The threat of the U.S. tariffs on aircraft and aerospace products and the inevitable retaliation by nations targeted by the Trump administration have highlighted how exposed the industry is to extremely complex and rapidly changing import and export requirements. The supply chain is already burdened by the need to be able to prove compliance with multiple restrictions on goods moving to and from sanctioned states, with transparency hard to maintain given complexities around hardware sourced from multiple suppliers around the world and the need to move items across borders multiple times in the lifetime of a product.

Supply chain and logistics management specialist Cofactr is among the companies now seeking to deliver technological solutions to these headaches. The U.S. start-up recently acquired artificial intelligence platform Factor.io to augment its approach to ensuring that every product and part circulating in the global labyrinth of the aerospace supply chain can be accurately tracked and logged.

According to Phillip Gulley, Cofactr’s co-founder and chief strategy officer, the prospect of having to estimate any tariffs, duties, or taxes due is just part of a complex equation that has to be resolved if companies are to understand the true cost of importing and exporting materials and products. But so, too, is staying on the right side of the law.

“That’s sort of where we came from as an organization,” he told AIN. “Do you have the compliance documentation? Do you have the country of origin data? Are you receiving materials from authorized channels? And then, do you fully understand the landed cost of those materials?”

Companies need to have full transparency right across the multi-tiered supply chains prevalent throughout aerospace, in which manufacturers end up dealing with many suppliers. According to Cofactr, this challenge is especially relevant at a time when manufacturers and suppliers may be contemplating moving production facilities across borders to appease the demands of those imposing tariffs. At the same time, companies need manageable ways to stay on top of lead times and pricing for parts.

Critical Parts in Sanctioned Hands

Cofactr started its work in the wider electronics sector, pointing to instances where equipment, and especially analog devices, had ended up being incorporated with sanctioned Russian equipment. “They weren’t supposed to be in these, and all of a sudden, the U.S. Senate was quite upset with them,” Gulley said.

As the Cofactr team has started trying to help aerospace and defense OEMs, in some cases it has been startled by an apparent lack of sophistication. “We’ve walked into manufacturers who are assembling for primes and have had a close look at how they are managing their supply chains,” Gulley explained. “Even for defense systems, where you have to have full traceability back to the original component manufacturer or the material source, we see pink plastic bags with part numbers written in marker.”

Little remains static in aviation manufacturing, making it hard for OEMs to stay on top of where supplies originated. For instance, Cofactr has come across a case where the supplier of a part coming from Taiwan moved its manufacturing location to China, adding a layer of political complexity to the provenance and chain of custody of that part.

“We have done a great amount of work on our data side to map the supply chain for distribution channels to make sure that authorized channels are being used,” Gulley said. “We have developed software to check, document, and permanently connect digitally the country of origin with the certificates of compliance to align and make sure that [each company] knows [the provenance] of every part in every system.”

Cofactr aims to help its clients ensure they can meet their manufacturing commitments by tracking supplies down to the lowest level of component that needs to be tracked, whether it be for tariff liability or export compliance. Its platform aims to give supply chain managers immediate access to a fully transparent view of every aspect of parts, subassemblies, and supply chain infrastructure.

Unique IDs and Digital Twins

The company creates a unique identification for each part and uses this to link the physical part to a digital twin in the client’s database. The data gathered can show the exact location of items at any given time and who has handled them at any stage in the supply process.

If a company has to divide a consignment of parts to be dispatched to different places, the system can update the documentation by creating a separate, unique identification for each consignment. This involves keeping all elements digitally connected to the initial procurement of each part, with all supporting documentation, such as a bill of materials, purchase orders, and invoices.

For some clients, Cofactr provides its software for integration with their own inventory management systems. In other cases, it handles inventory and kitting tasks using its own logistics facility in New York to capture data for all materials in transit by scanning barcodes. The group is now planning to open a new warehouse on the U.S. West Coast.

Possibly the hardest part of the task is to ensure that all suppliers are on board and cooperating with this intricate approach to managing the flow of inventory. This involves connecting and coordinating the flow of data between prime contractors and lower-tier suppliers, regardless of whether everyone in the chain is a Cofactr client.

“It can be very hard for some primes to push through this process change,” Gulley acknowledged. “So, it’s a lot of knocking on doors. But if you look ahead a couple of years into the future, you will see visibility and transparency across the tiered supply chain as being a priority and standard in high-compliance industries. Right now, it’s an aspiration.”

Cofactr is now tapping more AI capability to process the ever-proliferating volume of documentation, including emails, associated with parts its platform tracks while concealing proprietary data. AI can also be used to securely process complex export control documentation.

“AI parsing tools can take what might be thousands and thousands of communications and boil it down so that the operator [of the process] inside a company just sees the four things they have to think about today, instead of hundreds of emails that have arrived before 9 a.m. that are completely unmanageable.”

Among Cofactr's publicly acknowledged clients in the aerospace and defense sectors are Stoke Space, Neros, Salient Motion, H3X, AnySignal and Farcast.