Live from JA New York: Diversify the supply chain

New York--The heart of Monday’s educational session on why and how retailers should diversify their supply chain can be summed up with one very well-known idiom: don’t put all your eggs in one basket.

To start the session, Matt Tratner, Jewelers of America’s director of membership and sales, gave an example of a giant company that found itself with a very big problem due to a lack of diversity in its supply chain: auto maker Ford.

When the earthquake and resulting tsunami hit Japan in 2011, it left Ford with a severe shortage of cars and trucks in metallic red and black because the company only had one supplier of Xirallic, the pigment used to make this color, and that supplier was in Japan.

“If it can happen to Ford, it can happen to you,” Tratner said. “Don’t put all your eggs in a single basket.”

He said retailers shouldn’t stop at one source and should pull from different manufacturers, working with two or three different suppliers for the same product. While one manufacturer can serve as the main supplier, he said it’s not a bad idea for retailers to send orders to their secondary and tertiary suppliers from time to time, just to stay in touch with them and keep the relationship fresh.  

While he said he believes the best place to find new manufacturers is at a trade show, other methods for sourcing new suppliers are referrals, the Internet and trade associations, such as JA, the Indian Diamond & Colorstone Association, Platinum Guild International and the Cultured Pearl Association.

Once a retailer has selected a new supplier, or suppliers, they need to assess their abilities, and one area that jewelers need to pay particular attention to today is sourcing.

“Sourcing is becoming a very, very big deal,” Tratner said. This is due to  a number of issues, including regulations regarding the origin of certain products--for example, the new federal laws regarding so-called conflict gold--and the growing number of synthetic, or lab-grown diamonds, in the supply pipeline.

He said retailers need to know where their suppliers are sourcing their metals, gemstones or other products from and that those sources are ethical. At JA, for example, they make their recommended suppliers sign a code of ethical practices; other industry organizations have similar requirements.

In addition to ethical sourcing, retailers also need to ensure that a supplier’s