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Operations Strategy

Project
Case : K. P. Sanghvi & Sons

Submitted to: Prof. Dr. Sanjay Jharkharia Submitted by:

Brahmeswara Reddy KV ePGP-01-003 Kannan Kesavapillai Kartikeya Misra Pankaj Gandhi Sanjay Kumar ePGP-01-010 ePGP-01-011 ePGP-01-018 ePGP-01-030

Executive Post Graduate Programme (ePGP) 2009

Indian Institute of Management Kozhikode

Index
Topic Brief introduction of company What do we mean by Operations Strategy? Infrastructural resources Business Plan by 2012 overview of the components of operations strategy Strategies for Competitive Advantage
Reengineering activities in manufacturing process

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12 13 10.

Page No. 03 05 11 14 15 18 19 19 21 22 24 28 30

Operations Strategy of a company The Challenges faced by the K P Sanghvi & Sons Process Choice Positioning Strategies in Manufacturing Overview of some of the changes made in last Three years in mnfg. Future supply chain and strategic plans Annexure

K. P. Sanghvi & Sons Diamond Cutting and Polishing Division

A Brief Introduction of the company : M/s. K P Sanghvi & Sons was established in the year of 1965 as a proprietorship firm and mainly cater its products to local market of India (i.e. Mumbai). Over a period of time, they have opened their offices in Antwerp and USA in late 1975. The company has made major breakthrough in post globalization period (i.e. after 1991), they have opened their marketing offices in Hong Kong, China, Japan, Middle East (i.e. Gulf countries), Italy, France, Taiwan and turkey. Based on their past business performance and manufacturing facilities in 1992-93, DTC (DeBeers Trading Corporation) has offered a status of Sight Holder to the company. At present, it is one of the leading diamond companies of the world and is a DTC Sight holder company. Company is having its business operations in all the major metros of the world, such as Antwerp Belgium, Tokyo Japan, Hong Kong, Dubai, New York USA and Mumbai. Apart from these business centers company is participating in international trade fairs of gems and jewelry. They have started a business of diamond trading in 1965 and then backwardly integrated to cutting and polishing and then rough diamond import. Later on in view of the business requirement, they have done forward integration into diamond / precious stone studded jewelry manufacturing and developed a concept of ACE jewelry for Indian market. The business Turnover of the company is more than 300 million USD per annum. Total manpower employed is more than 15,000 including skilled and semi skilled persons. Company is having its manufacturing units in Surat, Ahmedabad, and Mumbai (SEEPZ). The main raw material is rough diamonds and precious metals. The rough diamonds they receive from DTC (DeBeers Trading Corporation), Rio-Tinto of Australia, from Diawick of Canada, from the open market of Antwerp, London and Dubai and also through HDC (Hindustan Diamond Co.) of Mumbai. The precious metals such as Gold, Silver and Platinum they receive from the international suppliers of South Africa, Australia and Dubai. In view of the global competition, company has introduced professional management practices in marketing and manufacturing operations. Company has introduced some of the global management practices in its strategic management are and divide their customer base into various segments for deriving the higher value from the products. In line of this, we have extracted the information from management by conducting in-depth interview, analyzed their past business records (with MS Excel).

Detailed analysis of Geographical Market

Geographical Market

Turkey 6% Taiwan 1%

Hong Kong 14%

Others 4%

USA 37%

Italy 8% France 1% The Gulf 12% Japan 5% India 10% China 2%

The companies business activities are as follows : Activity 1. Selling loose polished (diamonds) to trade buyers 2. Selling diamonds jewelry to trade buyers 3. Selling loose polished or diamonds jewelry direct to consumers Competitive advantage Yes Yes Yes

Business Activity

Loose Polished

Diamond Jewellery to Trade Buyers

Direct to Consumer

Customer Segment

Diamond Wholesalers

Diamond Wholesalers & Jewellery Manufacturer

Jewellery Retailers

Consumer of Ace Branded

Company, mainly purchases following types of rough diamonds from DTC and other supplies to meet their business demand of different customer Segments, such as Commercial High, Commercial Medium, Commercial Low, Small MB, Preparers, and Rejections. The company has a mix approach for selling its product products to the customers and is nicely curtailed to meet the demand of the various customers. The products are directly purchased by the customers as well as sell through intermediaries also.

What do we mean by Operations Strategy? It is said that, Operations Strategy means adding Value for the Customers of the company. This will reduce product costs to customers, make the product more readily available to the customers on time and as per their desire, provide faster and prompt service to them, provide customers with additional relevant information of the product (its key features and differentiation from near by competitors) and last but not the least, customize the product to the customers specific needs. K P Sanghvi & Sons has made efforts in this direction for providing the customized solutions to their customers and for the same they have geared up at manufacturing level and at their supply chain management. The details of the same is as follows : The Customer Segments of the company are as follows : Wholesaler; Jewelry Manufacturer & Retailers; Branded and Non Branded Jewelry Manufacturer and Customers for ACE Brand Jewelry Business Philosophy for different segments : They believe that to maintain the rhythm of business, there is a need to balance our business activities among various stakeholders, in such a way that, they can maximize the value in every corner of the business sphere. As the nature of the industry is heterogeneous, they believe that the real value of product positioning is revealed only when the positioning is coupled with an appropriate market segmentation strategy. This is because differences do exist among segments and hence, comprehensive analysis and subsequent strategy would require positioning by segments and not just a single positioning for the total market. Based on the past few years of market research analysis, they concluded that, instead of defining market segments purely on a geographic basis, it is important to consider them in terms of product characteristics. Importantly it helps them to identify market opportunities, thus, paving the way for optimal companys positioning. This process of product segmentation also assists them in developing SMART objectives that are strategic, measurable, actionable, realistic and timely and of course profitable. The above market segmentation strategy has helped them to compete in global scene to use their limited resources more effectively.

Selling loose polished to trade buyers : From 1965, KPS and group has its presence in the market with a consistent development in every sphere of the business activities due to the strong business ethos like, honesty, integrity, reliability. Compare to their competitors, they are step head in identifying the appropriate technology and its effective utilization in manufacturing process, which reflects from following : Utilizing Laser Technology since 1990 (commercial laser machines became available in They have designed a set up station in 1995 which functions as per the image Developed a concept of Set Up Station for Laser Department to give integrate all the They are the only company who is utilizing (from July 2007 onwards) the Blue (Ultra 1994) processing technology, this only became commercially available in 2004. machines in 1995 Violet) Laser technology. It is cooler than Green Laser, there by saving 0.4 % weight (in CTs) of rough diamonds (compare to Green Laser); power cost reduced by 85% compare to normal IR Laser. Weight Loss comparison : IR 1.80~2.00 %; Green 1~1.2 % and Blue (UV) 0.60~0.70% Special requirements demanded by the customers in terms of cut and shape are designed to add more values to diamonds down the line in view of the specific requirements of the customers. Because of our manufacturing infrastructure and strength, we can claim an unusually fast turnaround time compare to our competitors for the same. There is no product differentiation for I1 & I2category goods in the market, and we have realized a substantial business potential in this category in view of satisfying the self esteemed need of the customers. We have promoted a Hearts & Arrow concept for this category of goods, help us to gain the credibility for providing higher quality in lower product segment. Pair Diamonds : In view of the Japanese Customers, they have developed a specific concept of diamond for marriage and engagement ceremony of pair diamond, in which both the stones are identical to each other on its 4 C concept (Color, Carat, Cut and Clarity). The customers are highly satisfied by their product and services, which reflects from following. Majority of sales (more than 65%) is through repeated customers More than 72 % of customers are with them since last 30 years Every year 8~10 % of new customers are added

They have a presence in all the major diamond hubs across the globe.

Even though they have reduced the credit period from 180 days to 150 days maximum, still 95% of the customers are doing their business with KPS group.

Selling diamond jewelry to trade buyers : By incorporation of Heart & Arrow in I1 & I2 category goods, they are able to differentiate our jewelry designs and style in the international market. Selling loose polished or diamonds jewelry direct to consumers ISO 9001 : 2000 certification has helped them to have uniformity and consistency in every aspects of business practices, which enabled them to supply product in conformance to the customers criteria. In view of the different taste and preferences across the India for jewelry design and metal combination, through market research they have realized that, it is better to offer diamond studded jewelry in yellow (18 K), white (14 K) and rose (11 K) gold. By virtue of wide range of offerings and innovative designs (supported through in house design studio), market perceives us a Trendsetter. International business exposure of more than FORTY years and competency in manufacturing enable them to utilize the market dynamics for ACE brand in such way that, it can respond well to the demand fluctuations. Business COW (Commerce On Web) has helped them to provide services in time for stock, order inquiry and new offerings, which has enabled us to gain exponential business growth in a short time. Each piece of jewelry is accompanied with a Lifetime Guarantee of Service and a Certificate of Authenticity, that verifies the quality of its diamonds and weight of gold, this particular initiative has helped us to establish as a trendsetter. To establish a bridge with the customers for having a closeness and to impart education, an event of Know Your Diamonds has been conducted at various shopping malls, across Mumbai, Delhi, Hyderabad, Bangalore & Chennai, for celebrating the Valentine month. Customer segments in each of the following activities : Activity 1. Selling loose polished to trade buyers 2. Selling diamond jewelry to trade buyers 3. Selling loose polished or diamonds jewelry direct to consumers Wholesalers are the real drivers for offsetting the inventory load. Following factors add value to have a business relations with wholesalers : Main Segments Wholesaler; Jewelry Mnfr., & Retailers Branded and Non Branded Jewelry ACE Brand Jewelry

Doing more with less Consistency in dealing with the intake quantity Less promotion expenses and market co.op required compare to other segments Help to maintain the rhythm of the company; Help in maintaining the inventory, there by reducing the inventory carrying cost Help us to reach many small business customers at a relatively low cost. Large transaction compare to retailers Provide the market trend with less market research expenditure Provide the market news for customer taste and preferences, help us in our procurement cycle

Major customers of this segment are : Diason; Fair Sino Trading Co. Ltd, Hong Kong New wholesalers tapped : Yorash Ben (Russia); KRISTAL; Kaprillian (Armenia); Ovasis (Iran) Jewelry manufacturers In last five years, the share of this segment in business portfolio has increased to a substantial level and provided support to us for maintaining the inventory, research and development Explain the range of your customers, using examples from across the world not only US and Japan but also HK, Korea, Lebanon, Turkey etc. In total, they supply 45 jewellery manufacturers, Jewelry Retailers Within this segment, they supply a wide range of products to their clients. Large majors in the US, like Zales, JC Penny, Gordons and Macys and Korea and Japan based companies are supplied with their jewelry and loose polished. They also support smaller chain retailers in many countries, like Golden West (20 stores, W. Coast), Shane & Co, Sadamatsu (stores in Tokyo) etc. They have also developed a business supplying non-conventional retailers like ACN TV (shop channel in the US) and internet retailers.

Details of Business Activity, Type of Rough Diamonds purchased and Customer Segmentation The details of rough diamonds purchased to satisfy the demands of various customers segments is as follows : Categories of Rough Diamonds Purchased Commercial High Commercial Medium Commercial Low Small MB Preparers Rejections Commercial High Commercial Medium Commercial Low Small MB Preparers Rejections Commercial High Commercial Medium Commercial Low Small MB Preparers Rejections Value of Purchase (US $ m) 1.771 1.836 9.420 14.354 37.173 17.749 0.112 0.704 3.225 5.255 11.903 6.532 0.001 0.055 0.258 0.606 0.523 0.369 Purchase History 3 Yrs 5 Yrs 11 Yrs 20 Yrs 20 Yrs 20 Yrs 3 Yrs 5 Yrs 11 Yrs 20 Yrs 20 Yrs 20 Yrs 3 Yrs 5 Yrs 11 Yrs 20 Yrs 20 Yrs 20 Yrs

Activity

1. Selling Loose Polish to Trade Buyer

2. Selling Diamond Jewelry to Trade Buyers

3. Selling Loose Polished or Diamond Jewelry Direct to Consumer

Notable achievements in adding value to rough diamonds over the period of 2000-2006 : All the new developments in the area of product and process have been achieved with the help of incorporation of modern technology in manufacturing and research and development. Development of state-of-the art corporate office, has helped us to alleviate the productivity level as all the business process of rough diamonds are carried out under one roof. By implementing Business Process Reengineering (BPR) in the manufacturing area, cost reduced by 7~8% with no impact on production and quality. BPR exercise comprises of : performance based incentives schemes, reduction in manpower through scientific process of job analysis and dual shifting of polish assortment and Fluting (matching & bagging) department to Surat

responsibilities and incorporation of modern machinery in manufacturing process corporate office from Mumbai in view of labor cost and infrastructure cost Consolidation of business activity in the area of inventory management has been started in the year of 2006. The goal was to reduce the business cycle (i.e. from rough to polish

receivables) from 12 months to 8~8 months. To achieve this objective following efforts have been made by us : inventory. Production cycle reduced from 75 days to In-house software for Auto pricing 25~30 days (from rough to final polish) with the help of MIS based reporting system. developed, which guides about the pricing strategy of the slow moving polished diamonds based on the past sales and production analysis. It helps us to reduce the level of inventory according to the business need. reduced from 180 days to 150 days As a part to focus on smaller number of more profitable and reliable customers who can support our new credit policy, they footstep our business activities in EU countries (such as UK, Spain, Germany, Czech Republic, Cyprus, & Ireland), Russia and Iran. In view of technical differentiation, US PTO has granted international patent for CUPIO. CUPIO means desire. By virtue of its unique shape and cut, we are able to derive higher yield, and able to charge premium. In view of the value addition in loose polished diamonds, we have forwardly integrated our business by deputing a family member for handling US business operations. With his foresights, in a span of just FOUR years, today K P Sanghvi is one of the important names among the Jewelry Retailers of US. ACN TV was a major player for selling of Color Stones studded jewelry through Maximum Credit period to customers In 2006, they have reduced the intake of rough diamonds with an aim to clear the backlog of the rough stock available in our

Television. We have identified the opportunity to promote the diamond studded jewelry on this established distribution channel, because it has fewer overheads compare to normal retail distribution. This initiative is a first of its kind in our business model, which has helped to establish a growth of 200 % on an annual basis. Taking into consideration the inventory level of odd size diamonds which are generally considered as a slow moving size in the market, we realized that, more value can be added, if we promote the same on a theme based concept. In view of the same, LOVE collection for Gordons has been developed on their 100th business anniversary, e.g. in place of 0.50 CTs stone, 0.45~0.47 CTs stones utilized, helps to offer the products at attractive rates to the consumers. This odd size bridal engagement ring was the NO. 1 contributor of LOVE collection in terms of business value generated.

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For handling the entire US business operations, a back office system (similar to a famous concept of BPOBusiness Process Outsourcing) developed in Surat which analyses the business data and provide the support to the management for day-to-day decision making and book-keeping as per the US GAAP standards.

In view of the market potential in India for diamond studded jewelry, we have initiated ACE Jewels P Ltd. in 2001. This particular initiative has provided an opportunity to us to reach to the retail consumers of jewelry in India.

New market tapped in Middle East countries OEM manufacturing service provided to KRISTALL for their Venus Cut Development of a new product segment in international market for I - clarity diamonds by offering Hearts & Arrows 'Lida cut was designed and is produced for Dora. It fills the gap between marquises and emerald cuts. This particular development has helped us to penetrate further in Turkey market. It has added more values to the rough diamonds and enhanced profitability.

They have developed an upgraded version of round diamonds in the form of new cut, known as Five Star shape diamond for EL TRES of Japan. With a concept of Pair Diamonds (2 polished diamonds produced from one single rough to express pure bond of eternal relation as pair like), they grab the opportunity to deliver the products in line with the emotions of Japanese consumers.

Infrastructural resources currently in place for the distribution of diamonds and diamond based products Distribution and Marketing Offices : Company has global business presence by having the offices in following countries which handles the business of parent country and its nearby sister regions as mentioned below : Antwerp : EU Nations (UK, France, Germany, Czech Republic, Cyprus & Spain etc.) Hong Kong : Far East, Australia, and New Zealand Tokyo : Japan market Dubai : Middle East countries, Lebanon and Turkey Rome : Italian market New York : US market, Los Angles and Canada and surroundings such as Russia

Apart from physical presence, we distribute the products through virtual media, such as our own websites, idexonline, and polishpricem Regular participation in Trade fairs and Jewellery fairs of international repute

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For distribution of ACE brand jewellery, theme based campaigns and road shows are being organized, like An event of Know Your Diamonds has been conducted across major metros of India with an aim to give a good insight of the 4 Cs of Diamonds, benefits of Branded Jewellery and some useful tips for Jewellery Care to the end consumers which would benefit them in choosing their Jewellery.

Marketing arrangements with third parties Clients have requested to use the KP Sanghvi IP in their advertising (goods supplied by K P Sanghvi is written in the spine). Lebanon based Nsouli Co. use it for their ELOGA & EXPOSURE brand wrist watch and luxurious diamond studded jewellery advertising, as does Dora, the Turkish co. for their Lida cut. Offering diamond studded jewellery through ACN TV in US market Marketing co. op made with Golden West of US for promoting earrings studs and more For promoting ACE and CUPIO as a brand and K P Sanghvi as a corporate company, business association made with some of the leading companies of their repute, such as Integrated Marketing & Advertising Group (IMAG) of LOWE (Lintas) The Mojo Group of USA Clea Public relations ICE Global 70, Seventy Prachar Communication

Prachar Communicatiuons, an external agency was appointed by Ace Jewels, to help in maintaining such consistent and effective communication to our stakeholders. Prachar, through their knowledge and expertise in integrated communications backed up with their full suite of products and services proved useful to address the challenges associated with strategic coordination of messages, both internally and externally, They also used their services in the areas of Public Relations or Below-the-Line activities and Media planning. Through our association with Prachar we explored media opportunities such as advertising with Elle magazine, Cosmopolitan, Hi Blitz, LOfficial, Femina Girl to name a few in the print media. Amongst dallies we considered advertising with HT City & HT Style, Deccan Chronicle, Chennai Chronicle & Hyderabad chronicle, Deccan Chronicle Total, Pune Times, Vijay Karnataka and Vijay Times. In consultation with Prachar Ace also measured the benefits of working with the electronic media with names such as NDTV India, NDTV 24X7, NDTV Profit, Red FM and Radio City.

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For providing maximum coverage to ACE brand, business tie-up made with Indias telecom giant, i.e. Reliance Infocom by launching a concept of Har Din Hira Jeeto (Win Diamond Daily) contest. Some of the activities undertook in this campaign are as follows : Ace hoardings were put for a period of 10 days across various cities and states like

Delhi, Haryana, Punjab, Madhya Pradesh, Himachal Pradesh, Orissa, Rajasthan and Uttar Pradesh, where Reliance Infocom have its presence. communication was further enhanced with a SMS blast to 14 million subscribers of Information about the contest was also played on the customer care lines so that all Ace logo was included on the bill envelope that went out to around 10 million postpaid Reliance subscribers dialing the customer care could hear the message. subscribers In-house Resources : K P Sanghvi has a dedicated team of management professionals who are handling various portfolios in marketing activities. The team is accelerating at a speed of light under a corporate leadership. A market research wing analyses the sales data, taste and preferences of the respective country in terms of design and also prepare a plan to forecast sales with the help of in-house software. Management Systems : Customized software is designed for inter office transfer of goods. It analyses the data and guides us regarding the optimal transfer of goods from one office to another based on past sales and business inquiries for those goods in respective countries. This enables us to minimize the level of dead stock at and to fetch better values. Centralized analysis through database at Surat based back office, they generate DSS / MIS based reports for all marketing associates and main H.O., such as Inventory Turn Analysis Individual style wise, profitability analysis Customer wise profitability analysis Customer wise cycle analysis

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Business Plan for developing Groups diamond business by the end 2012 : Channel Coherence : With a global presence in major jewellery market for more than 40 years through SAMDIMON, we would like to maintain the rhythm of the business with our existing clients in the same way as we did it for past. We would like to further penetrate the existing market by tapping the small buyers and would like to provide the customized products and services. We would like to further explore in the markets, such as Iran, Pakistan, Australia, New Zealand, Latin American countries such as Brazil, Argentina, & Chile and other EU nations in next 2~3 years. After its launching, CUPIO has gained tremendous response in US market due to its unique shape and combining the features of various products. In coming years, we would like to take this particular shape in other markets. Utilizing the experience of US market development for EU market development by 2010-11 In recent years, it has been found that, shopping through TV sky shop business is increasing in India. ACN (J TV) network has provided a substantial experience to us for TV network business. We would like to utilize this experience in India by having a business tie up with similar channel partners. Business plan for exploring in Indian market with ACE as a brand New collections Third party joint venture for promotion Theme / Culture based product development ACE as a household name (for this we will utilize TCS report) Future products will be customized according to the taste of a particular state Retail chain / super mall tie up

Experience of Pritampura store for similar kind of development in other cities of India Our ability to understand the customers need reflects from our past business activities to provide customized products and services. We would like to concentrate on this and increase the customer base which in turn helps us to establish new business channels.

In a short span of time, virtual selling through e-mails, websites and business portals has established a new business channel for us. To gain further benefit for such IT based channels, we are going to implement online shopping concept for higher value certified stones and jewelry. Through this system, customer can purchase the product of his desire by making a payment through credit card, e-chaeques and wire transfer. This project will be outsourced to software development company.

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Supply Coherence : They are going to focus on core competency to cater the products and services to our customers in an optimal way. For this we have made a rigorous analysis of business data of last five years. This analysis has revealed vital information about the products to be manufacture (shape and size), which gives higher ROI to the organization in all aspects. After this, we have consolidated business activities across the selected rough category only. To move ahead further in this direction, we will first consolidate the manufacturing operations of small units, results in : Proper quality check Economic scale of operations Due to fewer manufacturing units, it will be easy to implement changes in the manufacturing process in view of market need Lower level of inventories Easy to synergize stage by stage process Easy to identify the scope of process improvement by incorporation of new technology

With the help of information technology, we will synchronize the sales activities with manufacturing operations to reduce the cycle time. For this ERP based order tracking system will be implemented. This system enables the department heads to have real time view of the entire order and accordingly they can synergize the process at their end to complete the order in time. This project will be outsourced to software development company.

Business operations in international jewelry market for more than 3 years, we have realized that, we can add more value to the diamonds of existing rough supply through jewelry business. To explore further in this direction, we have developed a new factory in SEEPZ. This factory will be commencing its production in July 2007. The production of this factory will enable us to expand our business horizon in global market.

An overview of the components of Operations Strategy of K P Sanghvi & Sons : 1. Product Design : The diamonds and jewelry designed through in-house research and

development activities. Company manufactures diamonds according to the market demand and trend of the business and produce the standards round and fancy shape diamonds of different sizes. Apart from this, company has developed its unique product design (innovative shapes) for catering the specific need of the customers, who prefer to buy such fancy diamonds. For this in recent past company has developed new shapes of diamonds. For these new shapes company has obtained FOUR [04] product patents (US Patents : US D 565997; US D

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493382; US D 529836; and US D 513714). So by obtaining patents, company has protected its IPR. 2. Location : Company has its manufacturing operations in Surat, Ahmedabad, North Gujarat, Rajasthan, Mumbai (SEEPZ) and marketing operations across the globe, such as in Japan, Hong Kong, Dubai, New York, and Antwerp. 3. Layout : All the manufacturing facilities are having modern manufacturing layout. The factory of diamond cutting and polishing and Jewelry manufacturing are built up as per the BPP (best business practices) norms of DTC (Debeers Trading Company). These BPP norms are developed by DTC with an emphasis on quality management, OSHA and other environmental laws. The factory premises are as per the provisions of Factories Act 1948. 4. Process Design : The process of diamond cutting and polishing is of multiple stages and modified according to the quality management principles. The jewelry manufacturing process is also designed based on the Italian principles of jewelery manufacturing. In both the processes, all the modern machinery has been deployed for product processing. The process operates through machinery import from USA, Russia, Israel, Belgium, and South Africa. The entire manufacturing is divided into cell based manufacturing. Specific cells designed and developed by Mr. Samir Sanghvi (MD of the company) and smoothen the entire manufacturing process. Entire manufacturing process operates through computyerized online process monitoring system. They have implemented poka-yoke and Kaizen based approach for their manufacturing process. 5. Human Resources and Job Design : Company has employed skilled, and semi skilled craftsman for diamond processing and jewelry manufacturing. Apart from this a team of professionals are working in the company, comprises of engineers, MBAs, LLBs, CAs, CSs and many more. The company is ISO 9000 certified and Job Design of each position has been made. More than 15,000 employees are working in the company. 6. Inventory : The inventory management system of the diamond business is maintained according to the DTC rough cycle (10 sights in a year through which diamondteers purchase diamonds from DTC) and market demand for specific articles of diamonds. 7. Reliability and Maintenance : Company has a dedicated maintenance department where engineers and technicians are working. Maintenance schedule has been prepared for critical equipments. Condition monitoring system is in place implemented. Maintenance activities are further divided into electrical, mechanical, opto-electronics and computer related. 8. Schedule (for maintenance and raw-materials purchase) : Maintenance schedule has been prepared for critical equipments and according to the schedule, maintenance work carried out. Major raw-materials are rough diamonds and precious alloys (gold, silver, platinum etc). The rough diamonds purchased from DTC as well as from the open market in

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Belgium and London. There are TEN [10] sights in a year for rough diamonds purchased from DTC company. 9. Procurement (of raw-materials and technology) : Transfer of rough diamonds is a critical supply chain of the business. The diamonds from DTC are distributed through a specific agency called Brinks Arya. All the rough diamonds are import in India through customs department and released through bill of entry in either Surat or Mumbai. The entire responsibility of rough diamonds transfer from Europe, Russia and South Africa to India is with Brinks Arya. From bonded ware house of customs dept of govt. of India, Brinks Arya collect the diamonds and handover to the diamond manufacturers in Surat, Mumbai, Ahmedabad and other cities where cutting and polishing is carried out. Transfer of rough diamonds from Mumbai to Surat is through local courier agents (known as aangadia). The gold, silver and platinum is procured / import through advance license scheme of govt. of India from Dubai, Hong Kong, USA, Europe and from local market of India Advanced technology is being used by the manufacturer for cutting and polishing of diamonds and in jewelry manufacturing. The technology is import from Israel, Russia, Antwerp, Italy and USA. Also technology (at par with international standards) of local manufacturers (mainly from SEZ and EOUs), is utilized by the company. 10. Quality Management : The company is having ISO 9001 certification for all the gamut of operations, administration, marketing, finance and HR. All the manufacturing processes and business practices are carried out as per the SOP and SOC. Also the manufacturing system of the company is governed by BPP (best practices principles) of DTC which comprises of quality management, health and safety management and industrial relations part. 11. Corporate Social Responsibility : Company has established various charitable trusts for social and religious activities. A multi-facility hospital has been developed by the company in the heart of Surat City under a name of K P Sanghvi Hospital. In their home-town of Rajasthan (Nr Mount Abu, Sirohi District of Rajasthan), they have developed a spiritual and religious place, known as Pavapuri Tirth Dham. As a part of CSR practices, they run mobile hospital for near by villages of Mt. Abu and also provide shelters to the sick and disabled cow under a banner of Sumati Jeev Raksha Kendra. A cow-dung based bio-gas plant has been installed at the Pavapuri Tirth Dham and said gas is utilized for cooking in bhojanalaya of Jain Temple.

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Strategies for Competitive Advantage : Company has adopted some of the strategies which helps them to establish niche over its near by competitors. Differentiation company has developed some of the novel shapes for diamonds and for the same they have filed international patents. Apart from this, under license agreement / OEM, company is able to manufacture stated shape, cut and design for diamonds for their customers. Also they are able to place a lower segment of the goods to the upper segment by incorporating the features of the said segment products into the lower segment due to their manufacturing expertise. (this has been explained above on page # 9 & 10) Cost leadership Through innovative steps and in-house research & development activities, company has developed products which provide a higher perceived value to the customers. e.g. developed LOVE collection for M/s. Gorden, where 0.45~0.47 CTs diamonds provide perceived value of 0.50 CTs diamonds in jewelry. These product look-a-like 0.50 CTs collections due to its cutting by the skilled craftsmen of factory but have low cost diamonds (due to size difference only and not of lower quality and lower value). This product has provided cost leadership to the company over its competitors. Due to processing the diamonds in short time (i.e. from rough purchase to polished diamonds), K P Sanghi & Sons is carrying lower inventory compare to others in industry, which results in lower interest burden of the banks. This makes them able to offer products at comparatively lower price than the other manufacturers in the market. Due to its competitiveness in manufacturing, company is able to sell some of the collection at premium prices, e.g. pair diamonds to Japan based customers. Quick response a shorter production cycle, minimum inventory of finished goods, makes them able to adopt the fast changes of the market and deliver the product ahead of their competitors Flexibility, Reliability, Timeliness. Requires institutionalization within the firm of the ability to respond, change and adapt. To meet the strategic objectives, company has carried out reengineering in manufacturing area, details of benefits derived from it are as follows :

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Reengineering activities in manufacturing process Re-utilization of dies used in manufacturing process by developing a matrix based dies storage system, results into a reduction of manufacturing cost Elimination of process steps by developing new ways / methods / technology of polishing; results into reduction of manufacturing cost and process time New process development for fancy shape (marquees and oval) diamonds cutting and polishing, results into an improvement in yield and reduction in cycle time

Implemented a Japanese management concept : poka-yokes (i.e. avoid mistakes) in diamond cutting and polishing process at M/s. K P Sanghvi & Sons, Surat Lock of work-in-process inventories through software for parametric deviation in diamond Software generates the review report for process controller : it contains a list of Process Controller review these diamonds and prepare plan of action for recovery Benefits derived : reduction of faulty products transfer from one stage to another diamonds, which are having deviation of more than 2 % than its standard parameter

stage of manufacturing results into an improvement in productivity

100 point checklist developed for Laser Department similar to 5 S (by a Laser Scientist)
Study of opto-electronic settings through a check-list based system and also consider KAIZEN

Benefits derived : Diode run for more than 30,000 operational hours (against a

standard life of 5,000 hrs); has helped to establish uninterrupted production & minimize the replacement cost

Operations Strategy of a company : Corporate Objectives

Company has a business mark : 1965 , which indicates the vision of the founders of the company for continuity in business in any situation and in any environmental conditions. To shorten the manufacturing cycle time by 12 days in a factory (this years major objective) Add more manufacturers (on contract basis) for meeting the business demand Expand business in rough diamonds trading (after cleaving and first process) Pay-back to the society (through CSR)

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Marketing Strategies : This year company has planned to participate in all the major international events of trade fairs of jewelry and luxury items Company will focus on selling of regular diamonds and standard jewelry through the existing network / chain Company is planning to enter into agreement with leading global players As a part for establishing closeness to the customers, company has divided its customers into specific segments with an aim to cater them in a better way than the competitors. Details of different segments is mentioned in Annexure : A. Company has established an assembly line where standards products can be produced and a cell based manufacturing set up for meeting the customized production of specific cut and shapes of the diamonds. Innovativeness in products reflects from its patents filing for new shape and design

Order winning criteria : Due to the price competitiveness, company has an edge over its competitors All the products (0.30 CTs and up) manufactured in the company are confirming the international standards of gemstones as per GIA (Gemological Institute of America) and IGI (International Gemological Institute) Products of less than 0.30 CTs are manufactured as per the classic concept of 4 C, i.e. Color, Clarity, Carat and Cut. Due to the large base of manufacturing (assembly lines for standard product development, i.e. round stones and fancy stones) company is able to offer products in volume. Also with cell based manufacturing for OEM based product development, they are also able to supply products in small quantity of customized size. The diamonds from F color onwards are available in stock for having a selection options to customers. However diamonds of D and E color can be manufactured based on the specific orders from clients Due to the available technology and craftsmens skill, company has a wide range of products, i.e. from 0.01 CTs diamonds to 5 CTs and up diamonds manufacturing. In jewelry, they are able to produce the standards designs of earrings, bangles and rings, however with a facility of CAD (computer aided design) lab, company is able to develop customized designs

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In diamond market, K P Sanghvi is one among the top brand in international market, which reflect from the request of some of the diamond studded jewelry manufacture and luxury watch manufacturer; in their advertisement, they mentioned a name of K P Sanghvi as an authentic diamond supplier to them.

Company has developed customized machinery by having a technical collaboration with Indian and foreign companies. Also company seek technical support from one of the machinery supplier, M/s. Lexus Softmac, Surat

Manufacturing Strategy As per the details of Annexure : A, it can be said that, there were significant economies of scale in design, production and marketing, and KPS (K P SAnghvi & Sons) has a cost advantage. OEM based customers are willing to pay higher charges for the customized product design than the commercial / regular diamond buyers. This factor seems to be the main barrier for other competitors to enter in the OEM market. Due to this core competency of product design, KPS enjoys benefits over its competitors in diamonds and jewelry markets in various segments. The company is able to deliver customized product solutions to its customers, and around 20% of the products are customized product offers. The Challenges faced by the K P Sanghvi & Sons : The cost of business with OEM / luxury customers seems to be high due to the CAD designs and research and development cost for setting the cell based manufacturing. Also the labor charges in this OEM segments are high due to specific craftsmanship skills demand by the process. It takes generally long time for OEM products to manufacture, because the product development cycle time is higher in OEM products compare to the commercial / regular one. The market of OEM based shapes (diamonds) and designs (jewelry) is increasing in view of the celebrities designs and niche designer collection for neo rich people across the globe. Also event based theme are in place for jewelry which demands for such type of goods. To maintain the growth and profit, KPS has to diversify into making new variety of diamonds and jewelry for other segments of the luxury products and branded jewelry, results into higher utilization of technology, demands more investment in capital goods (plant & machinery). Following problems faced by the ICD due to this.

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Cost of manufacturing grew for managing the complex flow of products (OEM &

regular) o Some of the competitors had also started offering the customized designs to their

customers o Moderate competition faced by KPS in regular product line (diamonds and jewelry

both) o increment in capital investment due to the procurement of new technology in

manufacturing o o o higher dependency on DTC for the supply of raw-materials Fluctuations in the prices of raw-materials Fluctuation in INR : US D conversion (FOREX Fluctuations)

Process Choice Manufacturing practices at KPS : o o o The manufacturing chain is vertically integrated Diamonds of less than 0.20 CTs size are manufactured on traditional assembly line Diamonds of 0.20~0.40 CTs size are manufactured on semi-process approach, where

half of the process follow DSS (decision support system) and AI (artificial intelligence) traditional assembly line o The assembly line is designed in such a way that, it can easily accommodate the

manufacturing practices of new product by having an output of DSS based diamond planner machine, which provides an entire plan for product manufacturing in different stages. o DSS Diamond planner output (stick on a packet of diamonds) sticker travel with the

diamonds across the assembly line and workstations for final product development. This sticker carries the information about the product to be manufactured and it has instructions for the workers regarding the crown height, pavilion height and diamond diameter, weight to be derived in each stage and final polish diamond weights. o Diamonds assembled in batches (diamonds are divided in specific Kapan of Carats

[CTs], this Kapan is having a specific number and is a primary key in online process monitoring system) across the assembly line in view of economic scale of operation o The entire manufacturing process is divided into cellular JIT system of pull factor

based. The goods across the assembly line are transfer through material handling lift. Various cells are formed in the company for processing the raw materials, such as

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modeling cell, cleaving cell, laser cutting cell, DSS planner cell, blocking cell, bruting cell, pavilion cell, crown cell, final faceting cell and certification cell. o A manufacturing cell first incorporated at the main factory where goods of 0.70 CTs

and up is being processed. o The design of cell comprises of 8~15 workstations, each equipped with computerized

machines, jigs and fixtures. o Crossfunctional training (or multi-tasking) has been imparted to the workers to

utilize them in optimal way across all the cells of the manufacturing. o Minimum inventory of rough and polished stones has played a major role in

turnaround of the manufacturing cycle time. o Shortening of process cycle time has enabled the owners / partners to take

appropriate decisions for buying of rough diamonds in view of market demands and sales forecasting. Capacity location : o The diamond cutting and polishing units of the company are located at Surat,

Ahmedabad, Saurashtra, North Gujarat and Rajasthan o Jewelry manufacturing unit of the company is in SEEPZ ++ Mumbai

Infrastructure o Functional support for operations : Partners of the company are involved in day-to-day manufacturing through Centralized server for data base management system for managing the realAll the cellular based manufacturing factories are centrally air conditioned Modern manufacturing systems have been placed for diamond cutting and

MIS based reporting system time data through on-line process monitoring system

polishing and for jewelry manufacturing. These technologies are CAD CAM based robotics machines, AI (artificial intelligence, Belgium technology) based polishing machines, DSS (decision support system, Israel technology) based diamond planner machines and EZ (expert system) based cavity measurement modules (Russian technology) o Manufacturing planning and control systems According to the demand for specific articles in the market and availability of They are having a planning of three months in advance,

rough diamonds, production planning is made.

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Quality assurance and control : company is holding ISO 90001 certificate Each stones above 0.30 CTs are being sold out in international market with a

quality certificate from GIA and IGI laboratories o Manufacturing systems engineering The manufacturing process of the company is in line with a philosophy of lean Diamonds of 0.25 CTs and above size move across the cellular manufacturing

manufacturing. as a One Piece Flow. The diamond is kept in a barcode based packets and move across the machines of cellular factories and process according to instructions marked on it. The major focus of manufacturing is on yield optimization, minimum in-process Pull system of inventory has been implemented to control the overproduction Separate process flows has been developed for different types of rough inventory and elimination of waste and duplicate activities.

diamonds, such as flow for Australian rough, Canadian rough, South African rough, DTC rough, and Russian roughs. The rough diamonds have typical characteristics according to their origin of mines and needs specific cleaving process. Material (i.e. in-process diamonds) and information flow simultaneously with each other through Janghad system and online-voucher based GRN (goods receive note) system. Diamonds are processed as per the mathematical modeling and visual image Process improvement scheme is in place and for that, suggestion box are Cross functional teams are in place for carrying out training and internal audit Majority of the new recruited staff are being trained through OJT (on the job processing through modern machines placed at assembly line and in cellular factories. activities, helps to improve the productivity and resolution of conflict training) in manufacturing system, here they learn how to work in a team and perform the work as per the instructions printed on the diamond envelop o Compensation agreements : The payment to the workers is on a piece-rate base and

on a Carats based. The managerial and supervisory staff are on fixed pay and have a portion of incentives also. o o Work structuring : a concept of 24 x 7 has been implemented and shift systems Organizational structure : A Matrix based organization structure

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Positioning Strategies in Manufacturing : Type of Product < 0.25 Cts (Stars, Malee) 0.30~0.50 Cts 0.50~1.00 Cts & Up & Fancy (>0.50 Cts) Fancy Shapes (below <0.50 Cts) Type of Production Process Product focused : assembly line base Product focused : assembly line and cellular manufacturing Process focused and cellular manufacturing Process focused and cellular manufacturing
Finished Goods Inventory Policy

Produce to stock and maintains sufficient inventory Produce to stock and maintains sufficient inventory Some articles produce to stock; for 1.0 Cts & up advance order Produce to stock and maintains sufficient inventory

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Process Design o Based on the products to be manufacture, for diamonds cutting and polishing,

company has adopted following models : Job Shop : For manufacturing 1.0 Cts and up round shape diamonds and 0.50 Cts and up fancy shape diamonds (mainly certified stones), company have a job shop model. Mainly the jobs of these diamonds carried out in cells of the manufacturing wing. Assembly line : For the production of < 0.25 Cts of diamonds, they are being Mass Customization : for CUPIO and LIDA cut company have adopted mass on the products to be manufacture, for diamond studded jewelry processed on assembly lines Based customization process o

manufacturing, company has adopted following models : Assembly Line : For regular items of rings, earrings and pendent demanded by Mass Customization : For delivering the specific design to retailers, such as majority customers (mainly wholesales and retailers) pair diamonds and LOVE collection, mass customization is being used. With available Capacity Strategy : o This year company has added 9 [NINE] new assembly lines (in the form of sub

contractors) for production of diamonds of <0.25 Cts in view of meeting the market demand. (2009-10) o In the year of 2010-11, company is planning to add further 7 [SEVEN] assembly lines

into the manufacturing of diamonds. o An aggregate production increment of 22 % has been planned for 2010-11 in view of

demand in different segments of diamonds. o An aggregate production increment of 14 % has been planned for 2010-11 in view of

demand in different segments of jewelry. o A new business of rough diamonds selling has been initiated last year (2009-10), in

which company process (assortment and cleaving) the diamonds and convert them to makable stones and sells out in the market. Company has achieved a business of more than Rs 150 Crores in this segment o In the year of 2010-11, company is expecting growth of 35% in ough diamond

trading

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International Location Strategy : o Company will ensure for the regular supply of DTC and other rough diamonds

suppliers o In view of global competition and increment in remuneration to skilled craftsmen,

company has increased the wage rate. The same increment in wage rate has been compensated by reducing the inventory carrying cost (in terms of bank interest rates) and shorter production cycle o All the revenue generated by the company is through FOREX as company is an

exporter. Company has entered into forward rate contracts with leading banks of India in view of heading their payments and receivables in USD. o In view of the norms of BPP of DTC, every worker (of cellular manufacturing) has

been covered under PF and ESI. The assembly line workers have a higher labor turnover and will be covered by 2011-12 under PF ESI. For assembly line workers, a proper arrangement with sub-contractor is needed and will require detailed discussion with subcontractors o In view of the reducing the average cost of production for goods of <0.25 Cts,

company has decided to start product in villages and small towns of Gujarat. Other contractors from suburbs of Ahmedabad city will also being add in 2010-11. o For customized (OEM) product design and manufacturing, company will enter into

agreement with EU, Japan and USA based companies. Quality Strategy o In 2009-10, companys Chairman (Mr Samir B Sanghvi) and other director (Mr Apurva

K Sanghvi) have attended industrial tour on quality management organized by CII (Confederation of IndianIndustry) at leading industries of Bangalore. They have visited companies like, MICO, Titan and Tata and learn the quality systems over there. o After this tour, the Chairman has decided to implement some of the aspects of TMS

(Toyota Manufacturing System) in diamond cutting and polishing process in the year of 2010-11. A quality circle and quality forum will be developed at the assembly line and in A target of waste minimization and productivity improvement by 5% has been cellular manufacturing and there by improve the productivity. made for 2010-11

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Technological Capability Strategy o 10 o o Further investment of Rs 50 will be made in new plant and machinery in next 2 years. With advanced plant & machinery, company expects to reduce the production cycle An investment of 27 Crores has been made in plant & machinery in the year of 2009-

time and also wants to shift the process load from human to AI (artificial Intelligence) based machine for deriving higher yield from specific stones. o Company is expecting to reduce the cost of production by incorporation of advanced

machinery in diamond cutting & polishing. Focus on Core Capabilities o Core Capabilities Company has a capability to produce diamonds to stock as well as they are Able to do business on its shorter credit period than the prevailing markets

able to produce on a customized basis customs due to its control over the product quality and able to supply goods in quantity to customers (for ready to stock products of <0.25 Cts) Company is being founded on strong business values of Shri Babu bhai B Company has best craftsmen of industry and also implemented modern Sanghvi and adhere to its values and religious customs of Jainism machinery for diamond and jewelry processing, which make them able to meet the market expectations. Company is able to carved out desired shape of diamonds as per the need of the customers. With CAD CAM technology, company is able to manufacture jewelry with novel features, which help them to position the lower segment product to the upper segment by offering perceived quality of upper class to customers. o Focusing is achieved by: Diamonds of sizes lower than 0.10 C5 Cts are mainly processed by the subAfter a verification of the sub-contactor on companys criteria, a list of 15

contactors potential sub-contractor has been developed with whom company will starts operations in a financial year 2010 11

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Overview of some of the changes made in last Three years in manufacturing Mr Samir B Sanghvi and his technocrat team has work out on a new concept of turnaround of the company through cellular manufacturing system with JIT. They have identified seven areas where they seek improvements. 1. Reduction in manufacturing throughput time by reducing the process cycle time

2. Reduction of work-in-process inventories 3. Introduced pull demand concept for inventory 4. Stage wise parametric dimensions of diamonds has been set and used them as a check point for software system of diamond issue to workers. This system is a kind of poka yoke in which higher deviation in diamond parameters from the standards will not allow an operator to issue the diamonds, which stops the error to pass on to next stage 5. with the help of time motion and work motion study, a wage plan has been changed from fixed pay to piece rate based. This has reduced the cost of diamond processing, and also it has increased the remuneration to workers, who are good performer. Due to this change, those who were on higher pay scale due to seniority have faced problem and have shown reluctance to set in new remuneration system and voluntarily left the company. Due to this change worker productivity has been increased by 28% 6. All the diamonds of > 0.30 Cts are being sell out in the market with stringent quality parameters of IGI and GIA laboratories of the world. This change has helped to a great extent to company to establish as a quality goods supplier 7. Earlier the factory operates on a philosophy of SIX working days in a week and Sunday was a wee off day. Due to this, there was a higher absenteeism on other working days, mainly during marriage season, festivals etc. To minimize the absenteeism, a concept of 24 x 7 has been implemented and adjust the shift schedule and workers in such as way that, each cell and assembly line can operate to its optimum capacity on each day. With this, on every day, one team has a week off and factory operate on seven days. 8. After proper study of the entire manufacturing process, Mr Samir B Sanghvi has classified entire manufacturing process in two zones, one is a core area of diamond modeling and second is ancillary area where supporting activities related to diamond processing carried out, such as sticking, counting, plotting of crystallographic defects on visual and CAD model of diamonds on computer, weighing, data entry, polish diamonds assortment, fluting etc. The manufacturing process pertaining to the second area is mainly a routine type of work. In view of the nature of the job of second area, Mr Samir B Sanghvi has decided (after a reading on electronics industry of Thailand, Korea and China where women are being

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employed for routine type of work) to employee trainee women. A training program has been designed with one of his key person (name Mr Arvind Maradia) and they have started imparting training to women in routine manufacturing process. The women are being hired at minimum wages of the factories act for initial period of SIX months, after that, based on their work performance and learning ability, remuneration has been set. With this approach, at present some where around 1600 women employees are working in the factory in a salary range of Rs 6000~9000. Following benefits derived by the company by incorporating women in cellular and assembly line of factories o o o Reduction in manufacturing cost (around 42%) Less absenteeism compare to men. Consistency in quality of final products (perfect assortment of polished diamonds

according to the standards set by the company) o 9. Better group cohesiveness has been observed

Mr Samir B Sanghvi has benchmarked the performance of KP Sanghvi & Sons (KPS) in line with the electronics industry of south-east Asia (EISEA) in terms of incorporation female in the manufacturing process. He has identified the gap (in work area of assembly line and cellular manufacturing) between KPS and EISEA and accordingly developed his strategies.

10. He has redesigned the material and information flow across the company. A proper MIS has been developed and report management system ahs been strengthen 11. After the study of different divisions of the factory, he has classified the process in two zones. Also he has separate the process of diamonds according to their sizes and purity and developed different manufacturing process. In view of the complexity of products manufactured, he has classified the process as assembly line (for stones < 0.15 Cts size), semi assembly line (> 0.15 Cts and < 0.40 Cts) and cellular manufacturing (> 0.40 Cts). This ha shelped to product the products (i.e. polished diamonds) at cost-effective rates. 12. A benchmark of process cycle time of 12 days and 16 days has been set by him for assembly line and cellular manufacturing processes. 13. Implemented EOQ based inventory system through KANBAN (JIT) for FIVE weeks supply (i.e. a time of DTC rough selling cycle time) 14. Instead of push strategy for inventory in diamond manufacturing, a pulled strategy has been implemented with kanban approach for both assembly line and cellular. 15. By proper study of the manufacturing process, non-value added activities have been eliminated and shorten the process cycle time in days.

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16. Taking into consideration the ergonomics requirements, all the factories are having centralized air-conditioning system, which provide pleasant working environment across the assembly line and cellular cells. ORGANIZING TEAMS : Convert the entire organization hierarchy from functional to a cell based team and allocate Four key employees to each team of cell, i.e. Q C inspector, skilled craftsmen, supporting supervisor for employees and computer operator. This cell based team has helped to KPS to establish JIT in place, and discontinued old manufacturing system The team specialists have been assigned with assembly work of piece-rate basis. Expert knowledge of team leaders have been utilized for production control, quality, stores (inventory) and many more functions. A separate centralized store department has been developed for catering the materials and utility items to assembly line, which was earlier decentralized. This has resulted in a cost savings. Future supply chain and strategic plans for the specific category of rough diamonds (to be sough from DTC) : KPS maintains a harmonic balance between the organizations vision, goals, objectives, skills, knowledge & resources and ever changing global opportunities. Our goal of furthering growth is taking shape through a well defined marketing strategy for our B2B and B2C segments. They will further develop downstream business activities though channel partnership by providing co-op support in terms of finance and branding to prospective clients. Iterative business process with our channel partners, allows us to get information regards to trends, taste and preferences. This sharing helps us to prepare the strategies. They have developed a new jewelry factory (in 2007) at SEEPZ, Mumbai, which will cater the goods to the overseas customers. Customer Propositions : They will focus more on the retail customers, this shift in focus helps to add high value to the business. This particular shift will change our customer proposition to a substantial extent. They will provide value added services and products with advance features to our existing customers, which will help to retain the customer base.

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Changes in product and service mix : Looking to the scenario of ever changing global market, we will diversify more across the diamond pipeline in next 2~3 years. For more value addition to diamonds, we will focus more on the jewelry retailing segment. Development of new product I1 clarity diamonds

US based jewellery manufacturer (Helzberg) provides SI stone with GIA Ex-Ex-Ex, H & A combination in their collection of bridle and solitaires, known as Masterpiece. This collection is rated on a higher side in US market. An idea of generating more business through Masterpiece concept has been shared with Helzberg. We will offer Materpiece in I1 clarity diamonds with GIA Ex-Ex-Ex and Hearts & Arrow for earrings. This will be a Line Stretching effort to bring advance features of higher segment products to a lower one. We are expecting to generate more business by serving to the mass market. Later on, we are planning to launch this concept in non US market. SI clarity Multiple stone Helzberg offers SI clarity single stones in their jewellery collection. By product line extension, we will offer multiple stones of SI clarity in the said collection to increase the diamond volume. Copyrights and Patents (IP)

We will develop new designs and combinations in jewellery and protect them through copyrights and patents. This will help us to increase the brand value of our product in US market and we can charge premium. The products will be 3 stones plus bridge rings, marquise stone as a centre piece in bridle set. By safeguarding the designs with copyright and patent registration, we can enjoy the monopoly in the market, helps to generate higher value. Development of new services Order Tracking System

An important tool for our B2B module, we will launch order tracking system on our business portal. This system would enable our client to track his order while in process. This will help link him through the entire process right from his ordering to the moment he is in receipt of the final piece of jewellery.

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Once the customer places his request for the product, the system would generate a unique ID, i.e. Order ID and inform him of the same. This would function as his unique id, through which he can track his order, to check on the current status of his order. The entire system would be designed in a user friendly way where the customer can be involved till the procurement of his order. The customer can gain information on various parameters like expected days to complete their orders, exact delivery date and time. The system allows the customer to be part of the product at every stage of its manufacturing. On a screen layout, the entire process from rough diamonds to polish diamond or studded jewelry to dispatch, will be made available at the touch of his fingertips. The manufacturing stage where order is under process will be differentiated by blinking of that stage. Customer can click at this blinking stage and know the status of the process. As per the request made by the customer, system will present the respective information in the form of data and images. This particular system will provide a feeling of virtual processing to customers. This IT enabled interactive system provides a touch / feeling to a customer that, entire order is processed under his/her supervision. Online shopping system

We will develop a virtual store on our business portal for certified stones and diamond studded jewellery. Where in customers can come, select the product they desire and place their order online. The selected goods will then be shipped to their address as mentioned in their online order. Payment for online transaction can be made through either credit cards, e-cheques and wire transfer according to the customers convenience. The above systems, viz. order processing system and online shopping system will be a part of our BUSCOW (business-commerce on web) platform. BUSCOW will be the tool to combat against the global challenges. Changes in the portfolio of business activities In the recent past the gem and jewelry market has witnessed a shift in focus towards high value addition in their existing business module. This movement has forced the wholesalers to initiate jewelry manufacturing and retailing activities. In coming years, we would like to focus more on this segment and would like to increase business with retailers.

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One of the new family members has joined the business and is going to handle the jewelry manufacturing operations in India. This will help us to broaden our business activities in developing nations. Recent time is a witness where young cohort group investing their major part of earning to buy electronic goods and branded luxury products. We have planned to offer studded diamonds on these goods, which will add more value to the products. To materialize this concept, we would like to make strategic tie-up with branded goods manufacturer. Support for new development will be provided through existing CAD centre. In coming years, we would like to establish ACE as a national brand by increasing the retail outlets. With the objective to add value, personify and maintain a brand synergy between communication and retail identity, Ace will works on bringing life to all its future campaigns and will constantly work towards enhancing the image of Ace as against its competitors. They will make cross business tie ups with leading companies of India for promotion of ACE brand. Apart from this, we will launch ACE in reputed Super stores of India They will participation in Trade fairs and seminars of national and international repute to create awareness for diamonds of specific cut and shape and also for ACE brand. Diversification, Expansion & / or Consolidation In view of the further business development, they will diversify the diamond business activities across its pipeline by further venturing in jewelry segment where scope to generate high value. Further, they would like to explore the business activities in other markets such as Australia, Brazil, Iran, Maxico, Russia etc. to expand Activities of ACE will be broaden across the sub-metros of India. In coming years, they will offer diverse range of designs to a growing domestic (Indian) clientele, which has gradually changed its outlook towards diamond jewelry, from an investment tool to a fashion accessory. To increase diamond jewelry span across a wide range of collections, we will offer jewelry from ethnic to contemporary, from fashion to bridal wear, from delicate to spiritual to avant-garde stainless steel designs studded with diamonds and coloured stones. For ACE, our endeavour is to go beyond just selling a diamond to creating a brand experience for our customers wherein they get tangible value in buying our brand.

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To develop ACE as a national brand, they will focus on marketing activities in the sphere of co-branding promotions and establishing synergies with other like minded brands who address similar Target Audience (TG) such as Ace. All this would help us further uplift the aura of the brand. Also we find many new marketing options available today like in-film placement, in-television placement helping us reach a wider audience and help establish visibility and top-of-mind recall. To achieve above objective they would like to recruit sales / marketing professionals; redesign the existing job portfolio of executives. Based on the training need and organizational objectives sales professionals will be deputed for training Business activities will be further consolidated to reduce the business cycle to 7~8 months by 2011. To achieve this objective, first they will reorganize their database management system and then they will implement MIS / DIS based report systems (similar to manufacturing) in marketing and rough purchase area. This new reporting system will provide the decision support to the key executives and make them able to take corrective actions. Through their market research activities, they will identify the potential channel partners and develop business with them. Their designers will travel the world to keep abreast of global trends and think out of the box to incorporate prevailing elements that meet the requirements of our different brands and buyers. To reach more close to the consumers, we will implement ERP system in marketing first and later on integrate the same with manufacturing. Master budget will be prepared to support our objectives in the area of diversification, expansion and consolidation. Required fund will be allocated to each activities and mainly the finance will be through working capital, Contingency Planning We have multi-location marketing set up across the globe, which helps us to adjust the distribution of goods to combat any kind of contingencies.

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