Every year, the air transport industry spends US$50bn on aircraft spare parts. Yet, the tracking and tracing of serialized spare parts as they move between airlines, lessors, and original equipment manufacturers (OEMs) remains largely manual and paper dependent.
Until recently, there was no single view of how to track hundreds of millions of records of transactions between these entities, exacerbating risk and cost. To address this challenge, SITA has developed an MRO Blockchain solution. This digital platform allows seamless and detailed collaboration among all parties involved in the manufacturing, repair, and usage of aircraft parts. PwC estimates that the use of blockchain could cut MRO costs globally by around 5% or US$3.5 billion.
SITA brings the benefit of MRO Blockchain to the aftermarket. It has partnered with ILS to create a new authenticity-assured parts service leveraging a blockchain-based digital passport for an expanding aftermarket in the commercial and defense aerospace industry.
We spoke to John Herrman, Executive Vice-President General Manager of ILS, to find out how blockchain is revolutionizing the MRO sector and the value of the new partnership between ILS and SITA to the industry.
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Tell us more about ILS and what you do.
ILS provides the largest worldwide digital marketplace and business intelligence services for aerospace parts and repair services. We’ve been working with the aerospace industry for over 40 years.
Our customers are buyers and sellers of parts, equipment, and services in the commercial and defense aerospace industry across the globe.
We help more than 28,000 aftermarket users – aircraft parts manufacturers, Maintenance, Repair and Overhaul (MRO) service providers, and operators in over 100 countries to optimize stock and make better pricing decisions with the most comprehensive AI/ML (Artificial Intelligence/Machine Learning) driven data services and the largest aerospace part inventory worldwide.
Can you tell us more about the aerospace aftermarket?
OEMs (original equipment manufacturers) sell new, ready-to-fly aircraft with all equipment and parts accounted for. OEM maintenance programs aside, once an aircraft has been delivered, it enters the aftermarket. The aftermarket repair and overhaul services for aircraft, known as MRO, can be provided by many organizations – OEMs, in-house airline services, and MRO service providers. These organizations need aircraft parts to complete the aircraft maintenance, repair, and overhaul.
The aftermarket parts market is anticipated to continue to grow significantly over the next few years. And it is also a sector that is inefficient when we think of parts record management for serialized parts. It is dependent on manual and paper-based processes and documentation and, therefore, slow and error-prone today.
Take an AOG (aircraft on the ground) situation as a typical scenario where aftermarket customers need to quickly assess available options to resolve their time-sensitive supply needs. This is where automation and technology can enable full transparency into the legitimacy, condition, and availability of an asset and remove the risk from the purchasing process. And this is where SITA and ILS are collaborating.
Why did you start working with SITA?
We already knew SITA and various industry trade shows and conferences. With mutual customers recommending that ILS participate in the SITA blockchain initiative, we started to have more in-depth discussions after the launch of the MRO Blockchain – a consortium involving SITA and other organizations to help the MRO chain digitally track, trace, and record aircraft parts.
There was a natural synergy for us to work together because we work with aftermarket buyers and sellers of aircraft parts, and both SITA and ILS have an extensive customer base of regional and global airlines. We have a shared vision of enabling digital transformation for the air transport industry. By joining our forces, we can significantly enhance overall aftermarket and MRO value chain efficiency.
Can you tell us a bit more about the solution being deployed to enhance efficiencies?
SITA developed a unique digital passport solution that leverages blockchain technology to provide back-to-birth traceability for serialized parts. This is being implemented in the ILS digital marketplace. Basically, our customers will be able to select parts intelligently by a digital passport safeguarded and enabled by the MRO blockchain attached to the related purchase and sale transaction accessible at the click of a button.
We believe the fundamental benefits of the development of this digital passport capability for our customers includes:
- Safeguards the asset value for both seller and buyer.
- Accelerates faster and more efficient purchasing and selling.
- Creates trusted and transparent buying experiences because parts are traceable and assured.
What is next for ILS and SITA?
We have an ambitious, yet feasible roadmap defined and are well underway with developing initial phases in which customers can validate and test the solution.
Obviously, undertaking an effort of this magnitude in collaboration with industry partners is no small feat. Yet it’s critical to ensure we deliver both a high-quality solution and develop critical momentum to ensure broader adoption.
