Midrange Stuff, OS/400 Edition

While many OS/400 shops in the automotive food chain should be taking steps to address and comply with the Transportation Recall Enhancement, Accountability and Documentation Act, passed by Congress in reaction to the Bridgestone/Firestone tire recall in 2000, few of them are, says Ron Ezsak, channel director at Active Web Services. The situation isn't confined to OS/400 shops, as ERP packages in general lack TREAD Act functionality, he says, but OS/400 shops' penchant to avoid fixing what's not broken magnifies the issue.

While there have been larger tire recalls, the Bridgestone/Firestone tire recall of 2000 garnered more attention than any other recall in recent history. More than 200 people died in traffic accidents that investigators linked to loss of control due to tire blowouts caused by tread separation on Bridgestone/Firestone tires. As a result, Bridgestone recalled more than 6.5 million tires, which cost the company hundreds of millions of dollars, as well as market share and respect.

In the fall of 2000, Congress passed the TREAD Act to serve as an early warning system to potential product defects involving cars on our nation's highways, like the tread separation in Bridgestone/Firestone's Wilderness AT tires. The new law requires any company producing highway vehicles, trailer and tire manufacturers, and component suppliers to report to the National Highway Transportation Safety Administration, on a quarterly basis, all warranty claims, consumer complaints, field reports, and any other incidents involving a fire or fatality, says Ezsak, whose company, Active Web Services of Aurora, Illinois, has developed a niche based on getting manufacturers and suppliers in compliance with the TREAD Act.

Ezsak says most companies in the automotive supply chain--by no means only OS/400 shops--aren't in compliance with the TREAD Act. For all but the largest tier-one shops, developing a custom reporting system is too expensive. And trying to satisfy the TREAD Act requirements can be tough, as the TREAD Act's reporting templates are in limbo. Luckily, budget shortfalls have forestalled enforcement, and "segment-based public hangings, to make an example" of out-of-compliance companies shouldn't start until mid-2004, Ezsak says.

Major application vendors have not jumped on the TREAD Act bandwagon, either. Ezsak says the type of warranty and claims management reporting that the TREAD Act requires falls somewhere between CRM and ERP, and neither camp has picked up the ball yet. Major automotive ERP applications, like J.D. Edwards, MAPICS, SSA Global Technologies BPCS, and SAP, haven't gone much beyond simply entering and storing warranty and claims information, although SAP is ahead of the curve, he says. The reason, says Ezsak, a former SSA GT sales executive, is that warranty spend analysis just isn't sexy. "It's not like accounting or marketing."

OS/400 shops, in particular, have probably seen the least amount of TREAD Act enhancements in their ERP applications, Ezsak says. "We look at the AS/400 constituency as those who will enjoy the most benefit," he says."But when you have a system that's not broken, you don't mess with it."

Active Web Services saw an opportunity and took it. The software company developed a Windows .NET-based product called ActiveWeb Warranty, which grabs data from the ERP system, puts it into the TREAD template, and sends it to the National Highway Transportation Safety Administration. The product works as well with OS/400-based ERP systems as it does with Oracle and Microsoft SQL Server, Ezsak says. Overall, the company has 300 customers.

Last week, Active Web Services announced a partnership with Chicago business intelligence software vendor SPSS to license its Essbase OLAP and Clementine data mining software--running on Windows boxes--to provide a higher level of analysis of warranty and claims information in ActiveWeb Warranty. The solution, which has already been implemented in at least three companies--including one of the United States' largest tire manufacturers--is designed to provide a feedback loop to the company's engineering and R&D department, in much the same way that the TREAD Act provides feedback to federal regulators.

The new business intelligence system should help companies make strategic decisions based on how much money they forecast to be spent fulfilling warranties and claims. The software's predictive analysis capabilities will calculate possible outcomes based on variables on how their product is used. For example, if a particular tire is going to be used on a particular car, in a particular part of the country with predictable weather patterns during a certain part of the year, there will be patterns of failure in that tire, which could lead the tire manufacturer to change the tire's compound to better adapt to those conditions, and thus avoid a costly recall--not to mention building a safer tire for consumers.

Ezsak says, while the first component of ActiveWeb Warranty--TREAD Act reporting and compliance--can cut processing costs by 15 percent the first year, the product lifecycle feedback loop created by the analytical software can save a company much more, upward of 80 percent. Implementation of ActiveWeb Warranty ranges from $50,000 to $500,000, and can be completed in 90 days, Ezsak says.