The jewelry industry is a complex and highly competitive field that necessitates adept handling of various procurement challenges. Companies within this industry must skillfully manage intricate supply chains, foster fruitful collaborations with suppliers, and seamlessly integrate e-commerce operations. To thrive in such an environment, businesses require a sophisticated set of tools for jewelry procurement that can empower them to overcome obstacles effectively. In this article, we will explore some of the key procurement challenges and solutions specific to the jewelry industry along with notable success stories. 

What are the procurement challenges & solutions in the jewelry industry? 

Ethical sourcing

One of the biggest challenges in the jewelry industry is ethical sourcing, particularly when it comes to metals like gold, which can be sourced from conflict zones or through exploitative practices. According to a report by McKinsey, consumers are becoming increasingly concerned about ethical sourcing, and companies that don't prioritize it risk losing market share. One example of a company that has taken steps to ensure ethical sourcing is Tiffany & Co., which has a responsible sourcing program that includes a rigorous supplier selection process, regular audits of suppliers, and partnerships with organizations like the Responsible Jewellery Council. In its 2020 sustainability report, Tiffany & Co. stated that 100% of the gold, platinum, and silver used in its products is responsibly sourced.  

FactWise empowers procurement organizations with dynamic, holistic supplier performance analytics across key supplier metrics like price, on-time delivery, quality, etc. so that buyers have a high degree of decision intelligence. Our supplier selection algorithm helps you prioritize preferred and well-performing vendors, while also discovering new suppliers that match your ESG or other ethical requirements and quality standards. 

Supply chain transparency

Another challenge in the jewelry industry is supply chain transparency, as it can be difficult to trace metals and gemstones back to their original sources. According to a report by Deloitte, consumers are increasingly demanding transparency and want to know where their products come from. One example of a company that has implemented transparent supply chain practices is Brilliant Earth, an online retailer of ethically sourced and traceable jewelry. Brilliant Earth uses blockchain technology to track the journey of its metals and gemstones from mine to market, providing customers with detailed information about the origin of each piece of jewelry. According to a report by Gartner, blockchain can help improve supply chain transparency by enabling secure data sharing and reducing the risk of fraud. 

Metal price volatility

Like other industries that rely on metals, the jewelry industry is vulnerable to price volatility. According to a report by Deloitte, companies in the jewelry industry can use various strategies to manage price risk, including hedging, diversification of suppliers, and long-term contracts. One example of a company that has successfully managed price risk is Signet Jewelers, the parent company of brands like Kay Jewelers and Zales. In its 2021 annual report, Signet mentioned that it uses various financial instruments to manage its exposure to metal price fluctuations and that it has diversified its supply chain to reduce risk. 

Quality control

Quality control is critical in the jewelry industry, as customers expect high-quality, long-lasting products. According to a report by Gartner, companies in the industry can use various quality control tools and techniques, such as statistical process control and root cause analysis. One example of a company that prioritizes quality control is Pandora, a global jewelry manufacturer and retailer. In its 2020 sustainability report, Pandora mentioned that it has a comprehensive quality management system that includes testing and analysis of raw materials and finished products, as well as continuous improvement initiatives. According to the report, Pandora has reduced its product defect rate by 50% since 2016. 

Lead time management

Jewelry production often requires multiple steps, including sourcing, design, manufacturing, and delivery, which can make lead time management challenging. According to a report by Gartner, companies in the jewelry industry can use tools like capacity planning and production scheduling to manage lead times effectively. One example of a company that has implemented effective lead time management strategies is Swarovski, a global manufacturer of crystal jewelry and accessories. In a case study published by Deloitte, Swarovski mentioned that it had optimized its production planning process to reduce lead times and increase production efficiency. As a result, the company was able to reduce inventory levels by 30% and increase on-time delivery rates by 20%. 

Supplier collaboration

Collaboration with suppliers can help companies in the jewelry industry manage costs, reduce lead times, and improve quality. According to a report by McKinsey, companies can use various approaches to foster collaboration with suppliers, such as joint development programs, strategic partnerships, and supplier scorecards. One example of a company that has implemented successful supplier collaboration programs is Richemont, a luxury goods conglomerate that owns brands like Cartier and Montblanc. In its 2021 annual report, Richemont mentioned that it works closely with suppliers to optimize supply chain efficiency and quality control. The company also uses a supplier performance management system that includes regular performance evaluations and improvement plans. 

With FactWise Source-to-Pay, companies can reduce cycle times and procurement costs while increasing supplier collaboration and process efficiency, standardize processes and utilize data analytics that provide insights into areas for improvement, while continuously reviewing and improving procurement practices to stay ahead of the curve. Implementing FactWise with these strategies can result in significant savings, improved supplier relationships, and streamlined processes. 

E-commerce integration

E-commerce is becoming an increasingly important sales channel for companies in the jewelry industry. According to a report by Deloitte, e-commerce sales of luxury goods are expected to grow significantly in the coming years, and companies in the industry need to integrate their e-commerce operations with their procurement and supply chain processes. One example of a company that has successfully integrated its e-commerce operations is Blue Nile, an online retailer of diamonds and engagement rings. Blue Nile uses a cloud-based procurement platform to manage its supplier relationships and streamline its procurement processes. According to a case study by GEP, Blue Nile was able to reduce its procurement cycle time by 30% and increase on-time delivery rates by 15% after implementing the platform. 

In conclusion, the jewelry industry presents unique procurement challenges that require innovative solutions. Effective lead time management, supplier collaboration, and e-commerce integration are just a few of the strategies that companies in the industry can use to optimize their procurement processes. By leveraging the latest procurement tools and technologies like FactWise Source-to-Pay offering cloud-based solutions and supplier scorecards, companies can gain greater visibility and control over their procurement activities. Ultimately, these approaches can help jewelry companies improve efficiency, reduce costs, and enhance their ability to compete in a rapidly evolving marketplace. As the industry continues to evolve, companies that prioritize procurement excellence will be well-positioned to succeed in the years ahead.