{"id":26646,"date":"2017-11-15T22:59:23","date_gmt":"2017-11-16T03:59:23","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/rolls-royce-increases-its-share-of-the-us5-3-trillion-civil-aviation-market-through-digitalisation\/"},"modified":"2017-11-15T22:59:23","modified_gmt":"2017-11-16T03:59:23","slug":"rolls-royce-increases-its-share-of-the-us5-3-trillion-civil-aviation-market-through-digitalisation","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/rolls-royce-increases-its-share-of-the-us5-3-trillion-civil-aviation-market-through-digitalisation\/","title":{"rendered":"Rolls-Royce increases its share of the US$5.3 trillion civil aviation market through digitalisation"},"content":{"rendered":"
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The best jet engines in the world<\/figcaption><\/figure>\n

The demographic and economic growth of the countries around the world result in anticipated air traffic increase of 4.4% annually, requiring approximately 35,000 new aircrafts at a value of US$5.3 trillion over the next 20 years (1)<\/sup>. In addition, driven by environmental concerns and the pressure on airline ticket prices from low-cost carriers, airlines demand more fuel-efficient aircraft engines, resulting in more-technologically complex designs and shorter development cycles (2)<\/sup>. The challenge of delivering a greater volume of more-sophisticated jet engines creates significant disruption to the engine manufacturers\u2019 supply chains. This is where the adoption of digital technologies and their integration with the existing supply chain becomes not only a competitive advantage for the jet engine manufacturers but also determines the companies\u2019 long-term prospects.<\/p>\n

The jet engine market is dominated by three companies: General Electric, Rolls-Royce and Pratt & Whitney. Rolls-Royce is the current marker leader in the wide-body aircraft segment (aircrafts having a fuselage wide\u00a0enough to accommodate two passenger aisles) and has approximately 50% share of the new orders (3)<\/sup>. The intense competition in the market results in manufacturers willing to sell their products without profit, but capture significant value from the MRO (maintenance, repair and overhaul) business driven by digital data. As a result, digital technologies not only transform Rolls-Royce\u2019s product supply chain from initial concept to aircraft delivery, but also the company\u2019s service offerings and aftermarket supply chain.<\/p>\n

In order to shorten the product development cycle as well as reduce costs, Rolls-Royce is moving towards a completely digital design-and-test process for the jet engines it builds. The company has an already integrated planning and manufacturing execution system and the medium-term goal is to move all data on the cloud, so that it can be accessed in a controlled and selective fashion by all parties involved in the supply chain.<\/p>\n

Furthermore, Rolls-Royce is embracing Industry 4.0, by bringing together robotics, virtual manufacturing and digital workflow, where all information related to design and manufacturing is transferred digitally across the entire supply chain (4)<\/sup>. Another major technology Rolls-Royce is adopting is ALM (Additive Layer Manufacturing)\/ 3D printing that provides the opportunity to design and manufacture much more complex products that are unachievable with conventional manufacturing technologies (5)<\/sup>. Rolls-Royce produced in 2015 the largest component ever built using ALM and the company\u2019s focus in the short-term is on using ALM in manufacturing prototypes to accelerate the product development cycle (6)<\/sup>. In the medium-term, the company is looking at adopting ALM for the manufacturing of increasing number of engine components as the speed of the process and the number of materials certified for aerospace use increase.<\/p>\n

In the service supply chain, Rolls-Royce is looking at using augmented reality to allow a technician at an airport to access maintenance data and 3D models and trouble-shoot a jet engine. In addition, an engineer at the headquarter can observe through real-time streaming the operation\u2019s progress and guide the technician if required. This results in reduced disruptions to the airlines\u2019 operations and lower maintenance costs for Rolls-Royce.<\/p>\n

Rolls-Royce\u2019s Engine Health Management (EHM), where data is streamed from engines in operations for analysis and trouble-shooting, is a pioneer in the advanced data analytics area. The short to medium-term goal for the company is to expand the service\u2019s digital capabilities and develop EHM into a predictive data analytics tool that goes beyond physical models to proactively detect the unexpected through AI.<\/p>\n

Further steps Rolls-Royce can take, building on its EHM capabilities, is the adoption of digital technologies based on RFID, allowing the company and its supply chain to store and retrieve valuable engine and parts information accurately. This can be developed also in retrofit packages and implemented during scheduled engine shop visits. Moreover, utilising the Internet of Things (IoT), the engine manufacturing and maintenance can be further improved by integrating digital sensors during the parts manufacturing allowing traceability, real time analysis and ability to take prompt actions, therefore reducing lead times and improving process efficiency.<\/p>\n

In the medium term, once the technology is economically feasible, Rolls-Royce can look at positioning ALM machines at its airport service centers and using them to manufacture spare parts on-demand, further reducing the maintenance cost and customers\u2019 disruption. Moreover, to ensure that the 3D models delivered to the ALM machines for manufacturing are original and haven\u2019t been hacked, Rolls-Royce can use blockchain technology (7)<\/sup>.<\/p>\n

Finally, Rolls-Royce can gain further competitive advantage in the industry by developing an ecosystem\/ platform that allows the OEM, supply chain and customers\u2019 data integration, analysis and proactive trouble-shooting. In doing so, Rolls-Royce can further reduce the product development cost as well as generate value from new service-centric business models.<\/p>\n

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