Aftermarket Startup Chases Supply Chain Deals for Airlines, MROs
Although the aviation supply chain is full of digital platforms to help companies buy, sell and trade aircraft parts, one Estonian startup is aiming to set itself apart by automating the process of finding the best deals.
SkySelect, which was founded in 2017 and backed by Silicon Valley investors, is a robotic process automation platform that uses algorithms to automate more than 90% of parts purchasing operations for airlines and MROs. According to SkySelect, it aims to do “the heavy lifting of consolidating the demand and negotiating on behalf of airlines” while saving time and money for customers.
“Every year, $40 billion worth of aircraft material gets bought and up to one-third is estimated to be a waste because of the industry’s overall inefficiencies,” says Erkki Brakmann, CEO and founder, SkySelect. “Most of the industry is disconnected and runs on emails, spreadsheets and phone calls,” he says, noting that this contributes to unreliability of the supply chain.
“It is difficult to keep up with all the moving parts when everything is so manual,” says Brakmann. “This has led to overproduction, mismatch and excess inventories, extra shipping costs and avoidable operational disruptions which all add up.”
According to Brakmann, the SkySelect platform runs on Amazon Web Services and works like an API that can be plugged into an airline's or MRO’s systems to pull in their part requirements. The platform’s proprietary algorithms automatically check availability of parts to find the best options and consolidate them into orders that can then be placed on the platform. The platform also automates the delivery tracking with analytics to measure the supply chain performance.
Since the platform processes thousands of part requirements simultaneously, Brakmann says it automatically finds the best deals from the market and eliminates 30-50% of the manual effort involved in the purchasing process.
The startup is working with more than 20 airlines and MROs, including Magnetic MRO—which extended its contract with SkySelect in early June—and TAP Air Portugal, which signed a contract with the startup this summer.
“There are many more supply chain opportunities in the aviation market than you can see on a daily basis. The part you are searching for might be lying on someone’s shelf not used,” says Natalja Lagno, strategic purchasing manager, Magnetic MRO, adding that the platform helps Magnetic MRO find “hidden gems” in the aviation market.
“We are in the 21st century and we are used to having access to info in real-time. But for aircraft material, it’s not the case—we are still buying parts like we did 30 years ago,” says Kaarle Karp, head of supply chain at Magnetic MRO, noting that the SkySelect platform’s automated ordering process provides savings of 20% or more.
According to Brakmann, the aviation industry’s COVID-19 recovery has provided unique circumstances for savings within the supply chain. “The opportunity has never been greater to save on aircraft material. There is an abundance of excess inventory available today, arguably more than during any other prior period in commercial aviation history,” he says. “However, the best deals and savings will not wait and are often passed up because hunting for such deals is labor-intensive, requiring knowledge, data and managing more suppliers.”
Brakmann says SkySelect is still working to perfect the platform, but he notes that its venture capital investments enable it to accelerate building out the technology while working closely with airlines, MROs, OEMs and suppliers. He also says the platform is designed as an end-to-end solution for purchasing that can be used in conjunction with other platforms or point solutions.