Traceability technology enables the detection of fake parts in the aviation supply chain industry, so why do counterfeits continue to surface?

In the UK they call them ‘cut and shuts’ – cars made out of the remains of written-off vehicles. The tell-tale signs tend to be evidence of welding on the undercarriage, mismatched fittings on the doors or seats, or even a body paint colour that doesn't quite match under close inspection.
The practice is highly criminal and – given how it compromises the structural integrity of the vehicle – dangerous to the new owner.
Well, now it looks like the Brits have moved onto planes, as a London-based company stands accused of forging “numerous” certificates to authenticate counterfeit parts used by the aviation industry’s most widely used jet airliner engine, according to the European Union Aviation Safety Agency.

Seventy fake engine parts detected

According to the agency, AOG Technics has been routinely faking Authorised Release Certificates (ARCs) to supply parts for the CFM56, the high bypass turbofan engine that powers Airbus aircraft such as the A340, and A320, as well as the Boeing 737. 
Since its debut in 1974, 30,000 CFM56 engines have been produced by CFM International, a French-American joint venture between Safran and GE Aerospace, although it is unclear how many remain in circulation. 
It’s not been established which fake parts AOG Technics has been distributing and whether they have undergone any form of testing – ARCs would confirm they have been produced to specific standards and rigorously tested. 
But it is believed there are at least 70 fake ARCs, and that this encompasses 50 different part types. 
The UK's Serious Fraud Office carried out a raid on AOG Technics in early December 2023, making one arrest.

A warning cry to the entire industry

CFM International has warned customers who might have sought replacement parts for their CFM56 engines, as well as maintenance facilities that might have also been passed on fake parts.
Already the industry is questioning how widespread the counterfeiting problem might be in the spare parts market. 
The example of AOG Technics underlines how important it is to always know the origin story of your parts.
Fortunately, this is made much easier thanks to blockchain traceability technology that makes it relatively easy to detect fake parts used in the aviation supply chain industry – providing you have it, of course.

A breakthrough comparable to the net 

A blockchain is a cryptographically linked chain of immutable data recorded digitally on a ledger (‘blocks’). 
The blockchain includes all the relevant information pertaining to an item (an engine part, for example) or materials – such as their origins, usage history, maintenance logs etc. – which provides a highly efficient way to keep track of them throughout their life cycle.
Accessible via a digital, globally accessible platform shared among ecosystem partners, all that is needed is the item’s hash or block number to check its blockchain. 
Blockchains are secure – huge efforts are made to ensure the data cannot be falsified, and this is undoubtedly one of blockchain’s biggest selling points.
Blockchain offers huge benefits to the aviation supply chain, as it provides total transparency for critical parts used in planes, along with other tangible and intangible assets.
It has been identified as a technology that will significantly impact both the aviation supply chain industry and aviation in general. The hype has been akin to the way many major aviation players viewed the arrival of the internet.

Cuts cost, errors, paperwork, fake parts  

Up until a decade ago, it wasn't uncommon for aviation companies to be in possession of spare parts missing accurate and comprehensive master data – the most critical factor in ensuring the efficient and reliable documentation and traceability of aircraft parts
In many cases, the files containing the vital master data were uploaded to a server, making it inefficient to find years later.
Parts without this documentation are worthless, and it has only been since many aviation companies started integrating blockchain into the way they keep records of parts and materials that this industry-wide problem has been addressed. 
Furthermore, only essential data was stored – all other information, even though it might be valuable further along the supply chain, was lost.
Using blockchain enables supply chain operators to:
  • reduce maintenance costs – paperwork is a huge drain on resources and severely slows down the supply chain
  • increase availability
  • minimise errors in tracking aircraft parts
  • ensure data is accurate – essential for data analytics and predictive maintenance, 
In a 2018 note, Accenture highlighted the huge potential it saw in blockchain technology for the aviation supply chain industry:
“Blockchain is well-suited to improve the performance of one of the world’s most complex, globally interconnected and security-dependent supply chains. This elegant and paradigm-shifting
technology has the potential to deliver profound benefits for the hundreds of suppliers typically involved in the manufacturing of a single aircraft.”
Already in 2018, 70 percent of respondents to an Accenture survey said they were hopeful blockchain could help the industry detect the increasing amounts of falsified data entering their systems. The latest edition of the same survey in 2022 underlined their optimism about how the Metaverse could further improve blockchain's capabilities (see Figure 1).
A number of other industry supply chains are also increasingly using blockchain technology, including fashion, food and groceries, gold, textiles and farming.
Used in the food industry, for example, it can establish the origin of an item suspected of being the source of an outbreak of listeria or salmonella.

Blockchain: many reasons to innovate

Nevertheless, many players in the aviation supply chain industry continue to only keep track of configuration data in their own systems. The result is too many loose ends.
By resisting blockchain – and not integrating their data with other companies’ data – collaboration in the supply chain will continue to be limited. 
Fortunately there are other incentives to use shared solutions, as blockchain applications have a number of other potential uses, according to a report by Deloitte: 
Among them are:
  • redefining engine and parts leasing through ‘smart contracts’. At present, leasing involves complex contracts, often involving multiple partners. Blockchain smart contracts enable an automated, efficient, error-free process
  • simplifies revenue sharing and money exchanges, whether it’s between airlines or parts manufacturers and suppliers – another complex area that is heavily regulated
It won’t be long before blockchain becomes the standard, contends Deloitte:

TAKEAWAY:

The example of AOG Technics distributing fake parts is another warning cry to the aviation supply chain industry to tighten its ship, as its dependency on written documentation is ineffective and outdated. Fortunately, blockchain traceability technology would enable the industry to eradicate the problem, but it does need all its major players onboard. Not only would it give suppliers complete transparency about the life cycle of the parts they’re trading, but it would give them an excellent understanding of their customers’ needs, enabling them to stay ahead of demand.