Blockchain for Parts Tracking: Where does this promising approach stand today?

Blockchain for Parts Tracking: Where does this promising approach stand today?

For the April 2022 edition of Aerospace Tech Review, I wrote an article entitled ‘Blockchain: The Future of Tracking Aircraft Parts?’ In that story, we explored the application of the blockchain digital identity system to tracking parts from their dates of manufacture to end of life, and how blockchain could address serious issues such as Suspected Unapproved Parts (SUP); in other words, fakes. Blockchain’s robust security features — with each part being assigned its own unique blockchain identity at start of life using its serial numbers, transactional data, maintenance records, and 8130 tags — can also be used to detect stolen parts as they enter the aviation supply chain. Blockchain can also expose supposedly ‘refurbished’ parts that have actually exceeded their operational lifespans and are not fit for re-use.

Time has passed since that first article: Where does blockchain usage stand today in the aviation industry? Is it catching on, or have events moved on since our first article? That’s what this blockchain update article is meant to find out.

A Quick Blockchain Refresher

To retain consistency with our initial blockchain story, let’s begin with the same definition. “Blockchain owes its name to how it works and the manner in which it stores data, namely that the information is packaged into blocks, which link to form a chain with other blocks of similar information,” said the Lisk Foundation, the nonprofit group associated with the Lisk blockchain application platform. “Once the data is recorded in a block it cannot be altered without having to change every block that came after it, making it impossible to do so without it being seen by the other participants on the network.”

Gary HochmanQuantum Marketing Group
Gary Hochman
Quantum Marketing Group

To put this definition into more accessible language, “Blockchain can simply be understood as a transactional ledger, similar to an accounting ledger used for banking,” said Gary Hochman, a partner with Quantum Marketing Group. “It provides a start point and an end point for information. The ledger can be shared to see current transactions and used to identify historical transactions based on the data contained in the transaction.”

David BettenhausenAerotrax Technologies
David Bettenhausen
Aerotrax Technologies

“Here’s my definition: Blockchain is a trusted, permissioned transaction platform maintained across distributed computers in a peer-to-peer network, utilizing incentives to ensure good behavior,” said Jeff N. Smith, Parker Aerospace’s head of digital product programs. Again, blockchain is designed to be secure by its very nature. “Verified participants in the network are only allowed to add records,” noted Aerotrax Technologies CEO David Bettenhausen. “This creates an immutable record of all transactions that is indisputable and auditable.”

Jeff N. SmithParker Aerospace
Jeff N. Smith
Parker Aerospace

Mark Roboff, CEO and co-founder of SkyThread (which is building a blockchain data exchange network for commercial aviation), prefers to define blockchain by explaining what it isn’t. “Blockchain is not cryptocurrency. It is not tokens. It is not Bitcoin. It is not NFTs,” he said. “Instead, blockchain is a data structure ecosystem where data is distributed amongst the many players that are part of a blockchain network. And the way that blockchain implements its security is in the design of its data structures, which is really, really, very clever because it allows us to create these secured, distributed data ecosystems where any time information is tampered with, it’s immediately detected because of how information is chained together using cryptography.”

Mark RoboffSkyThread
Mark Roboff

A tamper-resistant identity system for aircraft parts that is impossible to hack. That’s what blockchain offers to aviation. But that’s not all: “The information needed for us to get value out of a blockchain has everything to do with having data on our parts and around its movements beyond the four walls of our manufacturing plant,” said Smith. “Blockchain means that we don’t have to integrate with each and every one of our customers’ ERP or maintenance systems, which we’d never be able to do or maintain anyway. Meanwhile, just as our customers want clean data from a part’s origination point, so do we — which ties into the incentives’ aspect of blockchain. A permissioned blockchain provides us with security and trust associated with the use of the technology. This foundation gives us the security necessary to share this to the chain and know that it is only being shared with a permissioned node partner and in the way we have agreed to share data. Without this kind of built-in security, no one would be willing to share this type of data.”

An Example of Blockchain’s Strengths

To get a sense of how blockchain can improve the aircraft parts servicing sector, let’s look at an example.

Quantum Marketing Group has two entries in the aviation blockchain tracking market: QCcapture and PartsFax. “We started looking at teardown parts and found a need to document their condition, and from that activity we filed a patent to create a standardized part trace methodology,” Hochman said. “That patent was issued in 2022. We then filed for a continuation patent to apply blockchain, artificial intelligence and other value-added features to our applications QCcapture and PartsFax.”

According to Hochman, the combined benefits of these enhanced programs include automatically pushing updated blockchain data, voice, and video records to cloud storage, improving part out and line maintenance part documentation with blockchain trace data tracking being accessible through the company’s mobile app, and being able to find out how many times a part has been serviced, leading to more accurate part valuations. Using blockchain for parts tracking and monitoring also makes it easier to ensure compliance with relevant regulations, track parts shipments and any damage that occurs to them enroute, and improve QC (quality control) throughout. Blockchain can also shorten servicing turnaround times by providing repair depots to assess the state of the affected part before it is shipped, and detect any missing elements of the part using attached photos and videos.

Blockchain is a data structure ecosystem where data is distributed amongst the many players that are part of a blockchain network. The way blockchain implements its security is in the design of its data structures, which creates secured, distributed data ecosystems where any time information is tampered with, it's immediately detected due to how the information is chained together using cryptography, says SkyThread’s Mark Roboff. Photo Credit: Werner Aero image.
Blockchain is a data structure ecosystem where data is distributed amongst the many players that are part of a blockchain network. The way blockchain implements its security is in the design of its data structures, which creates secured, distributed data ecosystems where any time information is tampered with, it’s immediately detected due to how the information is chained together using cryptography, says SkyThread’s Mark Roboff. Photo Credit: Werner Aero image.

Blockchain identities can be integrated into the existing parts databases operated by airlines and MROs, and enable better data sharing among everyone concerned. This speeds up the process of parts acquisition, installation, monitoring, repair, and removal. “This data can be FAA, EASA, CAAC, ARSA, or ASA-integrated,” said Hochman. It can be accessed and updated using apps running on Android, Apple, or Windows devices that each have access to a camera, video, and voice recording capability.”

Obstacles to Deployment

Back in last year’s article, it was made clear that blockchain was a long way from being adopted by the aviation industry. No matter how well-suited blockchain is for aircraft parts tracking, issues such as who would pay for the deployment and maintenance of a blockchain system, who would have access to the data, and risks of self-interested businesses exploiting blockchain insights to enrich themselves need to be resolved before this technology can achieve widespread acceptance and deployment. Also stuck at the starting gate is a proposed solution of creating a unified blockchain system for the entire aviation industry, with a neutral party managing this system for everyone’s mutual benefit.

Today, not much seems to have changed. “There are many challenges to creating an industry-accepted standard for blockchain,” said Hochman. “There is the issue of who is going to monitor and ensure standards to be created by one or more consortiums or other industry groups all wanting to be the proven accepted solution. Then there is the politics of who owns the data and who will share and not share historical records. There is also the issue of security and private information: OEMs, MROs and repair shops do not want to share with competitors, and there is the issue of who is the company person responsible for blockchain within aviation organizations: CTOs, IT management, or quality control and compliance management?”

There are further issues that need to be addressed for blockchain to find its place in parts tracking. For instance, “Blockchain for parts needs to start with the OEM when the part is manufactured,” Hochman said. “Documenting the part’s existence and condition (new) at the factory is what starts the security aspect using the part’s ID number and serial number (authenticity) which will follow the part through its life cycle whether installed on a newly manufactured aircraft/engine or for stock. This is especially true for flight critical, life limited and USM parts (Used Serviceable Material).” Will OEMs be willing to shoulder this cost? Will their clients be willing to share in the expense? Like the ever-thorny issue of splitting a restaurant bill between a table of 12, the question that matters most is: “Who pays what?”

When it comes to the deployment of blockchain in aviation, Aerotrax’s David Bettenhausen has his doubts. “Theoretically, blockchain would be well-suited to the task if it were to be properly implemented across the entire supply chain, then it could provide cradle-to-grave traceability,” he said. “The challenge is traction: When competing on priorities across the entire organization at an airline, MRO, or OEM, using blockchain to track aircraft parts is not very far up the list of their priorities based on the conversations that we’ve had. Instead, decreasing AOG time, improving reliability, empowering people to accomplish their work, and maximizing MRO velocity are higher priorities. Now some may make the case that using blockchain to track aircraft parts could result in solving some of these priorities, but this is dependent on the overall network adoption of the blockchain. And that is dependent on thousands of companies — from mom-and-pops to massive defense prime contractors — all saying ‘yes’ to buying into the blockchain system.”

This is why Aerotrax Technologies has moved away from blockchain for its cloud-based aircraft part tracking system. “We made the decision because blockchain was ultimately slower, more expensive, and riskier,” Bettenhausen said. ‘I say this with the background that we built in this space for years. We signed on big customers, we tested blockchain software, we implemented it in numerous places, but we could never cross the valley of proof of concept/pilot into commercial. This forced us to take a step back and completely redesign the platform from scratch.”

However, SkyThread is finding success with blockchain. “We are deploying SkyThread for Parts — leveraging the SkyThread Blockchain — at some of the largest OEMs, Tier 1s, airlines, and MROs in the world today,” said Roboff. “In the past six months, we’ve publicly announced commercial agreements with Air France Industries KLM Engineering & Maintenance, AJ Walters, L3 Harris, and Parker Aerospace.”

blockchain link

The Push for an Industry-wide Standard

The obvious need to improve data sharing across the aviation industry — and not just for parts tracking — has resulted in the creation of the IDCA: the Independent Data Consortium for Aviation. It is a global consortium of aviation companies seeking a way to share data “in a non-competitive manner,” said the IDCA’s website. “Its objective is to create a more efficient marketplace, where both waste and the time required to get to a common solution is minimized.”

The areas where the IDCA hopes to foster a common trusted platform for aviation data sharing start with parts tracking from birth to disposal. But it also hopes to encompass Aircraft on Ground (AOG) servicing, diagnosing technical problems common to all operators, lease ownership transfers, and preserving mandatory aircraft safety data even in areas experiencing conflicts.

Ravi RajamaniIDCA
Ravi Rajamani

So where does blockchain fit into the IDCA’s vision? According to the IDCA president, Ravi Rajamani, this is an open question. “What we are trying to do at the IDCA is to develop consensus rules for ensuring that data can be shared in a reliable, secure manner across all the participants in this ecosystem,” he said. “If blockchain proves to be the best way of getting to that, then that’s fantastic. But if tomorrow we come up with a better way of getting there that follows the requirements that we are going to set up, then fine — we will switch. But I don’t think we should get hung up on blockchain. It’s the rules that are above that, that are important.”

Where We Stand Now

Based on the feedback we received for this article, there remains a lot of enthusiasm in the aviation industry for the kinds of benefits that blockchain can provide, but not necessarily for blockchain itself.

Certainly, the implementation of blockchain would entail extra time and expense for the aviation industry, whether limited to parts tracking or for a whole range of functions as the IDCA envisions. But this will likely be true for any industry-wide data tracking/sharing/verification standard and/or system that the industry may ultimately settle on. Moreover, because humans engaged in profit-oriented businesses can’t always be trusted to put the Greater Good above their own selfish desires, some sort of neutral authority with the power to back its decisions will be required to make any such system work.

This is the irony of the current blockchain debate. Many of the issues being cited have little to do with blockchain as a discrete aircraft parts tracking system, and everything to do with the general concept of a trusted industry-wide data-sharing standard and the costs associated with it.

Judging by his comments, the IDCA’s Rajamani is aware of this distinction, which is why his focus is on the rules being developed to enable safe data sharing, rather than focusing on blockchain or any other specific solution towards this end. But it remains to be seen if the aviation industry as a whole understands this distinction, or if their time will remain consumed with debating the pros and cons of blockchain instead.