Blockchain technology is breaking out of its traditional cryptocurrency model. The applications for a secure, transparent, and highly traceable distributed ledger system are nearly endless.
One application that’s being examined by a variety of industries is supply chain management. Blockchain provides a perfect complement for existing systems that need to track the origin, handling, and ultimate destination of a part or product throughout an often convoluted and frequently global supply matrix.
Supply chains, like the industries they serve, are diverse and keyed toward different factors. A food supply chain must emphasize speed and care in handling, while a bulk commodity supply chain — like coal or iron ore — must be efficient and fungible.
The supply chain for industrial and aviation parts combines the difficulties of both general approaches. Delicate parts must be handled in a precise manner. Efficiency is doubly important when each component is worth potentially tens of thousands of dollars.
One new mover in the aviation supply chain space is GSC Aviation, which aims to make a dent in the more than 50 percent of airline accidents that occur due to human error. Remove the human error, the thinking goes, and you remove a major source of airline trouble. This is one of the few examples where blockchain technology has the potential to save lives.
Maintenance errors can also have a significant effect on airline operating costs. It is estimated that maintenance errors cause:
20 to 30 percent of engine in-flight shutdowns at a cost of 500,000 USD per shutdown
50 percent of flight delays due to engine problems at a cost of 9,000 USD per hour.
50 percent of flight cancellations due to engine problems at a cost of 66,000 USD per cancellation.
François Normandeau, General Manager of Casta Diva Forums, says:
Using of blockchain applications allows airlines to have tamper-free and transparent records of each single element of their supply chain, including origin of parts, specifications, date of shipping, notes and comments, etc. Blockchain would not only simplify record-keeping but also streamline processes and increase cost efficiency.
GSC Aviation’s blockchain aims to take aviation supply beyond the current RFID chip paradigm. While RFID chips have been chugging along for quite some time, their interoperability remains low. That is, the chips must be scanned and the information rather cumbersomely stored and manipulated at each discrete point in the supply chain.
This threatens margins and puts large amounts of expensive equipment at risk of being lost in the shuffle. Worse — it’s potentially unsafe. Ensuring the integrity and proper placement of aviation parts is one of the most mission-critical supply chain jobs available. If a crate of tomatoes gets misplaced, money is lost and the tomatoes are ruined. If a crate of aviation electronics is delivered to the wrong components manufacturer, the results could be catastrophic.
Developers of the project consider:
In a critical sector like aviation, knowing the source of all parts, having product quality information and being able to locate the supplier of a faulty component is crucial for industry players… In addition, the transparent and verifiable features of blockchain technology enable an effective and rapid response to fraud detection.
GSC’s system relies on a blockchain trading in native GSC tokens. Components are effectively tokenized in the GSC marketplace and can be tracked throughout the supply chain. This can be retroactively applied to parts featured planned obsolescence. This is crucial to the safety of the entire aviation system, as regularly maintaining and replacing parts is one of the key factors in reducing accidents.
The dovetails that could potentially be made between platforms like GSC and the so-called Internet of Things are enormous. As interoperability improves between machine components and individual blockchains, it might be possible to view the aircraft supply chain in layers.
The base layer consists of an Internet of Things-enabled blockchain, like IOTA, capable of handling the information being shuttled back and forth between autonomous delivery vehicles, warehouse sorting hardware, and purchasing databases. The next layer consists of specialist blockchains, like GSC, which give the Internet of Things a template, so to speak, from which to work.
Say widget A in a certain aircraft has been tokenized and is due for replacement in the next two weeks. The traditional model would involve a database — likely entered by human hands via RFID scanning — flagging the part for replacement. It’s then up to the humans in the supply chain to make the necessary purchase, ensure delivery, and schedule the actual replacement.
These bumps and lumps disappear in an Internet of Things system. The tokenized widget A is automatically flagged by the blockchain when it reaches its obsolescence point. This executes a smart contract on the supply blockchain, which itself cascades down to the base Internet of Things blockchain.
The part is ordered automatically — again, via smart contract — and the delivery process begins without human involvement. Importantly, the new widget is automatically enrolled in the blockchain from the moment it’s purchased — so there will never be confusion as to where exactly it is, when it’s coming, or when it should be installed.
The blockchain’s potential for streamlining supply chains is emerging as its single most important use case. Ironically, GSC and similar projects have the potential to mitigate the loss of human life by removing the human element from the supply chain entirely.