Building a sense of supply chain security

Jewellery retailing involves extensive logistics management and requires efficient and foolproof security measures. Thus, there is a need to assess the finer nuances of building an effective and secure supply chain for the purpose of jewellery transportation. Jasleen Kaur...

At the end of 2014, the media was abuzz with a certain news in the gem and jewellery industry. The news was about Apollo Fiege, a company that was 60 percent owned by Raaja Kanwar’s Apollo LogiSolutions and 40 percent by Fiege Logistics of Germany, forming a venture with the Ferrari Group of Italy (not the car maker) to provide logistics solutions to luxury goods: precious metals, diamonds and jewellery. Earlier, Brinks India, an Indian arm of international group, entered into a strategic partnership with BVC Logistics with the aim to provide logistics services to the diamond and jewellery sector on a large scale and ensure maximum outreach. These developments led to a boom in the sector. As per the Gems and Jewellery Export Promotion Council (GJEPC), the gems and jewellery sector in India plays a significant role in the Indian economy, contributing around 6-7 percent of the country’s GDP. One of the fastest growing sectors, it is extremely export oriented and labour intensive. The government of India has declared the sector as a focus area for export promotion based on its potential for growth and value addition. It has recently undertaken various measures to promote investments and to upgrade technology and skills to promote brand India in the international market. The domestic gems and jewellery industry had a market size of Rs 251,000 crore in 2013, and has the potential to grow to Rs 500,000–530,000 crore by 2018, according to a study by the council. The study also projected that the country’s gems and jewellery market could double in the next five years. The growth will be driven by a healthy business environment and investor friendly policies by the government. “We are expecting high single-digit growth in the overall segment this year. Diamond jewellery demand is robust across all destinations, led by the US. Gold jewellery demand has also seen phenomenal growth in 2014-15. Thus, we can easily surpass USD 40 billion this year,” said Vipul Shah, chairman, GJEPC. According to him, Indian jewellers have taken several initiatives to promote gold and diamond ornaments. “Apart from frequent bilateral meets, they have also successfully made a dent in the Latin American market, set to fetch good volume this year,” Shah added. This positive attitude demands uplift in the logistics segment. According to Rajkumar S, founder director and CEO, Sequel Logistics, the current market size of the logistics services for this segment is approximately Rs 500 crore per year. Apart from this, there is a large element of unorganised logistics service market which makes it difficult to estimate the total and complete market size. While this sector offers huge potnetial for logistics players, the number logistics service providers (LSPs) are fairly few in this segment.

An effort to make it glittery “Logistics is the key component for the gem and jewellery industry, it is small but plays an important role in providing best solutions to the trade. BVC Logistics has and will always support their valued customers pertaining to their requirements within domestic regions or internationally,” said Harsh Arora, head of sales, BVC Logistics. While, Krishnanand Bastikar, vice president international marketing, BVC Brinks, observed, “We have played an important role in growth of exhibitions within India and globally, along with the exports, deemed movements, stock transfers, domestic movements following the correct procedures and providing assistance as per the state / province requirement.” Logistics companies like Sequel Logistics are also taking continuous efforts to boost the sector. Rajkumar S explained, “Sequel Logistics and G4Si came together last year through a strategic alliance, to offer a complete, seamless and superior logistics service in both the diamond and jewellery and the bullion segments. Most of our customers described this as coming together of ‘the best of both worlds’. G4Si, with its pedigree and a huge international network, and Sequel, with its largest secured network in India, together have raised the service benchmark to the next level. The alliance has had a significant positive effect on both our businesses, interms of growth and market share.”

Understanding complexities The sector has a limited number of players due to the complexities involved in logistics of jewellery and precious metals. Documentation, dimensions of the product and taxes need to be perfect when it comes to supply chain of precious metals. Hence, LSPs need to play very safe unlike other sectors. Arora averred, “Customer’s KYC documents, license, registration copies, export documentation, declaration needs to be accurate and in correct order. Size, dimensions, purity etc., need to be accurate. Goods upon reaching the destination should be cleared with local taxes and duties paid by the consignee. And of course, there is extra care taken due to the risk involved and the value of the goods.” The bullion logistics service is dependent on various factors including regulations, and hence it is more volatile in nature. Rajkumar expressed, “The scope for logistics would increase through scrap gold collection and transportation to refineries. The jewellery logistics service is relatively stable and predictable. Retailers are increasing their presence in the Tier-II and Tier-III markets, after the metros have become saturated to a large extent.”

Exhibitions are coming up in big way “With the growing online business the requirements has also increased of the gem and jewellery trade, BVC has come with various solutions for their valued customers like low value parcels (LVP movement). BVC has taken appropriate measures on the security front with the provision of armored bulletproof vehicles that enables secured transportation across India, also BVC takes care to choose the best airlines to send the cargo under valuable mode. Also, since the cargo is so highly valued, we provide tracking on our own home-grown software,” shared Bastikar. Anjali Khanna, who had a stall at The Bridal Show at Hotel Ashoka, New Delhi for Kundan and Pearl jewellery, said, “Before making a retail store, these kind of jewellery exhibitions act as a powerful tool for us to generate our customer base. We participate in almost 10 such exhibitions in a year which helps us to strengthen our network and brand value.” Mithun Sacheti, co-founder and CEO of CaratLane, said, “Exhibitions are increasingly being used as a very effective means of sales, as well as to assess the potential of smaller towns, before making full-fledged investments in retail stores,” stated Rajkumar, adding, “Though relatively small now, the online jewellery shopping channel (e-commerce) has also seen a steady growth in volumes in the last couple of years, driven largely by the gifting purchase. All of these trends present an interesting and substantial scope and opportunity for the logistics service providers to not only manage, but also to drive the pace of growth of these trends.”

The silver lining Since relations with neighbouring countries are getting better and with the trade providing support for the growth of this industry, we can expect good news, believes Bastikar and Arora from BVC logistics. “If the government of India shows a little more leniency towards the applicable duties and taxes then we see a tremendous growth in the imports and exports,” both added. “Traditionally and culturally, India is the largest consumer market for gold and silver jewellery. Driven by both rural and urban markets, the growth trend is expected to continue for the next 5-7 years,” Rajkumar predicted. There are many odds and ends that are part of jewellery logistics. From the departure to the arrival of the carrier, a jeweller’s heart is in his throat. If the merchandise doesn’t reach in time or there’s a technical difficulty in the transport then it can lead to a loss of hundreds of crores. Surely, logistics of gem and jewellery isn’t child’s play.