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LGDs introduce a change in manufacturing dynamics
Oct 23, 2024

1The natural diamond (ND) industry has traditionally emphasised maximising yield from each stone, focusing on carat and value extraction. Lab Grown diamonds (LGDs) introduce a change in manufacturing dynamics. Reduced rough prices mitigate the cost implications of lower yields. Additionally, consistent high-quality rough production encourages experimentation with polished diamond shapes.

This shift necessitates a move toward automated polishing and diverse cuts and shapes. To accommodate this, polishing factories must embrace automation and flexible manufacturing processes. This includes adopting approaches like cellular manufacturing and upskilling workers for the demand for diverse shapes and proprietary diamond designs.

Unlike natural diamonds, LGD production can be tailored to specific orders in terms of quality and size. This shift impacts the entire supply chain. The conventional natural diamond mindset of producing polished diamonds and maintaining large stockpiles becomes impractical for LGD producers due to steep stock losses.

LGDs can shift their operations to become demand driven. Adopting a just-in-time (JIT) model allows for rough diamonds to be selected based on orders, followed by lasering, polishing, and final jewellery assembly within a short timeframe. JIT minimises inventory holding costs, reducing processing time from months to mere days.

Transitioning to a JIT model might pose challenges for LGD businesses accustomed to the natural diamond approach. However, this shift is standard practice in other manufacturing sectors. Implementing the JIT model requires investment in systems, processes, and personnel training, potentially necessitating closer proximity to end consumers.

Young entrepreneurs leading many LGD companies, often from families entrenched in the natural diamond trade, must challenge traditional assumptions to flourish in the LGD realm. This shift embodies a mindset of innovation and adaptation, moving beyond previous generations’ paradigms.

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