A Step Towards Blockchain?
The pandemic has encouraged both paperless and travel-less alternatives to traditional aftermarket practices, but cash has been short to invest in change.
Nevertheless, aftermarket giants have stayed on their digital courses and are making progress to that new digital ecosystem everyone has desired.
For example, Aeroxchange recently launched the first fully electronic airworthiness certification with encrypted e-signatures, according to CEO Albert Koszarek.
The new e-document would supplant paper or PDF versions of FAA Form 8130 and EASA Form 1, which authorize the release of a product, part or component and ensure that it is being delivered in accordance with regulations.
The new Aeroxchange file is in XML format, so all data can be automatically entered into the customer’s ERP system, such as Trax or Amos, and Big Data analytics can be applied to the data without any manual processes.
“They will not need PDFs or paper documents,” Koszarek stresses. “They will have XML with valid signatures that can be ingested into their systems.”
The Aeroxchange exec says he does not know of any other trading platform or company that is providing signed electronic certifications that can be ingested by customer systems.
Aeroxchange has further plans for digitization. Next year, Koszarek plans to launch an e-document for shop findings. After that, he plans a set of electronic documents containing the data on engines that determine engine value, including life-limited parts and serial numbers.
For the new e-certificates, customers must obtain their regulators’ approval for use of e-signatures, but Koszarek says Aeroxchange’s experience in developing e-signatures can help accelerate the approval process. He is hoping for a quick uptake of the new e-certificates by the aircraft OEMs and major airlines that are owners of Aeroxchange. Still, it will take time and efforts. “I’m aware it will take investment, and investment is the pacing item.”
The new e-certificates use ATA Spec 2000 standards, which are well developed for spare parts. Aeroxchange has developed its own standards for other products.
Adoption of the new e-certificates by Aeroxchange customers would be very significant, as the platform now handles more than half of the transaction value in the aviation aftermarket and well over half of the number of transactions in the aftermarket.
Koszarek argues that the new e-certificates are an important advance on their own and they could also be an important step toward Blockchain, or a distributed ledger, for the aviation aftermarket.
“This virtual document with an encrypted e-signature is the essence of Blockchain,” he says. “To get a valid pedigree of documents signed by the right authorities, that’s a big step.” Hash tags can be added to the XML documents to form the links required by Blockchain.
Koszarek has been in contact with groups, such as the Blockchain Alliance, working on distributed ledgers. He says he first wanted to build the infrastructure for the distributed ledger approach, the “enabling technology,” so that Blockchain developers would have something to work with. But he still sees the development of an aviation aftermarket Blockchain as computationally difficult, “not an easy problem.”
Craig Gottlieb, managing director of Aerospace and Defense at Accenture and long a Blockchain advocate, agrees this is a step forward. “Anything that can digitize a valid identity or attestation for a part definitely helps the cause,” Gottlieb says.
“If those validated identities can be then shared through a validated multi-party system, there is definitely benefit to be had.” He points to Honeywell’s work on GoDirect Trade as another good example of how value can be created in this way.
Gottlieb further argues that the COVID pandemic and its aftermath have accelerated a general trend toward multi-party systems, which can be Blockchains, distributed ledgers, tokenization, or distributed databases, to securely share data from multiple sources.
The pandemic focused attention on supply chains, tracking and tracing COVID hotspots and vaccination efforts. “All of these use cases drive us toward things that multi-party systems are really quite good at.”
Gottlieb also believes the pandemic increased industry managers’ understanding that value is increasingly derived from ecosystems, not just individuals.
“Whether it’s the value-sharing agreements across overhaul shops that are part of how some engine manufacturers go to market, the strategic push that Collins Aerospace is making in its connected ecosystem, or Airbus’s launch of SkyWise, this kind of pivot was underway as 2020 started.”
The Accenture consultant does not believe cash shortages are a major hurdle to an aviation aftermarket Blockchain. “The technology has come far enough that companies that see an opportunity to employ multi-party approaches can use the technology.”
In Gottlieb’s view, the main challenges remain value and emotion. “It’s hard . . . to define value at the ecosystem level, and that takes time.” He also points to lingering discomfort with sharing data.
A recent Accenture survey revealed that only a third of aircraft operators are willing to share both flight data and operational data with their MRO providers. “Much of that reticence is tied to airlines’ lack of confidence in MRO providers’ ability to securely and effectively manage data exchange at scale.”