Even-Zohar: We Have a Structural Problem That Needs to Be Solved

The global economic crisis is a blessing in disguise, said diamond industry analyst Chaim Even-Zohar. According to Even-Zohar, the crisis exposed the need for restructuring and consolidation.

Speaking on Monday at Indaba, Africa's largest mining conference held in Cape Town, Even-Zohar said, "We have a structural problem in the diamond business that needs to be solved," adding "we need to clean up, we need to consolidate and we are doing it now. The crisis is a blessing in disguise."

Even-Zohar said that while sales of polished diamonds by retailers is expected to fall by some 33 percent, rough diamond sales are expected to fall 60 percent due to what he calls the Ripple Effect.

The ripple or bullwhip effect is the phenomenon in which order/demand variability is amplified as it moves up the supply chain.

Even-Zohar also discussed his “Spaghetti Junction” Chart, which describes the complicated and often inefficient route goods move in the pipeline before reaching consumers.