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Supply Chain Development of Indian Gold Jewellery Industry - Research Paper Example

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The paper "Supply Chain Development of Indian Gold Jewellery Industry" is a perfect example of a management research paper. The research would investigate the supply chain management processes of the Indian gold jewellery industry…
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Supply Chain Development of Indian Gold Jewellery Industry
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SUPPLY CHAIN DEVELOPMENT OF INDIAN GOLD JEWELLERY INDUSTRY: THE IMPLEMENTATION OF THE INFORMATION TECHNOLOGY IN THE UPSTREAM ACTIVITIES THAT SUPPORT OPERATIONAL EFFICIENCY Table of Contents Introduction 3 Literature Review 3 Context: Indian gold jewellery Industry 3 Supply Chain Design and Behaviour 5 Practices of Information Technology: Gold Jewellery 8 Research Background 10 Research Aim 11 Research Objectives 11 Research Questions 11 Research Methodology 11 Time Horizon 13 Anticipated Findings 14 Annexure 17 Introduction The research would investigate the supply chain management processes of the Indian gold jewellery industry. The various aspects of Gold jewellery industry would be studied in broader domestic and international market perspectives to suitably access the role of the industry on Indian economy. The research would indulge in data collection from various primary and secondary sources to build the case to determine the supply chain aspect in the business. Further, the support that the industry may seek from information technologies for operational successes and reduction of corruption would be suitably analyzed. The recommendations based on the study would be given at the end of the research to suggest what more and how the value addition for gold jewellery supply chain in India can be achieved. Literature Review The chapter would investigate the various secondary sources from the existing literature to interpreters and analyze the Indian gold jewellery industry. The gem and jewellery industry would be suitably studied to understand the non-linear nature of the supply chain in the process. The various trends in the industry with its effects upon the business factors would be suitably examined. Context: Indian gold jewellery Industry The gems and jewellery of India is renowned for its unique design and taste globally. The industry today is highly export oriented which is a significant foreign exchange earner for the nation. In between the financial years (FYI) of 2000 to 2009, 17% of all exports from India to other economies were gold jewellery. India consumers nearly 20% of the global gold and remains the largest importer of the metal (Gold.org, 2015a). The industrial raw materials like gems, gold metal, unpolished diamonds are heavily imported to supply the raw materials for the industry. Therefore, the industry is susceptible to external forces due to its import export dependence. The international commodity prices, foreign exchange rates and international demands are all subjected to international global economics, making the industry struggle at times of recessions. Olden (2010a) suggested that the recession of last decade has made the internal demands for gold consumption reduce significantly with steep rise in gold prices. This had a major impact on the domestic gold jewellery industry of smaller scales as it is depended heavily on export credits. The industry faces its own problems as the sector is very diverse with very small unorganized businesses forming a bulk of all the production done in the nation. However, since 2011 FYI the recession in both internal and international global economies modified giving the needed boost for the industry. The government authorities have aided the industry with interest rebates, credit period and export duty benefits to sustain the industry from economic slowdown. As on date, both the pre and post shipment export credit periods were increased to give the smaller businesses have longer inventory cycles. Again, factors like the abolition of target plus schemes affected the exports as previously the exporters of gold coin and medallions of gold were registered under jewellery exports that constituted a major size in the export volumes. Further, the value added norms were changed where the value addition was calculated on the entire piece of jewellery (gems and stones included) and not on the previously used method of calculating on the basis of gold content, affecting the exporters (The Economic Times, 2015). Therefore the demands for gold can be divided into two broad lines in the Indian context, gold as investment option and gold for jewellery consumptions. The industry directly employs 2.5 million people and has the capacity to employ more. 57% of all the investment demands comes from bar and gold coins. Hence options like high rates of return, no alternative to such gold investments, perceived capability to hedge against inflation and the ability to invest smaller amounts in commodities has made the gold investments very lucrative. However, the ‘black market’ corruption follows such investments as a large amount of unaccounted money is invested in gold (Gold.org, 2015b). Culturally, the Indian market had been using gold jewellery for over several centuries as an adornment. During occasions of festivity gold jewellery forms a part of the gifts for both males and females. Women adoration of jewelleries and the capacity of gold act as security in times of crisis are primary cultural uses. Again traditionally, gold jewellery had been considered as a symbol of power, wealth and power for the person possessing them. Each Indian occasion have the ritual of gifting gold jewellery to commemorate, as the married women ritually uses specific jewellery as symbol of marital status, fertility, power and position. However, the vast country have difference in designs and shapes based upon which part they belong to, but the tradition of using jewellery stays unchanged everywhere as Mangal Sutra, Maang Tika, earrings, nose rings, pendants etc (Titan.co.in, 2015a). Supply Chain Design and Behaviour The Indian gold jewellery industry has seen many multinational players to come in along with small scale jewellery makers. However, the supply chain infrastructure is a large investment oriented business where the trading for jewellery, coins or bars of gold needs high investments to start (Nhamo, 2014). Again, the metal gold as an investment option have limited competitor and thus attracts commodity investors. Gold commodities in shape of coins and bars have limited contribution to the overall industrial growth. The Responsible Jewellery Certification (RJC) is an international body that measures and controls the gold jewellery supply chain from mining to product sales along with certifications for product ensuring that the consumers get the best of the money they spend on gold purchase (Olden, 2010b). The RJH Supply Chain Model (As prepared by the Author) Since gold is a rare metal scarcely available across various places on the globe, therefore the control of mining, distribution, production for ethical business practices needs to be in place. Information Technology has changed the previous process of supply chain where the recycling of gold and ‘black market trading’ practices were common. In this context, Rushton and Walker (2007, pp. 71-71) observed that the buyers and suppliers are key for prevention of corruption in the supply chain. The process recommended by the RJH Council were to ensure that the certification for the gold that the consumers buy have a certification. Further, Vijayasarathy (2010) argued that the process of corruption is best handled by identifying areas of the corruption or changes of such happening, risks the supply chain. Thus the identification of the areas are key to incorporate the needed mechanisms to see corruption do not happen. Therefore incorporating the follow up systems in the risks routes the supply chain management systems can see the validity of the mechanisms put in place. The certification of RJH has incorporated few standards to achieve the certifications where the supply line of gold from mines to consumers is kept under strict vigilance. Further the Chain of Custody (CoC) model was proposed in 2012 to set the standards of precious metal supply chain. The responsibility of the model is to ensure that the sourced product comes from conflict free sources and that the responsible production is embarked at each step in the line. Therefore the standards are to maintain the appropriate standards of human rights, labour standards, environmental impact legal and ethical business practices. To ensure the chain functions responsibly the CoC standard guidelines are issued to its participating members (Responsiblejewellary.com, 2014). All the gold from mines to consumer is thus tagged and followed to ensure only responsibly sourced gold and gems enter its market. While implementing the standards the Indian government has set standards with other nations to see that responsibly sourced gold enters its market. For an example the Indo-Russian deal of diamond supply where the Memorandum of Understanding specifies what sort of diamond is going to enter Indian markets (Ibef.org, 2014b). The systems that have been put in place to see the chain acquire only responsibly sourced gold and trace the change of hands in each step of supply chain. The objective for such IT infrastructure and its mechanisms to prevent corruption is further discussed. The RJC model of Supply Chain Integration for Indian Jewellery industry (Source: Olden, 2010c) Practices of Information Technology: Gold Jewellery The gold jewellery industry of Europe has introduced many technological applications in the industry for measuring, weighing, designing activities. Swiss, UK and German are the most prominent in among them who has introduced Information technology based operations. Further, Japanese Yasui technology of wax casting, standard karatage measurements are brought in place to be consistent with quality standards (Gold.org, 2015c). Use of IT based CAD/CAM technologies to integrate stages of styling, 3D modelling, casting, designs etc are added to aid the industry to be competent and have consistence in quality deliveries. The Integrated Supply Chain (ISRM) with IT supported technologies have introduced many a measures like vacuum melting, Rapid Proto Typing machines to assort precious gems, 99.99% gold refiners, matching colour assortments. Nevertheless, the bigger suppliers also do have a team to constantly monitor the various developments in the technology to upgrade the current technologies. Titan, a major operator in international scale based out of India has introduced Goldmine systems as one of the very first .net module to integrate the retail sales of gold jewellery in India (Titan.co.in, 2015b). Hill (2010) opined that the monitoring and supply chain regarding corruption is supplementary and not replacing a in-house anti-corruption program undertaken by both supplier and buyers. So anti corruption programmes in its IT module for supply chain has integrated the following objectives in such a network creation (Transparency.no, 2014). Effective implementation of required safeguards for supply process with efficient training, documentation and control are part of such programme. The systems are designed and developed to have integrated whistle blowing systems. Risk Analysis increases the possibility of the target and programmes and forms a important part of development and necessary course correction. The process identifies the procurement and marketing as the two most vulnerable parts where corruption may occur and puts the best of efforts in monitoring the process for further development. Processes consistency is an achievement that has made IT work consistent evaluate each batch of production, supply and distribution from mines to consumers as a standardised process. Cooper and Tracey (2005, pp. 237) noted that since gold is a rare metal with its own unique physical properties, therefore measuring gold and change of its weight along the process follows the physical property as guide for tracing. However, the 80% of the entire Indian gold jewellers are from rural India with restricted or limited options challenging a mass standardization (Vinaja, 2004, pp.70-71). The efforts taken up by Titan, a renowned multinational jewellery house of India, serves as pioneer. Goldmine is considered to be the first ISCM integrated software, developed on .net platforms. The software has inbuilt mechanisms to counter any change of weight via x-ray detection, CAD –CAM mapping etc. Further the process has its own analytical code to determine what to expect, at each stage after purification till consumption, for each unit of gold used (Mitshihara and Muller, 2013, pp. 137). This serves as the trigger for ‘whistle blowing’ to indicate loss of weight, if any, in the process. Continuous monitoring of consumers and competitors (in this case the multinational jewellery retailers) to add on the new additions and norms (legal) that are evolving. The control has been further enhanced with inputs from different stakeholders and consumer’s feedback to make the process more full proof. Research Background The Indian jewellery market with its precious gems accounts for approximately 41 Billion USD market size as on 2013 and expected to reach about 85 Billion USD by 2018. India is deemed to be the hub of Global jewellery industry due to its cultural affinity for the metal, government policies and high skilled jewellery producing labour. The exports of the industry are expected to reach 58 Billion Dollar USD by 2015 while the domestic market volume would be estimated 35 to 40 Billion USD (Ibef.org, 2014a). However, the research would focus on the supply chain aspect of this precious and rare metal in India. The supply chain for the industry has two broad identities like ‘mine supply’ and ‘scrap supply’ based upon the source of metal collection for jewellery production. Since gold can be sourced from multiple participants in the supply chain, the line stays non-linear (Olden, 2010d). Various aspects of this non linear supply line would be studied in India’s context along with various safeguards and standards framed under law to guide the supply line of gold. The stakeholder’s role in such a supply line would be critically analyzed to formulate suitable recommendations. Research Aim The research aims to find more about the supply chain line for the Indian Gold jewellery industry in comparison to its international counterparts. The IT frame works would be critically analyzed to find the suitability of the same in controlling corruption and streamlining the supply chain line. Research Objectives The objectives for the research would therefore be as follows: To study the supply chain line of Gold jewellery industry in India To critically analyze the role of Information Technology in supply chain management for Indian Gold Jewellery Industry To evaluate the efficiency that IT has brought into support operational efficiency Research Questions The questions which the researcher would seek an answer would be as: How do the supply chain lines for gold jewellery industry affect the business? What is the role of Information technology in the business? How has IT helped the operational efficiency in gold jewellery business? The research would answer the aforesaid questions in the study process and the findings would be linked with the study objectives formed herein. Research Methodology The research would follow a distinct strategy to formulate the research process and analyze the findings likewise. The processes include collection of data for the purpose and analyze them for the business decision making. As a part of epistemology, the subject would follow post positivism in its philosophy where descriptive analyses of literature from relevant sources are used. Further, the research is based upon primary and secondary data. These data determines the supply chain of Indian gold jewellery market and the utility or value that IT has brought in. The data sources involve stakeholders and published data from various journals and books. The research would be following a deductive approach where the findings would be based upon existing theories. The IT infrastructure in the supply chain section of Indian gold jewellery has made a transition in the early days of this millennium (Neef, 2004). The findings would assist in determination of the ability of the It processes and safeguards in place to block corruption and streamline the supply chain processes to add value for the industry. The secondary data as a part of empirical research, is been collected from already available sources. The primary data however would come from the people of the industry associated with production and distribution (Alzheimer-europe.org, 2015). The qualitative research would be conducted where the questioner needs to be prepared to collect the descriptive opinion of the various stakeholders. The information received in the process would form the primary data for the research. The case studies used for the research from published sources forms the secondary inputs results and findings. Since the case studies have a specific topic focus thus it enables descriptive details of a subject in concern. However (Socscidiss.bham.ac.uk, 2014) argued that the case studies do not always form a deductive approach and at times challenges the prevailing theories and concepts. The primary qualitative data is planned to be collected from 10 different supply chain individual from the Indian Gold jewellery industry, especially them who are well versed in IT systems of Jewellery retails. The population for the research is all stakeholders, suppliers and retailers from Gold jewellery industry. The plan is to have a semi-structured interview with them either on a face to face interview or via Skype platform (Priem and Swink, 2012 pp. 7-13). The primary and secondary data collected in the initial phase would be analyzed to co-relate the findings with the theories. Further, the descriptive approach in the method research enables the researcher to venture into various aspects of subject from quantitative and published sources for an inference. The study would be conducted over a period of 6 week and thus the cross-sectional study format would have a time line that would be divided into multiple sections or phases of the research process. The Gantt chart as below would be followed for data collection, analysis and compilation. Time Horizon Tasks May wk 4 June wk 1 Jun wk 2 Jun Wk 3 Jun Wk 4 Jul wk 1 Jul Wk 2 Jul wk 3 Jul Wk 4 Aug Wk 1 Aug wk 2 Aug wk 3 Aug wk 4 Going through proposal comments                           Reading for sources                           Making changes on the Literature as required                           Framing research questions                           Literature review                           Research methodology                           Data Collection                           Data Analysis                           Findings                           Developing suggestions                           Editing draft                           Final corrections                           Report Submission                           The tentative Gantt Chart for the Research The research process would be further divided into objective formulation, literature review, data collection, analysis and recommendation phase within a span of three weeks. Anticipated Findings The research aims to find the objectivity of IT infrastructures used in the Indian gold jewellery industry. The findings from the research process would enable the objective linking where the findings would be linked with theory in literature review. The recommendations for the future development of the gold jewellery industry in India can them be identified and analyzed for further development of the gold jewellery industry. Information technology is the way forward for the global supply chain for any industry where the futuristic demands and sales can predicted based out of data. Therefore, the supply chain along with the buyers would know where to buy from, get the needed quality assurances and fixed competitive prices from a specific market. Nevertheless, the process would help in tracking the gold right from mines to consumers enabling the authorities have a better control and reduction of corruption and unethical practices. Again, the consumers would know the sources of the product that they are purchasing to stay away from gold and gems unethically sourced. Reference List Alzheimer-europe.org, 2015. Alzheimer Europe - Research - Understanding dementia research - Types of research - Research methods. [online] Available at: [Accessed 20 Feb. 2015]. Cooper, D. and Tracey, M., 2005. Supply chain integration via information technology: strategic implications and future trends. IJISM, 1(3), p.237. Gold.org, 2015. India Jewellery Market | Indian Gold Designs | World Gold Council. [online] Available at: [Accessed 20 Feb. 2015]. Hill, C., 2010. International business. Harper Collins: New York, US Ibef.org, 2014. Gems and Jewellery Industry in India, Indian, Diamond, Gold, Sector. [online] Available at: < http://www.ibef.org/industry/gems-jewellery-india.aspx> [Accessed 21 Feb. 2015]. Mitshihara, J. and Muller, P., 2013, Special Topic Forum on Resources and Supply Chain Management. Journals of Supply Chain Management, 49(2), pp.137-137 Neef, D., 2004. The supply chain imperative. New York: American Management Association. Nhamo, G., 2014. Breakthrough. Baltimore, Maryland: Project Muse. Olden, P., 2010. Gold and the Jewellery Supply Chain A Context. [online] RJC. Available at: [Accessed 20 Feb. 2015]. Priem, R. and Swink, M., 2012. A Demand-side Perspective on Supply Chain Management. Journals Supply Chain Management, 48(2), pp.7-13. Responsiblejewellary.com, 2014, Chain of Custody Standards Development [online] RJC. Available at: [Accessed 20 Feb. 2015] Rushton, A. and Walker, S., 2007. International logistics and supply chain outsourcing. London: Kogan Page. Socscidiss.bham.ac.uk, 2014. Research methodologies. [online] Available at: [Accessed 20 Feb. 2015]. The Economic Times, 2015. Indian Gold jewellery Retail Industry: | The Economic Times. [online] Available at: [Accessed 21 Feb. 2015]. Titan.co.in, 2015. [online] Available at:< http://titan.co.in/hot-jewel-Supply> [Accessed 20 Feb. 2015]. Transparency.no (2014) Anti Corruption in Supply Chain, [Online] Available at: [Accessed 21 Feb. 2015] Vijayasarathy, L., 2010. An investigation of moderators of the link between technology use in the supply chain and supply chain performance. Information & Management, 47(7-8), pp.364-371. Vinaja, R., 2004. World Class Supply Management: The Key to Supply Chain Management Journal of Global Information Technology Management, 7(3), pp.70-71. Annexure Indian global exports of Precious Gems and Jewellery items (2000 to 2010) The Volatility of Gold Prices in India (Jan ’08 to Jan ’10) The surge and decline of Gold Prices in Indian Market (Jan’13 to Jan ‘14) Read More
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