Digital ecosystems and GE’s journey – Part 1

hello welcome to another episode of
Block Talk my name’s Mike Walker and today I am here with David Havera with
GE Aviation Digital welcome David hey Mike glad to be here
awesome so today we’re gonna be talking about blockchain and more specifically
around how blockchain is used to really enable these digital ecosystems we’re
going to take our businesses to this next wave of evolution and so it’d be
good to understand for GE you know how did you guys come to this revelation
that you know blockchain is gonna be one of these key technologies to help propel
that journey yeah we’ve been studying blockchain for
I would say the past five years and we’ve really identified early on that it
is going to require and enable a whole wave of collaboration that hasn’t been
enabled before and when we talk about industry 4.0 we have things like
hololens IOT ai and we see blockchain as the
thread connecting all those together so we’re currently in the age of big data
and we really understand the value of data and what it’s worth but being able
to unlock that data there’s a lot of gaps and yeah so so so real quick so
when we talk about industry 4.0 yeah some folks might not be familiar
with that term so what is industry 4.0 yeah I would just say it’s kind
of the next wave of evolution and that’s gonna bring the manufacturing businesses
to a whole new wave of productivity and it’s based on technology getting you
there so things like 5g enabling IOT devices to communicate anywhere in the
world together and then also enabling data to be shared and streamed and then
you have things like I mentioned before like hololens where you can actually
train mechanics in a 3d version of an aircraft engine rather than having them
physically go in the plant they can do that anywhere in the world so it’s
pretty pretty interesting how we’re weaving technology into things we do
every day now that’s really cool and yes you know I can definitely see how you
might want to use a technology like blockchain
we mastered this data yeah you know use it as a tool to make sure that when you
are creating these digital twins yeah of an engine of a person of you know pieces
of a plane that you have really really good data yeah
and if you want to do all this great predictive analytics well you need great
data to be able to do that yeah right and so for you guys and you know
building out these models what do you think some of the key market challenges
work that really propelled you down this path yeah I know I’ll actually give you
a really tangible example of what we see in our industry take something as simple
as an aircraft and airplane when it’s in the secondary market and a less worse
trying to sell it to another lessor the value of that asset of that aircraft is
actually derived from the documentation and the documentation is often in
forklifts loading these pallets of data onto the aircraft and it was a wait a
second yeah pallets of data yeah so paper of paper yes so they will
deliver a whole set of paper to be inspected yeah to sell an yeah and it’s
it’s just crazy if I was the one who’s in charge of selling this aircraft and
and or buying it and I had to open all the shrink trap pallets of paper and do
my due diligence it would be it’d be pretty scary and overwhelming so yeah so
we really see that you know blockchain can enable connect those gaps between
all the participants in the value stream because you think about a pallet of
paper it’s basically people you know maintenance records its birth
certificates its flight history all those parties are sending that
information and a paper format to the seller and it’s the sellers
responsibility to give that to the buyer and the seller doesn’t know what to do
with it so they just put it on a pallet create it up and then they they try to
make a sale with it so you need a way to organize that
and that’s where you know one of the key capabilities were looking at from a
blockchain perspective so in simple terms if if I went to an auto dealership
and I wanted to buy a used vehicle yeah today I would just get a simple CARFAX
report yeah right and I would understand all the things that were done to that
vehicle but in this case with a plane it sounds like that CARFAX report would be
very large yeah I’m might you would need a forklift
you’ve got a certain level of risk that hey you might you can’t physically in a
certain amount of time be able to go through and validate all this
information that the quality of the data is correct exactly and also things like
fraud and all these other things that may occur and so it’s interesting that
now introduce blockchain that’s able to not only provide a way to connect the
data yeah but also it’s providing things like you know digital signatures and I
know the actual individuals or the device that is said that yes this is
what happened to this airplane or a particular part within the airplane yeah
that’s really fascinating yeah I mean kind of take how we’re approaching that
problem today is we are our product team as has a product called
air vault and basically the job of that product is to take that pallet of paper
to digitize it to scan it in to put it on the cloud now you still have a
problem there because you still have a pallet of data that’s basically
unorganized in the cloud and you need to figure out a way to organize it so most
likely what you do is you’d go through and you organize it by like maintenance
request flight history birth certificate and etc but then you also want to know
that those documents haven’t been altered so what you’d have to do is
you’d have to go through and then you would actually like you mentioned you’d
have a governing body an authoritative source notarized those documents those
batch of documents so that you know that they were an unaltered State and the
blockchain is perfect for that now kind of going forward what the blockchain
allows you to do is it allows you to do a reference back to the certified
documents in the form of a hash and then you can tie that into transactions going
forward so really the ability for blockchain to
notarize and then reference that data and tied into future transactions is
it’s really a game changer and it’s it should make these transactions a lot
better ya know and and it sounds like it’s not just gonna be blockchain yeah
it’s gonna be put in the mix here yeah and so if we think about this from a you
know a digital supply chain perspective you know you know obviously a picture is
worth a thousand words here but you know it’s interesting to think of it more in
this way that you know we’re going to be dealing with a ecosystem of not only
business transactions but also different technologies that are going to enable
that yeah and at the center of this is what you’d mentioned earlier around this
industry 4.0 paradigm yeah which essentially is a digitization type of
approach and strategy to manage your physical assets yeah and you know folks
have to think through when they’re looking at their existing supply chains
whether it’s aviation or or other types of supply chains is that you know you’re
gonna not only need really great data in connection of data but also really great
ways to visualize that data yeah and so you guys are doing interesting things
around virtual reality and augmented reality you know what are some of the
things that you see you know high potential connecting blockchain to those
types of solutions yeah I mean early on it was kind of fascinating as we started
researching blockchain five years ago we were trying to build a platform as well
to support it and we just weren’t good at it I mean we’re good at helping our
customers solve problems but building a system and able to build off of in scale
we struggled and then joining Microsoft and using Azure as a platform in an
ecosystem has really enabled us and in many ways I mean the blockchain is just
a piece kind of the heart of the data organization but what you want to do is
plug off of that you want apps to view and interact with the data you want to
give that data out post-process from the chain store on a traditional database
off chain and then give your data scientist a chance to to mine that data
you also want to visualize that for management
reports so Power BI is a great tool for that as well so I think having an eco
system and then using blockchain as the foundational step to get that data
integrity it’s really key otherwise you’re not going to use the full value
of actually for the first time and a lot of you know industry 4.0 an industry
history having good integrity of your data you want to be able to build the
right applications to drive the right decisions and behaviors right and so you
know in your aviation supply chain there is you know approximately you know
21,000 independent data points yeah that’s a lot yeah and you know do you
when you look at blockchain as a technology do you envision that there is
one blockchain to rule them all or do you think that there’s a different
strategy here yeah no I don’t I don’t think that there’s ever gonna be one
blockchain to rule them all I think that you know today we kind of see leaders
different leaders you have three major between Ethereum Corda and Hyperledger
I kind of view those all to a degree as emerging they all have really good
adoption in different areas but I think eventually kind of blockchain will
converge and those technologies will come together just kind of how the
internet did and you would just have blockchain in the background and it’s
not going to be all these debates on what ledger it’s just gonna work as a
scaffolding bring your data integrity together and its features will be there
yeah and you know so that’s from a ledger perspective you know what about
from like a business transaction perspective when you’re when you’re
creating these ecosystems and maybe you have GE creates one maybe the FAA
creates one yeah do you see kind of a cross chain type of strategy in this
type of ecosystem yeah I mean certainly I would say what we’re going to want to
have for the this to be successful in the aviation industry is collaboration
across all the different channels in aviation so we want the regulatory
bodies involved absolutely the FAA it’s actually going to make their job easier
they don’t have to audit pallets of paper right right so and then we also
want to work with solutions not just on the engine like the example I gave
earlier was on the aircraft we believe although we sell
aircraft engines we want to work on the entire aircraft for solutions and be
able to help the entire you know the lessors the MROs the OEMs all work
together seamlessly because it’s an industry-wide problem regardless of
where you’re at on the aircraft yeah and what’s interesting is you know we’ve you
know piloted several types of use cases here yeah one of which that we’ve we’ve
talked about earlier around reconciliation of rebates on the
aviation parts you know that seems like a real quick easy type of solution
that’s you know solving big problems can you maybe walk us a little bit through
you know what challenges is that solving just using blockchain in that way yeah no
I mean I think this is one where we we studied kind of playbook with Microsoft
and the reconciliations you guys did with royalties on the Xbox and we found
a lot of the same problems where if you’re a customer of ours and you bought
a certain amount of product and you’re on a volume rebate it came down to the
very essence of what blockchain can do where you have a single source of data
because we’ve always had this discrepancy where customer would say
they bought this amount GE would say they sold this amount and then 95% would
match but that 5% would hold up a payment for a year or more and it you
just gotta enable kind of ways to settle that 95% and then you work the contract
and you were in your you work your process improvement around that 5%
figure out how to go away so blockchain aroused you to settle by transaction and
to settle that 95% so that you can get mostly hole and then you process improve
the other 5% to get down we we see that not just in the volume rebates but we
also see that with accounts receivable and accounts payable because again it’s
matching up with our vendors and our customers with cash settlement another
big optimization area for us so what I’m hearing you say really is where you have
situations where you’re doing any sort of reconciliation yeah that is you know
human labor intensive you’re getting multiple data feeds you know this is a
really good solution yeah an easy solution to use blockchain in that
particular context yeah I mean because in the past we were always emailing files back and
forth with customers or suppliers and the true benefit of blockchain is it
gives you both a version of truth that you both parties can see but not just
see but action right because I can action an email excel file on my
computer but then I got an email back you can actually action that data that
true source of data and then the other party can see what you’re taking on it
real time then that really enables you to ability to take a leap forward so yeah
and that’s enabled you to be more compliant with your suppliers yeah what
are some of the numbers around what you’ve been able to free up as far as
cash yeah with MTU use case around volume
rebates is around ten million dollars in cash yep that’s amazing yeah
and that was that was fairly straightforward to do right yeah how
long did it take you to build that yeah I mean that one it was kind of a
foundational vanilla use case but we spent a lot of time studying with the
customer I would say that after kind of cutting our teeth on that it would be
weeks you know that we could get something implemented today and really
what I would say is a lot of the blockchain the heavy lifting is we kind
of separate the technological implementation from the change
management piece so really the most of the heavy lifting is around how do we
operationally improve the process so that the blockchain solution is
implemented around a sustainable optimized process that’s that’s that’s
phenomenal yeah well listen David thanks so much
for swinging but no problem now this is a two-part series so we’re going to be
talking to David again but for this episode thank you for joining us and
we’ll see you next time


  1. Bass Town Ncs February 25, 2020 at 2:53 pm

    awesome content

  2. FranksWorldTV February 25, 2020 at 2:59 pm

    Great stuff. Looking forward to part 2!

  3. Umang Dobariya February 25, 2020 at 3:52 pm


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