What happens at the end of an aircraft’s life?

By John Rassieur, SkyThread Senior Business Development Leader

Note: this post is part of a 52-week series we’re posting about digital aviation. Chuck is taking a break so that John can write a post. This post is Week 11.

John Rassieur. MBA our senior business development leader, and this week’s guest blogger spent his military aviation career as a maintenance officer and test pilot. In this capacity, he was responsible for rotable and repairable components, technical spare parts, flight line maintenance and airworthiness of a fleet of aircraft. His work led to notably higher aircraft mission readiness and cost-effective maintenance. Additionally, John has worked in the aerospace industry as a business and supply chain consulting leader, working with clients around the world to lower cost while driving speed and process improvements. John is pleased to be part of the SkyThread team, taking advantage of his experiences in aerospace and technology. On to John's story about part availability…

What can go wrong?

One of the worst things you can hear in aerospace MRO is "Where is my part?" It does not matter who in the ecosystem utters this phrase, as it is always bad news. You cannot fix what you cannot see!

The airline dispatcher, or operations lead, or aircraft mechanic knows this means a delay in a flight or in getting an aircraft ready to return to fleet operations. The MRO spares provider knows an aircraft is on the ground (AOG) and is not delivering revenue to the airline, and that their service level agreement (SLA) forces a direct penalty because of the delay. The tier one parts supplier is worried their demand plan is missing AOG events and the "next" spare will be in the wrong place or late.

No matter how much money the ecosystem of airlines, MRO providers, Tier One suppliers and the airframers spend on technology to "manage" spares, they cannot get the 8130 tag nor the aircraft to talk to us. The technology we have deployed, ERP, PLM, MRO, Analytics, have good intent, providing value in their own way. However, they all universally fail in bringing part state and visibility to the participants in the aerospace ecosystem and their personas. 

How have we dealt with this?

The result is nearly the same. We use the alternative technology, like Microsoft Excel, to build an "improved" spares plan to avoid delay and expense connected with AOG and other IROPs. The answers are always the same, likely including:

• Buy or build more parts.

• Change the location of parts.

• Add more aircraft and assemblies to the fleet.

• Join a parts pool to leverage parts supply and demand.

• Move repairs closer to the flightline.

• Move repairs to a maintenance hub.

• Outsource repairs.

Regrettably none of these solutions address the first problem statement, "where are my parts?" And just as certainly, they usually all add cost, expense, and time delay to the ecosystem.

When you find a list of available parts, you now must answer the follow-on questions; 1) which is the right part and 2) where it came from and, critically, 3) is it safe (airworthy and is the provenance secure). The 8130 tags will confirm air worthiness, most of the time, but since it cannot talk to us, we might not know if the part is counterfeit, nor if the part was previously scraped and reclaimed. 

The MRO industry has evolved  slowly over the past 40 years, adding spare providers and outsourcing capacity, particularly in low volume geographies to capture economies of scale. Furthermore, new and creative power by the hour or cycle have shifted financial responsibility and sometimes pass costs on to the consumer or shareholder.

These have not been sustainable outcomes or solutions as the aircraft and their parts become more complex and their interaction create new repairable conditions. To compensate, you add -

• More spares - you also add more capital and carrying costs - The SCOR model is clear, spare parts inventory costs 25% per year in operating cost. In perspective, every $1,000,000 dollars of inventory costs $250,000 annually

• More aircraft or major assemblies to mitigate longer TAT - you lose the use of capital for other initiatives such as route expansion.

• SLA's and other security measures - you add costs to manage the people managing the SLA's.

What can we do next?

So how do you address the root cause of the issues - parts visibility and provenance - unlocking trapped value in your company? The answer to both questions is simple, take advantage of SkyThread for Parts. SkyThread has built a parts state machine that validates and makes visible throughout the aerospace parts data network, the status of a part:

• Where is it?

• On-wing or off-wing?

• Where did it come from?

• Who else flew this part?

• Is it new or repaired?

• Do we have a birth record or repair history?

• Does it have a negative history (early removals)

• What are the current hours/cycles?

• What are the remaining hours/cycles?

• Can I get my hands on it?

What are the benefits to doing different things?

The global average MRO cost per aircraft and engine set exceeds $3 million per year and is rising. This empowering new information creates the visibility each ecosystem partner needs to take costs our of MRO, lower required inventory levels, shorten TAT, and improve asset (aircraft) revenue performance. So, who cares? Well, the benefits for each ecosystem partner are clear -

Airline / Operator

• Reducing TAT means delivering speed to seat revenue

• Lowering MRO costs and delivering cash

• Meeting schedule and reducing flight delays improving customer satisfaction

Tier I Parts

• Mitigating supply chain disruption, avoiding over production and penalties

• Improving power by the hour/cycle performance leading to increased margin

• Certifying parts avoiding counterfeits and suspected unapproved parts

MRO provider

• Avoiding wasted service time and SLA penalties

• More effective use of parts pooling with reduced inventory investment

SkyThread delivers on the promise of visibility and trust for aerospace spares. We call it "Data for the Life of the Part". We work to provide value "collectively" to the ecosystem and every partner individually. 

How Does SkyThread Help?

We’ve built SkyThread for Parts to help the airlines, the technicians, the broker / distributor community and the Tier 1 parts makers work together as part of a bigger community to take care of each other and our planes. The annual parts ecosystem is large – over $30 billion a year just for the parts purchases / exchanges and over $70 billion a year for the total maintenance activities. But the level of inefficiency, waste and delay is tremendous, and the level of forensics work to find the right part is mind numbing. 

SkyThread is providing the trusted data sharing network, enabled by blockchain, to bring forward the life history of an aircraft part to find the right part, for the right plane, at this moment to get this plane flying again. The life history is important, because there are no regulations requiring it to be provided. Therefore, we “get what we get”. SkyThread will provide more visibility to the “status” of the parts we have available, while not interfering with the existing part “offer / purchase” companies, processes and systems in place today. All these current enablers are like silos. You can only see what’s in the one silo, not all the silos. SkyThread is building the data network to support:

• Part # / Serial # on wing – what’s flying today and how long has it been there? – 60 million parts

• Part # / Serial # on ground – which parts are “staged” and what status are they in? – 40 million parts

• Part History – Part birth, 1st use of part (installed on aircraft), removal, repair, and installation history

Once we have a better handle on specific part # demand, we can do a better job of positioning and finding the right part for the right plane at the right place at the right time. No matter who you are or where you sit in the value chain.

SkyThread for Parts

For more information on what we’re doing, see my SkyThread article series on LinkedIn. In the first week of the series, I included a history of how we’ve come to realize there is a better way to achieving what we call “Data for the Life of the Aircraft”. We’ve been working with blockchain (and other technologies) to develop ways to use blockchain to achieve the industry business needs for data transparency and trust. In the 2nd week of the series, I included a short post on “Lessons Learned in Blockchain”. Now we’re making progress and working with over a dozen companies around the world in their respective parts and plane ecosystems to achieve “breakthrough” results. Here are the links to the prior articles in the series.