An Evening with Chaim Even-Zohar at DMIA

The Diamond Manufacturers & Importers Association of America (DMIA) Wednesday evening hosted their General Membership Meeting with guest speaker, Chaim Evan-Zohar. Evan-Zohar presented his analysis of present industry conditions and his assessment of the possibilities that exist for the future.

His presentation, entitled “Strategies, Policies and Scenarios to Mitigate the Impact of the Global Economic Downturn on the Diamond Industry Value Chain,” started off with technical difficulties the diamond market faces.

Addressing the packed room of nearly 300 listeners, Evan-Zohar said one of the main issues the industry is faced with is an oversupply and overstocked pipeline.

He described the Ripple Effect, otherwise known as the Bullwhip Effect, where if the retailer’s profit rises 10% then the demand from the manufacturer rises 20% for retail replenishing. However, he warned, this is congruent in the reverse. When demand is down on the retail side, the demand for retail replenishment from the manufacturer goes down by double as well.

It looked dim as Evan-Zohar lead the audience through the equation and up the pipeline, doubling the negative demands with each step. The balance of power has switched and the placing power no longer sits with the producers, resulting in a demand driven industry.

Quieting any murmurs of doom, Evan-Zohar explained that this phenomenon is an opportunity of change. In the next 12 months, he projected that the market would stabilize, perhaps with lower output, but definitely with healthier business.

As the evening wrapped up, DMIA President Ronny Friedman thanked Evan-Zohar and reminded everyone to take a copy of a pamphlet labeled “The Essential Guide to ‘Memo’ Transactions,” to which Evan-Zohar lightly replied, “Memos?! They should be outlawed!”