Gems and Jewellery
Making the Diamond Industry Shine
Firms of any size in the diamond cluster of Surat can benefit by the use of ICT solutions, says a report by PwC done for Project Vikas
Microsoft assigned PricewaterhouseCoopers with the task of analysing the IT requirements in Surat’s diamond cluster. The objective of this assignment is to study the business processes of the diamond manufacturing firms in the cluster, understand their current business process pain points, assess their current IT usage, and identify solution opportunities which will enable IT interventions and adoption of IT in these firms.
The report identifies segments in the cluster based on their size and the type of work they handle.
Job contractors/Third party manufacturers: They serve as job workers for a large (domestic or export oriented) manufacturer. They produce intermediate/finished diamonds from rough/intermediate diamonds. They get revenue in the form of agreed-upon job rates.
Small to mid-sized manufacturing firms: These firms source rough diamonds privately from agents or traders in the local grey market. They produce finished diamonds from rough diamonds. They sell in the domestic market through agents and traders active in the local market. They may also serve as contractors for a large exporter.
Large integrated units: These source rough diamonds from DTC or directly from the trading hub of Antwerp. They produce a large variety of finished diamond products, and export directly to world markets through their sales offices in Mumbai. They may have multiple diamond manufacturing units. They often sub-contract part or whole of the manufacturing process.
Key Challenges for the Segments
The report identifies the current challenges for each of the identified segments in the cluster. Across all segments, there are inefficiencies which are attributed to the accounting function not being integrated to key business processes. cesses
Job contractors/Third party manufacturers:
· Scope of the work is limited to cutting and polishing of diamonds
· Process inefficiencies exist in production planning, tracking and control
· Maintaining inventory becomes an issue during non-peak seasons
· Tracking of diamonds during cutting and polishing is through manual records
· Accounting is not integrated to key business processes
Small to mid-sized manufacturing firms
· Heavy dependence on a few customers
· Lack of visibility on end sales information leads to inaccurate sales planning and forecasting. This leads to either overstock or stock out issues
· High wastage of rough diamonds during production due to lack of optimised planning
· Productivity of manual intensive processes is a key issue
· Supply order visibility is a challenge
· Inefficient tracking mechanism due to lack of automation results in stock keeping issues
· Accounting is not integrated to key business processes
Large integrated units
· Sales workforce is not informed in real time about the finished goods inventory.
· Despite the more stream-lined production environment compared to the smaller firms, there is high wastage of diamonds during the production process.
· Supply order visibility is a key issue.
· Most large firms have basic material management systems, which is not integrated to production planning or finance – this leads to duplication of entry and increased overheads.
· Accounting is not integrated to key business processes.
Solutions for the cluster
The report envisages several solution offerings for the cluster which are derived from the analysis of the IT requirements of the key cluster processes and segments. The solutions are broadly segregated into transaction solutions, point solutions and collaborative solutions.
At a broad level, any functionality which is core to the operations of the firm would form part of the transaction system. Also, transactions which result in a significant impact on the books of account of the firm are likely to be part of the transaction system.
Point solutions recommended for the cluster would be advanced or specialised applications which meet the vertical specific needs of the industry. These applications are generally designed to meet the IT requirements of a specific area like design or quality rather than the enterprise needs of the organisation.
Collaborative solutions promote inter firm collaboration and exchange of information. Collaborative solutions can be at a cluster level like a Diamond export portal which can act as a comprehensive repository of export related information and a news and trade relation information portal aimed at promoting exports, and provide collaborative workspace between the customers, merchant buyers and exporters. Collaborative solutions can also be envisaged at a firm level which provides a collaborative workspace between the firm and its customers and suppliers for online order management and tracking.
Transaction Solutions
Basic Operation Software: This can be an entry level solution which integrates production and material management.
Basic Diamond Enterprise Solution: This is an enterprise level semiconfigurable solution providing basic integration of the key business processes like sales and marketing, production, material management and finance.
Advanced Diamond Solution: The advanced diamond solution has been envisaged to be a fully configurable and scalable enterprise level application suite having all the individual modules: Sales and distribution for sales order management, Production module to enable production planning, line wise capacity planning, material requirement planning and scheduling, Material management module for procurement planning, inventory planning and dispatch planning capabilities, and a Finance module fully integrated with material management, sales and production. The solution would also have individual modules for quality management, plant maintenance and human resource management. The advanced solution is envisaged to cater to the larger firms in the cluster having more matured processes and a larger user base which requires a completely scalable solution.