing structured data such as warranty-claim statistics with software and services from IBM, including data-integration tools and a rules-engine application for analyzing unstructured data such as handwritten reports.

The software will help automakers and parts manufacturers comb through terabytes of data for accurate analysis and reporting to the safety administration, says Larry Stolle, IBM's global business-development executive for the automotive industry. One early user of the product is pulling data from nearly 60 databases. The package, sold by IBM and SAS, is priced according to the implementation.

Stolle expects the auto industry will ultimately use these tools for more than Tread reporting. "If automakers stop there, they'll fail to exploit the investment made to meet a legislative requirement." Automakers can use the system to spot potential problems with products, compress problem-resolution times, and improve manufacturing processes, he says.

Ford Motor Co. is leveraging nearly a terabyte of warranty-claims data to help 10,000 of its dealers improve auto-service operations. Ford's global warranty-measurement system incorporates a Teradata data warehouse with 24 months of warranty data and Information Builders Inc.'s WebFocus business-intelligence software.

Ford analyzes the data to see how many repairs individual dealers are performing and the cost of those repairs. The system compares those results to other dealers in the region or within a country for European dealers. That makes it possible to spot instances where dealers may be performing unnecessary repairs or spending too much--and therefore charging too much--to service cars. "Our objective is to identify as early as possible a dealer that's trending in the wrong direction," says Jim Lollar, Ford's global warranty operations IT manager. Ford then works with the dealers to correct the problems.

While the program helps Ford lower its warranty expenses, Lollar says the real goal is to help dealers improve customer service. Ford has provided basic printed reports to dealers for two years, but last year the company implemented a system that provides dealers with Internet access to monthly WebFocus reports with charts and graphs and the ability to drill down into the reports' underlying statistics.

Ford is also leveraging the data warehouse for other tasks, including forecasting future warranty costs and identifying gaps in dealer technician training.