Understanding Supply Chain Transparency in Your Jewellery Business


This idea of supply chain transparency is receiving attention by many companies, even in the jewellery industry. Companies that provide transparency are aware of the origin of their products, and they offer products that are sustainable and not linked to conflict. So many companies are loud with marketing but hardly talk about how the product is made. When it comes to diamonds, the Kimberley Process is implemented to prevent conflict diamonds from being used in designs. Because a vast majority of companies cannot tell you the true origin of their materials and if their products contain conflict materials it is important to consider becoming a transparent company that publicly shares information.

We are going to discuss why companies are not transparent about their materials and how to make transparency work in your jewellery business.

  1.     Companies want to stay private about the process
  2.     Technology use and how to source responsibly
  3.     What can transparency do for your company?
  4.     Conclusions

1. Companies want to stay private about the process

Some companies produce negative social and environmental impacts from materials they use, and generally details on upstream practices are not collected. Why aren’t companies willing to be transparent about obtaining their materials? One reason for this is the criticism suppliers will receive if they are exposed. Many mining sites for diamonds, gold and other precious materials use harsh labor and let off massive amounts of toxic pollutants into the environment. Another reason many companies do not discuss their process is due to the fact that they are unclear about the return on investment. So many customers are demanding higher standards on brands they purchase from. Although, customers don’t expect transparency for jewellery like they do for clothing or food products. Usually the public is not demanding this type of information, so it is difficult to set urgency and investment for companies as standard.

Here are additional reasons why companies are closed off.

  •  Exposing the process will ruin the magic. Diamonds are seen as luxurious, high-quality gemstones prized by customers. Although this is the case, no one is aware of the behind-the-scenes of diamonds. These precious gemstones are associated with poor human labour and conflict in Africa. No customer wants to connect their dazzling and elegant diamond rings to conflict. Being told of these immoral conditions will undermine the value of pieces to customers.
  • There are unlawful practices taking place. Similar but not quite as insufficient as diamonds, gold jewellery is another popular product that has a background unknown to customers. With gold mining, child and forced labour is a concern in parts of Africa, Asia and South America. The work is dangerous with the potential of mine collapse and exposure to hazardous gases and dust. Mercury is used in the gold refining process and serves as a problem because of the risk of inhaling toxic fumes. Even though there are laws prohibiting children from entering mine sites, some of these laws are not strictly enforced.
  • It is difficult to trace. Unless the supply chain is completely managed, not all suppliers will be one hundred percent transparent. It can be extremely difficult and time consuming to trace supply chains. Usually if you source from small-scale mines, tracing becomes a bit easier. Another reason some jewelers are not transparent is because they truly may not know where their gemstones originated or where they have traveled, besides the wholesaler they recently purchased it from. Some digital processes have recently come out that will transform this problem.

As a jewellery company, you want to confirm your products are not the result of any abusive human right practices. It is unethical to hide the background of your products, if you are aware of them. Although, a majority of businesses are unknowing. If you are looking to make sure your gemstones are not a result of unlawful practices, continue reading to see how to ensure they are ethically sourced.

2. Technology use and how to source responsibly

With little technology available decades ago, it was difficult to trace the journey of gemstones from the mine to the jeweller.  These illicit mining activities are being stopped by established laws, like the Kimberley Process, and the blockchain technology that backtrack the process for materials. With these new commodities coming out, it is imperative for ensuring transparency in the jewellery industry.

  • Create new standards to have all suppliers be ethical. Established in 2002, the Kimberley Process Certification Scheme (KPCS) focuses on removing conflict diamonds from the supply chain. Conflict diamonds, also known as blood diamonds, refer to raw diamonds mined in an area where they are illegally traded to fund fighting. In addition, the workers are usually forced to work and mine gemstones with their hands. The KP was inspired by conflict diamonds in South Africa and controls brutal diamond production and trade. Currently, this process has 56 participants, representing 80 countries. Members of the KP must ensure diamond shipments are free of conflict, which prevents them from entering the trade. Under the KP, each shipment contains specific details on where the diamonds were mined, how they were mined, and where they were cut and polished. All of the companies involved in the process are listed as well. Additional requirements, like implementing export and import controls and committing to transparency, are put into place for membership to fully ensure all practices are conflict-free and use legitimate sales activities. Although conflict diamonds are not completely eliminated, the Kimberley Process has so far been successful in reducing the number of conflict diamonds entering the market.

Some countries have acts that enforce ethical practices and make jewellery companies check their supply chains. The United States passed the Dodd-Frank Conflict Minerals Law in 2010. It requires companies to disclose conflict minerals if they are necessary for the function of the product. Included in those minerals are gold, tantalum, tin and tungsten. This was created to limit the financing of conflict in Congo. There have been positive advances as a result of this law, including improved safety and health standards for miners and reductions in conflict with armed group control over mines.

There are additional established organizations that work to make a difference. For the most part, they all focus on dishonourable operations when it comes to mining.

    • Fairtrade ensures supply chains are not harming sources. The safest practices are put into place, and products are labelled to let customers know the product was produced ethically.
    •  Fairmined finds artisanal and small-scale gold mines that meet standards for responsible practices.
    • Alliance for Responsible Mining works to make mining a socially and environmentally responsible activity and improves the quality of life for miners.
    • Responsible Jewellery Council sets standards for topics in the supply chain like jewellery materials sourcing, labour rights, environmental impact, and mining practices.
    • World Diamond Council tracks diamonds to prevent the use of them for purposes like war and unethical labour.
  • Use backtracking processes.  How can you ensure diamonds and other jewellery materials are genuine and not a part of unethical mining practices? Monitoring tools exist to allow jewellery businesses to stay up to date on the end-to-end process of these materials from the mine, to the refinery, to the alloy manufacturer, to the production company, and to the consumer. Blockchain technology allows you to backtrack the whole chain the product went through and verifies authenticity. This technology has been around for other products for a while but just started being used in the jewellery industry so it may take time for everyone to comply. As of now, this technology is used for valuable resources, like diamonds and gold, because they are some of the raw materials that raise concerns. The future may see an expansion to everything in the jewellery making process.

De Beers, one of the top diamond ring jewellers, recently started utilizing this blockchain technology, along with Alrosa, the leader of the world diamond mining industry. A Hong Kong-based jewellery company, Chow Tai Fook, also introduced blockchain technology provided by Everledger. How does this process work? Every step of the way, as materials are passed from company to company, each company keeps records by entering data into a log. The materials are assigned one serial number at the beginning to be used in each step and then bagged at each step. At each step of the way, the information entered is locked and saved so it cannot be edited. This eliminates the problem of blood diamonds. Ideally, spools of gold wire will be scanned from the serial number and the transformation will be shown along the way, from the mine to the production facility and eventually to the jewellery manufacturer. De Beers also created their own new platform for the entire diamond industry, Tracr, which allows traceability for every diamond from the mine.

Blockchain technology has also been adopted for verification needs in addition to supply chain needs. It is used to authenticate lab-grown diamonds from natural diamonds.

Here are some of the benefits associated with using blockchain technology.

  • The information is locked and flows smoothly.
  • The records are readily available to show history.
  • It is accessible long term because records are permanent.

Although blockchain technology provides transparency, there are downsides.

  • The technology is far from free.
  • Even though the software is always upgrading, the possibility of mistakes being made can still arise.
  • This technology is still emerging within the jewellery industry so every supply chain partner must commit to it for positive results to be seen.

For decades, the diamond industry has faced challenges in transparency with safety and trust. Applying this technology will take pressure off of businesses trying to source materials responsibly by securely keeping track of the journey when moving from person to person and lessening fraud. There are challenges associated with blockchain technology, but it should not be dismissed. In the future, customers will be able to walk into a store and ask where the diamond came from on the ring they are interested in purchasing. They will be given the exact details and how your company obtained this gemstone.

3. What can transparency do for your company?

Addressing any human right concerns present in supply chains is critical. To be transparent, your business must share and not hide any issues with the supply chain and the steps taken to minimize them. Talking openly about your production process can benefit you. Why should you be so open to your audience? Here are some things it can do for your company.

  • It establishes customer trust because of the open sharing of information.
  • Your business will have a positive public perception.
  • If you have any additional employees, they will be more engaged with the company.
  • It creates a competitive edge so customers may choose you over a competitor that keeps their supply chain a secret.
  • Some customers are more willing to pay more for ethically sourced materials.

Transparency should become a priority for your jewellery business and shows there is nothing to hide within the supply chain. Being open about supply chain transparency may have nearly been impossible in the past because of the lack of technology available, but with emerging technologies, it is possible now. The importance of these initiatives should not be overlooked.

4. Conclusions

Not many people know where the gemstones in their jewellery is originally from. They strongly believe these gemstones were ethically sourced and are not aware of the troubling backstory. Although the demand for transparency in jewellery is not high, some customers are looking into it. With this being the case, it is completely up to the company to supply this information. Being transparent is the right thing to do with your jewellery business. Without it, you would not earn a level of trust from customers. Tracing diamonds has always been a challenge, but with technology it is possible. Blockchain technology is an excellent option to increase authenticity in every step of the process. It holds digitally secure and tamper-proof records for materials every step of the way and will kickstart your business in becoming more transparent. You are able to see how many hands your materials have passed through and where they have been stored and delivered. Supply chains seem to be opaque and companies are closed off about this topic so implementing ethically sourced materials will make you the outlier in the saturated jewellery market.

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