{"id":10890,"date":"2021-09-19T09:57:50","date_gmt":"2021-09-19T04:27:50","guid":{"rendered":"https:\/\/gjepc.org\/solitaire\/?p=10890"},"modified":"2021-09-19T09:57:54","modified_gmt":"2021-09-19T04:27:54","slug":"supply-chain-transparency-could-mark-a-major-shift-in-the-way-that-diamonds-are-perceived","status":"publish","type":"post","link":"https:\/\/gjepc.org\/solitaire\/supply-chain-transparency-could-mark-a-major-shift-in-the-way-that-diamonds-are-perceived\/","title":{"rendered":"Supply Chain Transparency Could Mark A Major Shift in the Way that Diamonds are Perceived"},"content":{"rendered":"\n

Diamond analyst <\/em>Paul Zimnisky<\/strong> reports on the benefits of the various diamond traceability initiatives taking hold within the industry.<\/em><\/h4>\n\n\n\n

While the diamond industry may have a reputation for being slow to change and integrate new technology, at the moment, meaningful innovation seems ubiquitous throughout the supply chain. From more sustainable mining methods and technology, to digital and more efficient diamond sales solutions, to automated manufacturing and grading, to e-commerce progression and downstream marketing and sales innovation, there is a lot of advancement happening with diamonds right now \u2013 the industry seems to be progressing faster than ever before.<\/p>\n\n\n\n

However, one initiative stands out as perhaps the most important: diamond traceability from mine to market.<\/p>\n\n\n\n

If the industry can provide end-consumers with the source of a diamond it can alleviate almost all of the challenges that have beleaguered the industry in recent years. By assuring the source of a diamond a consumer now knows it\u2019s a real, natural diamond and that it\u2019s not a conflict stone. In addition, there is a marketing and merchandising benefit that comes from knowing a diamond\u2019s origin at a time when consumers want to express uniqueness and want to have a story to tell about their most special possessions.<\/p>\n\n\n\n

For example, perhaps a diamond that was given as a gift was sourced in a country that has a special connection to the recipient \u2013 perhaps they are from Canada, Russia, South Africa, Botswana or Australia, or have a related family heritage to one of these countries. Perhaps a couple has travelled to or vacationed in one of these nations before getting married, so it has special meaning.<\/p>\n\n\n\n

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Tiffany & Co. was the first large jeweller to provide \u201cgeographical sourcing information\u201d on its diamonds. In 2019, the company began providing consumers with sourcing information on all diamonds 0.18-carat in size and larger \u2013 the company now also provides its consumers with details on the manufacturing process. That said, Tiffany\u2019s vertically integrated structure, which includes rough diamond buying and manufacturing subsidiaries, makes traceability a much more manageable task than for most industry participants without an internal supply chain.<\/p>\n\n\n\n

This is where a coordinated industry supply chain effort comes in \u2013 and participation had been wide and fast moving. In recent months, both of the industry\u2019s leading miners, ALROSA and De Beers, have announced initiatives to support traceability objectives. In July, ALROSA announced that it had developed a permanent \u201cnon-invasive\u201d diamond laser marking technology that \u201ccannot be destroyed or polished off.\u201d Management said the technology \u201callows the precious stone to be identified with 100% accuracy\u201d whether rough or polished. In August, De Beers said it developing a new \u201ctrusted source\u201d programme called the \u201cDe Beers Code of Origin\u201d which will provide consumers with proof that a diamond was recovered at a De Beers mine \u2013 importantly, the initiative covers all De Beers diamonds, not just De Beers\u2019 branded stones.<\/p>\n\n\n\n

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Photo courtesy: Sarine<\/figcaption><\/figure>\n\n\n\n

In the mid-stream, diamond service and technology company, Sarine, continues to advance its \u201cDiamond Journey\u201d initiative which uses a proprietary inclusion mapping system as well as other data to ID a diamond and thus track it throughout the supply chain using a \u201csecure cloud-based system.\u201d London-based technology company, Everledger, is deploying a Blockchain tracing technology which accumulates images and videos of luxury goods, including high-end wine, fine art, and diamonds, passing through supply chain to verify provenance and authenticity. Retailers can then browse \u201cknown-source\u201d inventory on Everledger\u2019s platform to supply their stores.<\/p>\n\n\n\n

At the current pace, within a few years, most natural diamonds, at least in solitaire sizes, will bear some source identification information (via grading reports or some other means). Such progression in supply chain transparency could mark the much-needed monumental shift in the way that diamonds are perceived not only by consumers but by society at large. Further, the result could be a self-reinforcing for the industry as consumers specifically reward companies (with patronage) that align with their stricter values \u2013 hopefully incentivising even more industry players to participate in higher-quality business practices.<\/p>\n\n\n\n

\u2014<\/p>\n\n\n\n

Paul Zimnisky, CFA is an independent diamond industry analyst and consultant based in the New York metro area. For regular in-depth analysis of the diamond industry, please consider subscribing to his <\/em>State of the Diamond Market<\/em><\/a>, a leading monthly industry report; an index of previous issues can be found <\/em>here<\/em><\/a>. Also, listen to the <\/em>Paul Zimnisky Diamond Analytics Podcast<\/em><\/a> on iTunes or Spotify for wide-ranging and interesting discussions with prominent guests from around the industry. Paul is a graduate of the University of Maryland\u2019s Robert H. Smith School of Business with a B.S. in finance and he is a CFA charterholder. He can be reached at paul@paulzimnisky.com and followed on Twitter <\/em>@paulzimnisky<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Diamond analyst Paul Zimnisky reports on the benefits of the various diamond traceability initiatives taking hold within the industry. While the diamond industry may have a reputation for being slow to change and integrate new technology, at the moment, meaningful innovation seems ubiquitous throughout the supply chain. 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