Digital Digest - Issue 1 (Oct 2024)

ISSUE NUMBER 1

OCTOBER 2024

DIGITAL DIGEST

BY DIGITAL FLIGHT Keeping you informed on the latest technology trends and developments

EXCLUSIVE WITH ERP.AERO’S CEO This months Community Spotlight is with Ralph Merhi

INSIGHT: AI IS COMING FOR OUR JOBS With the increase in AI adoption, what does the future look like?

SKYSELECT SMARTCERT GUEST ARTICLE GUEST ARTICLE

NEW SOLUTIONS

NEWS & UPDATES

Do Contracts & Catalogs deliver on their promise

Our community continues to grow, see who’s the latest to join

What’s new in and around the aftermarket technology sector

How they are solving titanium authentication challenges

THIS ISSUE

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FROM THE FOUNDER

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GUEST ARTICLE: SKYSELECT

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NEW SOLUTIONS

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GUEST ARTICLE: SMARTCERT

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NEWS & UPDATES

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AI IS COMING FOR OUR JOBS

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Q&A WITH RALPH MERHI

FROM THE FOUNDER

In today's rapidly evolving world, businesses in the aviation aftermarket are exploring digital technology to effectively navigate and overcome industry challenges. However, the path ahead can be incredibly daunting, with a severe lack of guidance, assistance, and awareness of the current digital landscape.

We pride ourselves on curating and showcasing the very best technology from across the aviation industry. Our platform actively connects businesses seeking innovative solutions that are provided from a range of trusted partners.

We are dedicated to influencing the speed in which businesses in the aviation industry adopt digital technology.

By offering comprehensive support, insightful advice, and unparalleled access to a vast network of technology providers, we aim to empower businesses to stay ahead of the curve and unlock the immense potential that modern day technology has to offer.

Our mission is to shape the future of the aftermarket by influencing the adoption rate of digital technology.

Craig Skilton FOUNDER

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GUEST ARTICLE: SKYSELECT

DO CONTRACTS & CATALOGS DELIVER ON THE PROMISE OF ON-TIMEPERFORMANCE & COST SAVINGS?

The following article is a condensed version of SkySelect’s recent article - for the full version click here

According to our research, sourcing across broad market supplier participants (top-tier and long-tail) yields better on-time performance and savings metrics.

By Erkki Brakmann & Nauman Saeed, SkySelect.

Long-term exclusive and non-exclusive agreements (LTAs), price sheets and catalogs requests from customers are on the rise with hopes of improving part service levels first and pricing second. However, the data suggests, procurement departments are spending ample resources negotiating contracts that may yield less desirable results in terms of on-time performance and cost savings metrics compared to buying transactionally and competitively.

In our research, aggressive (and automated) sourcing across broad market supplier participants (top tier and longtail) yields better on-time performance and savings metrics. And given the human capital bandwidth constraints across procurement departments, this strategy is not overly employed today.

Trail blazing industry participants are recognizing that a new generation of technology is available today, and getting better daily, to help accelerate the sourcing effort to effectively realize the metrics they desire.

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How Do Contracts Actually Perform?

SkySelect recently ran data on LTAs or contracts to measure two things: operational and commercial performance.

Here’s what we discovered: Operational Performance: The OTP of Transactional purchases is on average 15% higher

Note: OTS represents on-time shipment to suppliers’ commitment date while OTP is based on customers’ need by date requirement Transactional or Non-Contracted parts performed the best when sourced competitively across the broader supply base. This is contrary to the current-state at many airlines, where sourcing is performed with limited suppliers, many of which are repeat suppliers, because of bandwidth constraints of the buyer. With the use of AI technology, there are no bandwidth constraints and this outcome can be accelerated across the board.

Non-Exclusive Contracted and Catalog parts performed better than exclusive contracts in terms of on-time performance to customer need-by-date. However, they performed worse compared to competitive transactional purchases with true market lead times compared to static lead times in the catalogs and non-exclusive contracts.

Exclusive Contracted parts performed the worst in terms of on-time performance to customer need-by-date requirement. The lack of competitive sourcing prioritized better cost savings to on-time performance.

Let’s now look at how the same parts performed from a commercial standpoint:

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Commercial Performance: Transactional Purchases Have the Highest Savings Contribution

Transactional or Non-Contracted: Represents the most amount of cost savings potential. We see suppliers not taking the risk of holding pricing over longer periods of time as required under exclusive and non-exclusive price catalogs. Therefore, to yield the highest absolute savings, automating sourcing across hundreds of suppliers yields the highest cost saving potential.

Non-Exclusive Contracted and Catalog: Savings contribution from non-exclusive contracts or catalogs have been limited as the part scope is limited. Nonetheless, the average percentage of cost savings at a part number level is higher than that of transactional. But as mentioned before, suppliers continue to limit the number of parts with a fixed price commitment due to uncertain cost basis and evolving supply chain constraints. Hence, absolute cost savings remains low compared to transactional.

Exclusive Contracted: Represents by far the lowest opportunity to save money in absolute terms. However, the cost savings percentages are the highest at part number level. Similarly to the argument above, limited part scope in this segment results in the lowest cost savings contribution.

In addition to the above, as the aircraft parts market rapidly changes, the contracted pricing may not always be the best. According to SkySelect’s data, buying on non-exclusive contracts could result in missing out on 5-6% in tangible price savings. Considering an annual budget of $50 million for parts, this could translate to a significant $3 million in savings.

In conclusion: On-time performance (OTP) is on average 15% higher with transactional purchasing.

Cost savings at part level is good with contracting, however transactional purchases have the highest cost savings contribution potential.

With the modern technology available today, one can maximize both on-time performance and cost savings potential through transactional purchasing.

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NEW SOLUTIONS SMARTCERT

SHOWCASING THE NEW DIGITAL SOLUTIONS WHO HAVE JOINED THE DIGITAL FLIGHT COMMUNITY.

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ERP.AERO

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About

About

SmartCert revolutionizes traceability and enables a data-driven approach to part provenance throughout the aerospace supply chain. By leveraging Microsoft and AI, SmartCert centralizes and automates the receipt, review, processing, and creation of essential documentation, from raw materials to the aerospace aftermarket. The platform generates a comprehensive data trail that delivers actionable intelligence, powers advanced visualizations, and provides deep sub-tier insights.

ERP.Aero is an industry-leading provider of tailored ERP solutions designed specifically for the aerospace sector. With a deep understanding of the challenges faced by aviation manufacturers, distributors, MROs, and FBOs, we are committed to transforming operational efficiency. Our mission is to streamline processes, enhance productivity, and support scalability, offering a comprehensive suite of tools that empower businesses to manage everything from inventory and supply chain management to compliance tracking and financial reporting.

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GUEST ARTICLE: SMARTCERT

SOLVING THE CHALLENGE OF TITANIUM AUTHENTICATION In light of recent reports that Boeing and Airbus are intensifying their scrutiny of titanium records, particularly those originating from China since 2014, it is clear that the aerospace industry faces significant challenges in ensuring the authenticity of critical materials. The news that regulators are investigating the potential use of false or incorrect documents to authenticate titanium for Boeing and Airbus jets underscores the vital importance of robust documentation and traceability in manufacturing.

At SmartCert, we understand the complexities and pressures of maintaining rigorous standards for material authenticity and compliance. Our commitment is to empower the supply chain with tools that enhance transparency, accuracy, and efficiency with required documentation for traceable parts.

The SmartCert Advantage Automated Extraction of Country of Origin: Our AI feature can automatically extract the country of origin from titanium parts documentation, ensuring quick and accurate identification of materials. This capability simplifies the verification process, enabling companies to respond promptly to requests from customers and regulators.

Enhanced Traceability and Transparency: SmartCert provides unparalleled visibility across the entire supply chain. Our platform ensures that every quality certification is traceable, making it easy to track the journey of materials from their origin through end-of-life.

Streamlined Authentication Processes: By centralizing and automating the certification creation and management process, SmartCert reduces the risk of human error and fraudulent documentation. The system can validate each document against predefined criteria, ensuring compliance with industry standards.

Collaboration and Communication: SmartCert’s integrated chat feature enhances collaboration across teams and departments. This functionality allows stakeholders to share insights, address discrepancies, and confirm details in real time, fostering a collaborative approach to problem-solving and decision-making.

Moving Forward with Confidence As the aerospace industry navigates these challenging times, SmartCert remains committed to supporting the aerospace supply chain with innovative solutions that enhance the integrity and reliability required. By leveraging SmartCert’s advanced features, companies can ensure that their materials meet the highest standards of authenticity and compliance, mitigating risks and building trust.

“In a world where the stakes are high, SmartCert stands ready to help every company achieve the highest levels of accuracy and transparency,” says Lyndon Lattie, CEO of SmartCert. “Together, we can ensure the safety and reliability of the products that drive our world forward.”

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NEWS & UPDATES

KEEPING YOU INFORMED OF OUR SOLUTION PROVIDERS LATEST UPDATES AND DEVELOPMENTS.

Oyster Aero’s new trading module Oyster Aero have just launched a new trading module, now featuring Airframes, Engines, and APUs. This new service expands the platform to welcome Lessors, Airlines, and Asset Traders, bringing enhanced deal visibility to parts, packages, and now, whole assets!

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DIGITAL FLIGHT: INSIGHTS

AI is coming for our jobs 2023 was the year that artificial intelligence (AI) went mainstream. So chances are, even your mother has an opinion about the emerging technology (as outlandish or off-base as it might be).

At the center of the AI discourse are jobs specifically, how AI will impact the workforce and potentially take away jobs.

IMAGE: THE DECODER

Embrace Change As is typical human behavior, there’s a lot of resistance to change and fear-mongering taking place. While it can be debated what will happen to our jobs as new technology continues to emerge, for the sake of this discussion let’s assume AI will fulfill tasks with little or no human intervention, in turn resulting in less work needing to be done.

We should embrace this change!

After all, why should we be clinging to an economic legacy few of us are happy with and that consists of being overworked, burned out and constantly stressed?

Let AI shoulder this burden for us while we rethink the construction of our society.

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The History of Work Before we continue looking forward, let’s first take a step back and look at why we currently work the way we do.

“The eight-hour workday harkens back to 19th-century socialism. When there was no upper limit to the hours that organizations could demand of factory workers, and the Industrial Revolution saw children as young as six years old working the coal mines, American labor unions fought hard to instill a 40-hour workweek, eventually ratifying it as part of the Fair Labor Standards Act of 1938.”

- Steve Glaveski, The Harvard Business Review While the ratification of this act was a huge success back then, it’s a nightmare that we’re still using these same principles more than 80 years later.

We’re structuring our work around a concept implemented during Henry Ford and the Assembly Line!!!!! This is insane! The world and the technologies within it have gone through a cataclysmic evolution, yet we have not significantly changed our approach to work. With all the efficiency gains that have come about thanks to technology, we’re collectively working way more than we have to on tasks that are a waste of human ingenuity all to prop up a societal structure that shouldn’t even exist anymore.

A More Fulfilling Future If our only question around AI is what happens to our existing jobs, then we’re not asking enough of the right questions. We should be challenging the very constructs of our society.

Why do we still deem it necessary (generally speaking) to work eight (or more) hours a week for five days a week?

What if the idea of full-time work was something considerably less?

What if we cut out all the redundancy and mundane tasks from our work and let AI handle them for us, so we could spend our time using our brains thinking about the big picture and doing more meaningful tasks?

To be completely honest far more jobs exist in our economy than are necessary because we simply have to prop up our current societal structure built around what we define as full-time work. There are far more working hours needing to be filled than there are meaningful tasks to be done that require the human mind.

This is reflected in the cyclic nature of the economy. Companies are constantly going through hiring cycles followed by rounds of layoffs to reduce the redundant work they hired for.

We’re now also experiencing this from the employee side. There is a great resource crunch (which the aviation industry is experiencing first-hand), because people are realizing (partly thanks to the upheaval that occurred during Covid) that there is more to life than soul-crushing, rigorously structured jobs.

To sum it up: we should collectively be working less, but driving greater impact and overall be living more balanced and more meaningful lives.

We should be thanking AI, not fearing it because it’s the great catalyst for positive change to our society as long as we have the foresight to challenge our outdated structures instead of continuing to force ourselves into a system that no longer makes sense.

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COMMUNITY SPOTLIGHT

EACH EDITION WE ASK 5 QUESTIONS TO A MEMBER OF OUR COMMUNITY, GIVING A UNIQUE INSIGHT INTO THE INDUSTRY

Ralph Merhi CEO

1. You've recently taken up the role of Chief Executive Officer for ERP.Aero - how have the first few months been?

The first few months as CEO of ERP.Aero have been incredibly exciting and challenging. It’s been a fast-paced journey, diving deep into the aviation industry and understanding how our solutions truly impact businesses. A key highlight has been working closely with such a talented team, driving initiatives that are already showing positive results. We've made significant strides in enhancing our product offerings, which are receiving great feedback from customers. Every new role comes with its learning curve, but I’ve embraced the opportunity to lead during this critical growth phase for ERP.Aero. Balancing the vision for where we’re headed while staying connected to dayto-day operations, and ensuring that our customers remain at the center of everything we do, has been particularly fulfilling.

2. What excited you most about joining ERP.Aero?

What excited me most about joining ERP.Aero was the opportunity to work alongside a passionate team, particularly Yuri Gelman and Slava Zadorognuk, and the incredible potential I saw to revolutionize the aviation industry. ERP.Aero sits at the intersection of technology and aviation, offering innovative solutions that streamline operations, increase quote-to-sales conversion, reduce costs, and help businesses scale efficiently. The chance to lead a company that’s developing state-of-the-art tools like our AI-driven iRFQ system and integrated e-commerce platform was something I couldn’t pass up. The company’s growth and its ability to make a real difference for aviation businesses globally made it an exciting opportunity I was eager to take on.

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3. For those who haven't heard of ERP.Aero - what do they need to know?

ERP.Aero is a comprehensive ERP platform built by aviation professionals for the aviation industry. Our mission is to streamline operations for aviation manufacturers, distributors, MROs, and suppliers by providing an all-in-one solution that manages everything from inventory and supply chain to regulatory compliance and real-time analytics.

What sets us apart is our focus on simplifying the complexities of the aviation industry, offering powerful features like prioritizing opportunities based on return potential, marketplace integration with PartsBase, ILS and Locatory our AI-driven iRFQ system that automates the quoting process, and an integrated e-commerce module that enables companies to sell aircraft parts seamlessly online. We help businesses save time, reduce costs, and grow faster with scalable technology tailored to their specific needs.

4. What differentiates your ERP system from the others available on the market?

ERP.Aero stands out from other ERP systems due to our deep focus on the aviation industry, especially for suppliers, brokers, and distributors. Unlike generic or legacy ERP solutions, ERP.Aero is built to handle the unique complexities of aviation businesses—whether it's managing intricate inventory, setting up custom tiers and automated margins, processing RFQs swiftly, or ensuring regulatory compliance. Our AI-driven iRFQ system automates quoting, saving valuable time for brokers and distributors while increasing accuracy. Combined with user-friendly automation and 24/7/365 support, this industry-specific approach gives our customers a competitive edge and significantly streamlines their operations.

5. What's to come from ERP.Aero in the future?

Looking ahead, ERP.Aero is committed to driving innovation in the aviation industry. We’re constantly enhancing our platform, with more advanced AI-driven tools on the horizon to streamline operations for suppliers, brokers, MROs, and distributors even further. We’re also expanding our e-commerce capabilities, making it easier for aviation businesses to manage transactions online and tap into new markets. In the near future, we’re integrating more predictive analytics and automation features to help our clients make smarter, faster decisions. Ultimately, our goal is to continue evolving with the industry, providing the tools that aviation businesses need to grow, stay efficient, and remain competitive in a rapidly changing market.

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For those new to Digital Flight We help Suppliers & MRO’s successfully navigate today’s digital landscape of emerging technology and software solutions, through essential guidance, insights and strategy.

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DIGITAL DIGEST

BY DIGITAL FLIGHT