A 'gem' of an approach to staying competitive

Between high oil prices and the sub-prime mortgage crisis, the economic situation here in the U.S. has gone from bad to worse over the past few years. Let's face it, we are still largely an oil-based economy and these higher oil prices have a trickle down effect as they increase the cost of goods (higher costs of manufacturing and delivery). That, in turn, has forced many consumers to tighten their spending belts.

With the holidays just weeks away, traditional gifts like jewelry are likely to take a hit. To remain competitive in this tough economic climate, companies are leveraging technology to help them stay competitive. When Rhodes Scholar Gareth Penny took over as managing director of De Beers (the worlds largest and most well-known diamond producer) he was the genius architect behind some of De Beers’ most radical -yet effective - changes in their business paradigm. Some of those changes included "demand driven initiatives" and "technological innovation" to help cut costs and increase diamond production and supply.

So how has De Beers leveraged information technology to remain competitive in today’s economic climate?  "Many industries use technology to reduce labor costs and increase productivity. The diamond industry is no exception. Optical imaging and software systems are used to derive the greatest yield from the rough diamonds. This is important as even a very small percentage loss in yield can make the difference between a diamond being economical to polish or not", said Kobina Aidoo, Public Affairs Manager, De Beers Inc. USA in my recent email interview with him.

Kobina notes that another major element of their new business model is to keep a lean, six-week inventory, so that as the world goes through economic challenges, information technology also gives cutting and polishing factories access to real time information on what stones are required in specific consumer markets. "Factories in Botswana, for example, would have a direct link to markets like the U.S., and would be able to match their daily production to consumer demand," adds Kobina.

Speaking of Botswana, De Beers opened an $83 million state-of-the-art diamond sorting and valuing facility - DTC Botswana - earlier this year, the biggest and most sophisticated of its kind in the world. Says Kobia, "In this facility, we sort and value diamonds after they are recovered from the mines. The building has been equipped with sophisticated electronics, software and optical systems to sort diamonds at high speed and to high levels of accuracy and consistency, measuring the color, quality and shape of rough diamonds at speeds of up to 15 individual diamonds per second. The machines are calibrated to ensure consistency irrespective of factors such as lighting conditions or time of day".  Kobia adds that this helps keep costs down by trimming processing times and minimizing variation in quality.

There is a saying introduced by De Beers, “A diamond is forever.” There’s even the old song “Diamonds Are a Girl's Best Friend.”  But when it comes to remaining competitive in today's tough economic climate, apparently technology is a diamond company's best friend.