Honeywell Digitalizing the Trade of Aircraft Parts

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By Michael Larner | 3Q 2020 | IN-5911

Honeywell manufactures and repairs thousands of aerospace parts each day, and estimates the market for used aircraft parts to be worth US$4 billion annually. The company launched GoDirect Trade, an online marketplace for aircraft parts, 18 months ago to provide repair shops, airlines, and aircraft parts manufacturers with an e-commerce platform; typically, aircraft parts are bought and sold over the phone or via email and often supplied lacking all the relevant background information.

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GoDirect Trade Delivering E-Commerce in the Aircraft Parts Market

NEWS


Honeywell manufactures and repairs thousands of aerospace parts each day, and estimates the market for used aircraft parts to be worth US$4 billion annually. The company launched GoDirect Trade, an online marketplace for aircraft parts, 18 months ago to provide repair shops, airlines, and aircraft parts manufacturers with an e-commerce platform; typically, aircraft parts are bought and sold over the phone or via email and often supplied lacking all the relevant background information.

GoDirect Trade is not only an online marketplace. It also provides, thanks to the use of blockchain technologies, an information chain covering information about the part plus all associated information, including the work previously carried out on the part (and where), pricing information, and U.S. Federal Aviation Administration (FAA) certificates.

Simplifying transactions, providing pricing transparency, and End-to-End (E2E) record keeping will provide the airline industry with a quicker method for acquiring parts allied with confidence that the parts will meet safety standards.

Blockchain Technologies Providing Transparency to the Online Marketplace

IMPACT


At the time of writing, the GoDirect Trade marketplace has over 9,000 active users from over 3,500 firms who access the 100+ storefronts currently available on the site. Like other online marketplaces, sellers on GoDirect Trade are charged a monthly fee. Between them, the storefronts have processed over US$10 million worth of transactions since the marketplace opened.

Initially there was hesitancy among suppliers to adopt the platform, for fear of being undercut on pricing. However, the main benefit to parts suppliers is that they can now serve customers all over world. Improving the transparency and record keeping in this sector will drive customers to the GoDirect Trade platform.

Furthermore, pressures on airline operations thanks to COVID-19 are driving change in procurement practices. Previously, airlines sought quotes from three suppliers for aircraft parts, but now they can obtain a greater spread of supplier prices in a shorter timeframe from the GoDirect Trade marketplace. The blockchain ledger provides a searchable archive of relevant information pertaining to a part and protects parts manufacturers from the risk of counterfeit items entering the supply chain. However, it does not replace regulator’s disclosure and document requirements in order to gain safety certifications.

Maintaining Momentum

RECOMMENDATIONS


Honeywell has stolen a march on other aircraft parts suppliers in tapping in into digital technologies to support its own transactions as well as developing a new revenue stream for the company. The blockchain technologies deliver confidences for buyers and sellers and, in addition to Honeywell’s promotional activities, drive traffic to the GoDirect Trade platform.

An important step for Honeywell’s internal operations is that the GoDirect Trade platform is integrated with its own SAP system, ensuring real-time data flows into the ledger. Going forward, the GoDirect Trade platform needs to provide sellers with the ability to integrate the transaction data with their Enterprise Resource Planning (ERP) and Manufacturing Execution System (MES) systems in order to contribute to firms’ efforts to create digital threads across their organizations. A further improvement to the platform will be the addition of analytics capabilities to help with sales forecasting and understanding the performance of individual parts. Furthermore, Honeywell is looking to work with parts manufacturers and utilize the data collected to augment its quality management programs.

Away from aircraft parts, Honeywell is also applying blockchain technologies via a partnership with iTRACE Technologies, Inc., (a provider of supply chain security application) whereby a chain of custody is applied to labels such as barcodes printed by Honeywell’s range of industrial printers.

In the future, Honeywell is looking to create an equivalent platform serving the needs of other verticals—e.g., the automotive, food and beverage, and/or pharmaceuticals sectors—where traceability afforded by blockchain technologies ensures confidence among buyers. GoDirect Trade is one of the first use cases for blockchain technologies to support new revenue streams for an industrial firm. Other initiatives, such as BMW’s PartChain—outlined in the ABI Insight Blockchain Delivering Supply Chain Visibility for BMW (IN-5803)—have focused on delivering operational efficiencies. ABI Research anticipates more Business-to-Business (B2B) marketplaces to be launched in the coming years, with the traceability and overall transparency afforded by blockchain technologies allaying buyer concerns.

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