Shanghai GM achieves early returns on SAS® warranty solution

Shanghai General Motors Company (Shanghai GM) has taken a big step forward by improving the efficiency of its warranty analysis cycle. After implementing SAS Warranty Analysis, Shanghai GM, a US$1.5 billion joint venture between General Motors and Shanghai Automotive Industry Corp. (SAIC), can determine the causes of warranty issues and solve them much more quickly.

Equipped with the latest industry best practices and technology for warranty analysis from SAS, Shanghai GM is living up to its reputation as the leader in China for customer service and quality and is setting the pace on the market. "We outperform other industry giants," says Mr. Nanxiang Gao, Warranty Business Representative and Field Performance Engineer within the Quality Department.

Shanghai GM is the largest passenger car manufacturer in China, with a yearly production of 252,000 vehicles in 2004. The company also produces engines and transmissions for both the domestic and overseas markets. Holding around 10 percent of the market in 2004, the company ranks third in China in terms of market share.

The situation has become much more competitive in recent years as more and more global car manufacturers have entered the Chinese market – one of the world's fastest growing automotive markets with an annual growth rate of 16 percent. As a result, automotive companies had to refocus on profitability, cost savings and quality issues.

After-sales service and quality
Shanghai GM has a strong commitment to after-sales service and quality and is famous for its customer service, particularly the "Buick Care" after-sales brand. While production volumes have tripled over the past three years, Shanghai GM needed a strong system to improve the efficiency of its warranty analysis cycle to maintain high customer satisfaction and quality reputation as well as to manage costs. Reducing the time required to find the cause of a warranty problem had become the biggest challenge facing Shanghai GM's After-Sales Service and Quality. Faster problem identification ensures that the issue can be fixed sooner and warranty costs can be avoided.

The SAS Warranty Analysis solution has allowed Shanghai GM to reduce the warranty analysis cycle time by 70 percent within the first six months and to substantially cut warranty costs – the main objectives for the system, according to Mr. Gao.

In fact, adds Mr. Xinquan Zhang, Shanghai GM's CIO, "We have reduced warranty costs by 34 percent per vehicle."

These significant improvements have allowed the company to get total return on all software and hardware investments within only half a year. After just six months, Shanghai GM has registered 9 million Chinese Yuan (US$1.1 million) warranty costs savings due to shortened cycle time and an additional 9 million Yuan (US$1.1 million) from the early identification of 13 emerging issues.

The Quality Department has been championing the warranty analysis project. With around 80 field performance engineers, the department is responsible for the whole issue-solving process and for launching new projects in the area of field performance. The department serves the main divisions within the organization, including manufacturing, engineering and Power-train, an independent group within Shanghai GM that manufactures engine transmissions.

After a long and global investigation period, Shanghai GM found that SAS was the only provider of a packaged solution for warranty analysis that also offered industry best practices. After a thorough evaluation workshop, the warranty team found out that the SAS Warranty Analysis solution fulfilled 80 percent of the team's requirements and therefore needed little customization.

"SAS' teams from China and from the United States worked closely with us to make this project successful," Mr. Zhang says. "The implementation went very smoothly and was completed in less than six months."

Shortened cycle time
"Using the SAS solution, the average total cycle time was shortened from 174 days to 52 days within the first six months of utilization," explains Mr. Gao. This corresponds to a 70 percent turnover time reduction.

Regarding the early identification, Mr. Gao admits that the software's Emerging Issue component allowed the company to identify 13 issues in 2005 which could not have been detected without the system. Shanghai GM also saved on average three months in finding these issues compared to the time needed before implementing SAS.

The power of BI
Shanghai GM's engineers are especially pleased with the analytical power of the SAS software. The statistics driver analysis allows engineers to determine whether a warranty claim variation is normal or exceptional, meaning one that requires investigation. The root-cause analysis has become much easier and quicker and provides statistics-based clues that enable engineers to quickly understand what happened and what variables had an influence on the warranty issue.

"Before SWA, we depended on monthly reports to perform root-cause analysis. With SAS Warranty Analysis, we use real-time analysis in any dimension that we want from the data that is updated weekly. This improves our process significantly," comments a user of the SAS solution from the Quality Department.

Around 30 engineers within the Quality Department are using the SAS system every day. Some of the plants also are using the system already. Within a portal-like application, engineers can get early warning information and perform analyses, such as comparisons, trend exposures and control charts. They also can generate various advanced reports, including statistics driver analyses and forecasting. Historic data is also directly available. Using SAS Enterprise Guide, power users have several ways to directly access the warranty data to create customized report and do further analysis. As a result, they no longer have to depend on IT to provide the data and create report for them.

Mr. Zhong Zhong, Senior System Analyst and IT Project Manager, comments: "Shanghai GM understands the power of BI."

Enterprisewide solution
Shanghai GM plans to deploy the system to engineering, purchasing and manufacturing in a first phase. Power-train is also considering implementing the system. Mr. Gao expects that by expanding the usage of SAS, the company will find more ways of solving problems. The Quality Department itself organises bimonthly sessions during which the users can share knowledge and experience on the latest findings made using the advanced options of the SAS solution. "We are making constant progress and after six months of using SAS, we are still discovering new ways of improving our warranty analysis process," says Mr. Gao.

The Finance and the Marketing departments are also directly seeing the benefits of the warranty analysis solution. Accurate forecasts are now available, making the warranty accruals planning much more effective. "This also has an impact on the efficiency of our after-sales campaigns because now we know exactly how much money is available for after-sales," comments Mr. Zhong.

Industry index performance
Standard reports generated by the system offer senior executives an overview of the warranty analysis. Industry KPIs like cost-per-vehicle (CPV) and incidents-per-thousand-vehicles are now calculated and monitored with great accuracy. Between January and May 2005, the CPV index for two-month-old vehicles was reduced by 30 percent, a decrease that Mr. Gao says is derived directly from the improvements made in problem solving.

Today Shanghai GM is proud of its position as the industry leader in terms of warranty best practices. The satisfaction is great: not only has the project been nominated for the Technology Innovation Award by the SAIC group (an award that will be handed out in early 2006), but the reputation is also reaching beyond China. General Motors Global Warranty is extremely interested in the success of their Chinese colleagues and is closely looking at the new achievements. "Warranty Analysis is our contribution back to global GM," declares Mr. Zhong.

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