Application of the new technology blockchain to the aviation aftermarket is moving beyond the theoretical stage. The big global MROs are taking a much closer look.
For example, Andy Schmidt, senior vice president for Intelligent Solutions at AAR, says his firm is moving in this direction. “Currently, we are investigating ways to ensure part traceability and compliance using distributed ledger technology, what people call blockchain. We are now doing a feasibility study with a startup called SafeFlights.”
What is attractive about the approach? “In simple terms, blockchain requires consensus among trusted parties to permit transactions,” Schmidt explains. “Therefore, it impedes the entry of a bad actor or untrusted party.” For example, if a bad actor attempts to alter blockchain’s electronic distributed ledger, the altered node would no longer be in consensus with the others and the transaction would not be approved. “This consensus mechanism allows trusted parties to share compliancy data, improve safety, efficiency and reduce waste in our industry.” And the AAR exec sees further benefits in using the technology to streamline back-office administration, especially accounts receivable, including near-instant payment upon contract execution.
That is a long way from the present system. “Right now, everything is done manually using paper to trace a part’s authenticity and conformity,” Schmidt says. “On the ground, everything is checked manually using physical paper documents, both coming in and going out from the docks. All customers are currently obliged to have paper documentation to provide traceability of the part.”
But there are challenges in moving to a better system. Apart from securing regulatory approval, Schmidt says the main challenge will be getting all the different actors in the supply chain onboard. “That’s why we are looking at SafeFlights, which is developing a consortium blockchain where OEMs, MROs, suppliers, airlines and government can all participate and update the blockchain as a part moves from entity to entity or airframe to airframe.”
If Florida-based SafeFlights can pull that off, it could become a very important company in the new aftermarket world.