When a car or truck owner brings a vehicle into an Acura or Honda dealership in the United States, there's more to the visit than a repair or a service check. During each visit, the service technicians generate data on the repairs, including any warranty claims to American Honda Motor Co., Inc., that feed directly into its database. This includes what type of work was performed, what the customer paid, service advisor comments, and many other data points.
Now, multiply this process by dozens of visits a day at over 1,200 dealerships nationwide, and it's clear-American Honda has Big Data. It's up to people like Kendrick Kau, assistant manager of American Honda's Advanced Analytics group, to draw insights from this data and turn it into a useful asset.
Examining Warranty Data to Make Maintenance More Efficient Like any other major automobile distributor, American Honda works with a network of dealerships that perform warrantied repair work on its vehicles. This can be a significant cost for the company, so American Honda uses analytics to make sure that warranty claims are complete and accurate upon submission.
In the case of warranty claims, Kau's team helps empower dealers to understand the appropriate warranty processes by providing them with useful information via an online report. To support a goal of reducing inappropriate warranty costs, Kau and his team must sift through information on repairs, parts, customers, and other details. They chose a visual approach to business intelligence and analytics, powered by SAS, to identify cost reduction opportunities.
To decrease warranty expense, the Advanced Analytics team used SAS Analytics to create a proprietary process to surface suspicious warranty claims for scrutiny on a daily basis to make sure they are in compliance with existing guidelines. The effort to identify and scrutinize claims was once fairly manual, tedious, and time-intensive.
"Before SAS, it took one of our staff members one week out of each month to aggregate and report warranty data within Microsoft Excel spreadsheets," Kau says. "Now, with SAS, we populate those same reports on an easily accessible online dashboard automatically, and we recovered a week of manpower that we could put on other projects." By applying SAS Analytics to warranty data, the Advanced Analytics group gave the Claims group and field personnel the ability to quickly and accurately identify claims that were incomplete, inaccurate, or noncompliant. The results were impressive.
"Initially, it took our examiners over three minutes on average to identify a potentially noncompliant claim, and even then, they were only finding a truly noncompliant claim 35 percent of the time," Kau says. "Now, with SAS, it takes less than a minute to identify a suspicious claim. And in that time, they are finding a noncompliant claim 76 percent of the time." The effort to increase warranty compliance has paid off for American Honda. Through more complete analysis of warranty claims-and more education at the dealerships-American Honda saw a reduction in labor costs for 52 percent of its available labor codes.

Questions for Case
1. How does American Honda use analytics to improve warranty claims?
2. In addition to warranty claims, for what other purposes does American Honda use advanced analytics methods?
3. Can you think of other uses of advanced analytics in the automotive industry? You can search the Web to find some answers to this question.