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How Honeywell Uses Blockchain In Aviation

GoDirect Trade is an online marketplace powered by Honeywell. The marketplace focuses on the sale of aerospace parts, a $4 billion industry. But––somehow, some way––virtually none of the  transactions for aerospace parts are conducted online.

“That’s crazy, considering how much of the world placed an order on Amazon before they got out of bed this morning,” said GoDirect General Manager Lisa Butters, who spoke with us to give us insight into the company’s work at the intersection of blockchain and aviation. “The majority of transactions that are done for used parts is actually done through emails and phone calls and in a really antiquated way.”

Think used cars 15 years ago, when it was very relationship-based. “You come to the dealership, and they make you a deal. Nothing was transparent. That’s exactly what used aerospace is like today. When we launched this marketplace, about a year ago, we knew that our biggest hurdle was to really figure out why people weren’t transacting online. It’s a big dollar industry. But, why weren’t people taking advantage of digital, when in their everyday lives it’s something that they have come to expect.”

Honeywell researched the experience of buying parts over their online platform. They wanted 

an easy consumer-like experience. GoDirect trade is a blend between Amazon and Etsy. It’s like Amazon in that it takes 10 seconds to place an order. And it’s like Etsy in that you can have a customized storefront. 

“You could be a mom and pop all the way to a multi-billion dollar enterprise, and you can launch within five minutes and start selling parts online. But, despite the fact that you can have the perfect user experience, there is still that really nagging question of why are people not putting parts in their cart and checking out.” That’s what Butters looked at: how blockchain could potentially help Honeywell solve that customer problem. 

These are aerospace parts, so they are high dollar. They include everything from $1 screws all the way to multimillion dollar engines listed for sale. “Our average orders are about $10,000. It’s a little bit pricey to put that in your cart. But, if the average order that we transact is about $10,000, that’s a high dollar. So, for someone to feel safe enough to put it in their cart and to check out, there has to be a lot of trust between the buyer and the seller.”

That’s where blockchain technology comes in. “At its core, blockchain technology is really a way to manufacture trust between the buyer and seller, but in a digital way without human intervention,” she said. “The way that we use it in our marketplace is like CarFax. If you’ve ever bought a used car before through Carfax, it tells you everything there is to know about the car before you make the purchase.” 

For instance, maybe a car was in a cold weather state, and you don’t want all that damage to your engine from the snow. Maybe it was in an accident. “We try to figure out and collect as much information about the part as possible,” explained Butters. “Who are previous owners of the part? 

If you are on our marketplace, and you see two parts with the same part number, but one was owned by, say, Delta Airlines and the other was owned by an individual name than you may feel safer trying to check out with something that you know that Delta Airlines had installed on their aircraft.” 

This type of thing is a really big deal in used aerospace parts. The average time that a part changes hands is four owners. “In the US aerospace industry, we recycle high dollar parts a lot. And, so for us, we use blockchain technology, because it’s a way for us to crowdsource the data in a highly secure way.” 

These parts are touched by airliners, dismantlers, brokers, repair shops, individual sellers. “The technology allows us to collect all that data in a really secure way, and then show that on the marketplace,” she said. “So, we basically use all the data to provide it to the consumer ahead of time so that they can make a far more efficient and a better business decision when they’re trying to figure out if they want to buy the part or not.”

The transition to blockchain won’t be easy. “In the world of aerospace, it’s pretty antiquated in terms of paperwork and ownership trails. When you buy a house, it’s within that title. There are websites that you can go to and you can look up who owns the title prior to you owning the house. With aerospace, that whole ownership trail of who owned it previously, you would have to physically make sure that the bill of sale piece of paper followed that part with the box. It’s almost impossible to really figure out who owned it.”

In order for a part to be safe enough to reinstall back into an aircraft, if you don’t have the paperwork of who owned it, you typically have to take that part and do a full overhaul to it– recertify it and get it back into shape so you can reinstall it back into the aircraft. Big dollars. You have a part that, if you don’t know really where it came from, it’s not worth a lot. So, now you have to put in all these dollars to re-overhaul it or to recertify it so it can go back into an aircraft.

Blockchain technology for big enterprise companies like a Honeywell is a way to crowdsource the data. “Blockchain is a game changer for us,” said Butters. “Because typically, within some of these big Fortune 500 companies, we take a walled garden approach to data. We don’t want to share our data. We don’t want people to look at our data. We just want to house our own data. And, in this case, we need all of the data when it comes to serialized parts that we list for sale in the marketplace. We want to know everything about that part and what’s happened to it in the past. But, in order to get that information, then all of these companies or enterprises that have touched these parts, can’t all be in these walled gardens. What blockchain does is it allows us to break down those walls, not have the walled garden approach and start collaborating and sharing our data as to what’s been going on with the parts. But, in a highly secure way where people feel comfortable using a very secure technology.”

For now, blockchain is very infantile in the aerospace industry. “We’re barely scratching the surface. It all started with launching the marketplace. And starting with the customer problem of why are people not checking out. And, when we thought about why people are not checking out, we outlined five Whys, and it really came down to trust. They don’t trust enough to check out, unless they can pick up the phone and call or email and negotiate and make them feel warm and fuzzy and that this isn’t a scam.” 

Blockchain could be the technology that builds that trust digitally without human intervention. “And that’s really how the conversation started. They are not checking out because there is not enough trust built into that transaction.”

Some companies are better at keeping paperwork organized. But, in general, it’s really difficult when you have an aerospace part, and it changes hands four times. How do you expect to keep that piece of paper with that part so that people’s confidence in traceability can be low, especially within aerospace and the quality people work, which is why you’re seeing more and more trying to move into digitizing all their paperwork.

“Blockchain takes it to that next level, you’re not only digitizing all of your paperwork, but at the same time, you’re allowing the breaking of the walled garden approach so that people can start sharing data, collaborating and looking at all of the data points for a particular part.”

Honeywell uses Hyperledger Fabric. “That is a really good product in terms of helping us build an enterprise grade platform and it also allows us to build multiple channels on our platform. When you build multiple channels, you are able to very quickly have other kinds of business groups and areas tested using your blockchain platform, as well as our part pedigree platform where we’re trying to collect data across our ecosystem as it relates to parts.” 

It all relates back to trying to get more information about parts as possible. That’s how blockchain can help solve problems, including counterfeit activities, in aerospace. “The reason why it came up is because a lot of people, when they think of blockchain, associate it to anti-counterfeit and being a technology that can combat counterfeit activities. But, really, by itself, it doesn’t do anything like that and doesn’t do anything to combat counterfeit parts. But, when you couple blockchain with other technologies, that’s where you can really get the power of really combating counterfeit.” 

Honeywell is working with two startups: iTrace out of California and Secure Marking. iTrace has a patented unhackable QR code that you can laser etch onto aerospace parts, and then Secure Marking has developed a sort of magic ink. You can put the ink right on top of that QR code, and it’s invisible to the naked eye. You need a special light to actually activate the frequency. And so you can’t see it unless you have a special light. “We thought about how the Fed does five factor authentication on a $100 bill, and how we take that type of technology and put it on aerospace parts.” 

In a trial on some of the parts on the platform, Honeywell took ID plates, laser etched the unhackable QR code, and then used the magic ink from Secure Marking. Honeywell produces a similar ink, as well, in their advanced materials group. They experimented with this ink, too. As soon as a part is ready to go live in the world of manufacturing, it receives that QR code and the magic ink. And then  QR code is scanned and creates its digital birth certificate, so to speak, on our digital blockchain ledger. Honeywell can put such technology to the test. As a global manufacturer of aerospace parts, every two seconds something comes off our manufacturing line. 

Every two seconds, all of that data gets written to the blockchain ledger. “We have from now until the end of time, these digital birth certificates of all Honeywell parts to our blockchain. As soon as anything is born, we are writing it to the ledger.”

When Honeywell is creating a physical aerospace part, we take pictures and upload them to the marketplace. “We use blockchain technology in conjunction with OCR, optical character recognition. When people are receiving those parts, before they get listed for sale, once they scan the ID player, they take a picture of the ID plate, it runs through our OCR technology to read the part numbers and serial numbers.” The blockchain contains all of the paperwork that travels with that part. 

“We store all of the bits and bytes of all the quality paperwork. So instead of it being a PDF document, we take all the content from like quality paperwork, and we put it in the ledger. And so what happens during induction is we compare what’s on the ID plate using OCR, compared to the paperwork that we have stored in our blockchain ledger, which is bits and bytes. We make sure that those two things match before it moves onto the next step, which is packaging it and making sure that we can list it for sale.” That’s another example where Honeywell is using the technology, in terms of trying to use it to really make the process more efficient and more accurate. 

“We’re trying to mark aerospace parts with a two factor authentication process, and we’re trying to load it to the ledger so that we can follow the part throughout its lifecycle from birth to death. People are firmly entrenched that this could be a game changer for aerospace. If you think about aerospace, counterfeit parts, and how often it happens, it’s kind of like a diamond heist or a cybersecurity attack. You really don’t hear about those things in the news, because they don’t happen all that often. It is because the people who are in charge of those diamonds, they put a lot of security and measures around, so it never happens. It’s the same with aerospace and anti-counterfeit activity. It very rarely happens. And it’s because we put a ton of security around it.” But when it does, it’s a really bad thing. 

“In the case of aerospace and counterfeiting, the way that we combat anti-counterfeit, is we put a very intricate complex process in place to audit our suppliers where parts are coming from. And these are all very manual kinds of checks. In order to ensure that the parts that we’re getting are authentic, and there they’re going back into Honeywell parts. And then, ultimately, our Honeywell part is authentic, as well. If you think about what blockchain does for this process, we can take all of the complexities out of auditing suppliers of auditing where parts came from, because if I can at the source, as soon as you know a part is born, track it with blockchain.”

By the time it gets to Honeywell, even if it took 50 stops along the way, the part can be scanned, and the purchaser can figure out where it came from. “If it came from an authorized source, then it’s fine. I don’t need this really complex network of auditing and checks and authorized distributors in order to tell me that the part is authentic. And so there’s a ton of waste and process that can be eliminated in our supply chain by using this technology. And that goes deeper into the bill of material.” 

From an aerospace perspective, if parts are marked, and the changing of hands tracked––where parts are getting installed, where they’re getting sold to when they actually get scrapped out––that’s a really big deal for any company to know what is going on with their parts. 

“When we look at what blockchain technology can do for our parts, and how we track them, and how we manage them in our supply chain process, it’s a true game changer for us,” said Butters. 

“Whether you’re talking about parts that are going into passenger planes, or whether it’s an individual operator, these are parts both in the commercial private sector and the marketplace as well. We sell to airlines, and we also sell to individual operators of their plane. For instance, we had sold a used engine for $100,000 that went on to a 1984 aircraft to keep it flying. And that was somebody with a Gmail account. We sell to individuals with Gmail accounts all the way up to the largest airlines in the world.”

For Honeywell, blockchain is a way to remove the complexities of the supply chain to make sure parts are authentic. “The flip side from a marketplace perspective, where I really run the business, is really about transparency. Blockchain is the means in which I can bring transparency to the consumer, and really change the industry from doing emails and phone calls for $4 billion in sales into online sales.”

Honeywell has been working on blockchain applications for a year. “For anyone who’s just starting in any new infant technology, it all starts with research. You start watching YouTube videos, you start talking to people about it, you start reading case studies and white papers. And that’s really, honestly, how we started: just trying to figure out what this technology is. Can it solve the problem that we’re trying to solve? And then once we got started, it snowballed, where the more and more that we use it, the more and more we realize how it can really change the game for our business and for our processes.” Honeywell is looking at how to leverage the technology and expand it further.

The company developed Honeywell Forge, an Enterprise Performance Management Software. “And that whole thing is built off of open source architecture,” said Butters. “So the whole concept of open source is not foreign to us by any means. I would say whether it’s Honeywell Forge, or whether it’s GoDirect trade, or whether it’s blockchain and developing on our Hyperledger platform.” 

Honeywell prefers open source when developing new projects “to make sure that we’re open enough so that others can help develop with us and get applications out so we can start testing them and seeing what’s going to go live and what’s not going to go live.”

The company’s leveraging blockchain and expanding our ecosystem. “In an enterprise setting, it’s really a team sport. If Honeywell is the only person on the blockchain ledger, this is not going to work. Our main focus right now is building up the ecosystem with the right players. We need more and more companies. And we do have them today. But we need more and more whether it’s  companies, repair shops, mom and pops or otherwise inside of our blockchain ecosystem, spooling up their own nodes or inputting data through our user interface, so that we can continue to collect all that data, because if it’s just us in it, it’s not going to work. 

So Honeywell must first and foremost expand its ecosystems. “The other thing that Honeywell is looking towards, besides expanding our counterfeit solution that we had talked about previously, is there’s other areas like additive manufacturing that were highly interested in when it comes to blockchain digitizing engine logbooks using blockchain. But, you can get a little bit caught up in trying so many use cases, and then not building like full blown production applications, which is why we have it structured with Hyperledger Fabric and the multiple channels where you can develop on it. You can build a ton of use cases. But, at the same time, right now, our bread and butter will be expanding the ecosystem for our pedigree network.”

It’s about winning over person by person, company by company, says Butters. “This is really what it’s gonna take. We want to get the word out that blockchain isn’t just for cryptocurrencies. And it’s not just for the finance industry or the diamond industry or the food industry. It has major implications within aerospace. It’s really about not only educating people.” 

Honeywell is trying to take the lead in educating within aerospace why blockchain technology can be a game changer, while setting an example. “We use it day in and day out within our marketplace. We’re trying to build out the ecosystem. We’re not going to stop until we get more bigger players. And we’re trying to expand it with our manufacturing environments. We’re trying to set the example that it can change the game but the big players and the small ones all need to participate in it for it to work.”